German claims from ECB reach $880 billion in May
8 June 2012, Frankfurt (MarketWatch)
http://www.marketwatch.com/story/german-claims-from-ecb-reach-880-billion-in-may-2012-06-08At the end of May, the German central bank was holding about €698 billion or $880 billion in claims against the European Central Bank--money it stands to lose from a collapse of the euro zone.
That's an increase of 8.4% from April and follows increases of 4.6% in April and 12.5% in March.
European officials say such imbalances are inherent to the Target2 system of transfer payments used by the 17 euro countries and are not a problem -- as long as the currency bloc doesn't fall apart.
But with talk of a breakup increasing, the numbers published Friday by the Bundesbank come as an alarming reminder of what's at stake.
Target2 is the handy acronym for the EU's Trans-European Automated Real-time Gross settlement Express Transfer system.
The Bundesbank's Target2 claims amounted to
€698.60 billion at the end of last month, up from
€644.20 billion at the end of April.
The rising claims reflect increased demand for ECB money in the southern countries of the euro zone.
Spanish, Italian and Greek banks are receiving less in loans from northern European countries but they have access to ECB liquidity, which is replacing private loans to finance these countries' current account deficits.
As a result, southern European countries' Target2 liabilities are increasing while the receivables of other euro-zone members, such as Germany, are increasing.
The ECB nets the liabilities and receivables and Germany's claims are constantly increasing.
The Bundesbank views the rise in Target2 claims as a signal of growing differences in the competitiveness of euro-zone countries and supports stronger rules to access ECB money to limit the amount it is owed.
