Intra-eurosystem debts

Whittaker, John (2011): Intra-eurosystem debts.

Abstract

Germany is a reluctant supporter of the EU funds which are being used in the ‘bailout’ of Ireland, and it insists on strict ‘austerity’ conditions, concerned about risk and moral hazard.

However, through its central bank, Germany is lending €325bn (December 2010) to other central banks in the eurosystem. The Central Bank of Ireland (CBI) has borrowed €146bn from the eurosystem in order to support its banks.

This ‘bailout’ of Ireland via the eurosystem is larger than its official EU ‘bailout’ (€146bn as against €67bn) and much cheaper (1% interest as against 5.8%), but it exposes Germany to similar risks.

• Item Type: MPRA Paper
• Language: English
• Keywords: eurozone operations; TARGET2
• Subjects: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E42 - Monetary Systems ; Standards ; Regimes ; Government and the Monetary System ; Payment Systems; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy

References

References

ESCB Statute (2008) ‘Protocol (No.4) on the Statute of the European System of Central Banks and of the European Central Bank’, Official Journal of the European Union C 115/230 EN 9.5.2008. http://www.ecb.int/ecb/legal/pdf/en_statute_from_c_11520080509en02010328.pdf

European Central Bank (2010) ‘Opinion of the European Central Bank on Emergency Stabilisation of Credit Institutions’, CON/2010/92. http://www.ecb.int/ecb/legal/pdf/en_con_2010_92_f.pdf

European Central Bank (2011) Annual Accounts December 2010. http://www.ecb.int/pub/pdf/annrep/ar2011en.pdf

National Treasury Management Agency (2010) ‘Eligible Liabilities Guarantee (ELG) Scheme’. http://www.ntma.ie/ELGScheme/CreditInstitutionsELGScheme.php