Munich Personal RePEc Archive

ESBies as a Basis for a TARGET2 Settlement Mechanism

Pasche, Markus (2017): ESBies as a Basis for a TARGET2 Settlement Mechanism.

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The broadly discussed TARGET2 imbalances in the European Monetary Union result from the fact that there is no settlement mechanism such like the Interdistrict Settlement Accounts (ISA) in the Fed system. The proposal of Brunnermeier at al. (2011, 2017) of so-called European Safe Bonds (ESBies), although designed for different purposes, could be used as a remedy of this problem. In this brief note I suggest to use ESBies as a standardized safe asset for settling cross-border transfers of deposits.

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