The positive values indicate asset positions-lending-in these accounts at the end of December 2011. They are not really frightening, though, but there are risks.Ĭhart 1 shows estimates of the TARGET2 balances on December 31, 2011, for the countries in the eurozone. The balances in the TARGET2 system represent assets and liabilities, and the "unlimited" balances sound scary to some people. 2 It is possible for banks and central banks in the eurozone to build up liabilities to other central banks in unlimited amounts on this system. The fuss concerns balances associated with the European Central Bank's payment system, TARGET2. The payment system in the eurozone, or TARGET2, has generated a substantial amount of press lately, with various claims flying, such as one article stating that the eurozone central bank system is "massively imbalanced." The article in the German publication Spiegel Online (Kaiser 2012) also suggested that TARGET2 "sounds about as exciting as the title of an accounting seminar." The term "massively unbalanced" applied to eurozone central banking does sound rather ominous, though. The positive balances generate interest for national central banks that carry those balances, but the balances do not represent the risk exposure of the national central banks.The negative balances are debts of national central banks backed by collateralized loans to private banks.Positive and negative balances have built up in TARGET2, the payment system in the eurozone.
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