ESBies as a Basis for a TARGET2 Settlement Mechanism

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

Abstract

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: TARGET2 imbalances; ESBies; ISA
• Subjects: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E42 - Monetary Systems ; Standards ; Regimes ; Government and the Monetary System ; Payment Systems; F - International Economics > F3 - International Finance > F32 - Current Account Adjustment ; Short-Term Capital Movements; F - International Economics > F3 - International Finance > F33 - International Monetary Arrangements and Institutions; F - International Economics > F3 - International Finance > F36 - Financial Aspects of Economic Integration; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F45 - Macroeconomic Issues of Monetary Unions

References

Bindseil, U., König, P.J. (2011), The economics of TARGET2 balances. SFB 649 Discussion Paper 2011-035.

Braunberger, G. (2017), ESBies: Wie die EZB Anleihen wieder los werden kann. F.A.Z. vom 27. 1.2017

Brunnermeier, M. K. et al. (2011). European Safe Bonds (ESBies). The Euronomics Group. (www.euro-nomics.com)

Brunnermeier, M. K. et al. (2015), The Sovereign-Bank Diabolic Loop and ESBies. CSEF Working Paper No. 427

Brunnermeier, M. K. et al. (2017), ESBies: Safety in the Tranches. Economic Policy, in print.

Burgold, P, Voll, S. (2912), Mythos TARGET2 – ein Zahlungsverkehrssystem in der Kritik. Friedrich Schiller University Jena, Global Financial Markets Working Paper Series No. 29-2012

EEAG (2012), The EEAG Report on the European Economy: The European Balance-of-Payments Problem. CESifo, Munich 2012, pp. 57-81.

Gopal, M., Pasche, M. (2012), Market-Based Euro-Bonds Without Cross-Subsidisation. Working Papers on Global Financial Markets No. 37/2012, University of Jena.

Konings, J.P. (1012), Without proper balancing forces, Hans-Werner Sinn’s “European ISA” will be destabilizing. www.jpkonings.blogspot.de, Thursday, November 22, 2012.

Sinn, H.-W. (2012a), TARGET losses in case of a euro breakup. voxEU.org, October 2012.

Sinn, H.-W. (2012b), Die Target-Kredite der Deutschen Bundesbank. ifo Schnelldienst Sonderausgabe 21. März 2012

Sinn, H.-W., Wollmershäuser, T. (2011), Target Loans, Current Account Balances and Capital Flows: The ECB’s Rescue Facility. NBER Working Paper 17626.

Voll, S. (2014), ISA vs. TARGET2 – ein Vergleich der Voraussetzungen für einen effektiven Ausgleich von Zahlungsbilanzsalden. Friedrich Schiller University Jena, Global Financial Markets Working Paper Series No. 51-2014.

Wolman, A. L. (2013), Federal Reserve Interdistrict Settlement. Economic Quarterly, Second Quarter 2013.