Via Olaf Storbeck, I found an excellent post on the Target-2-System by Rebeleconomist and on Hans-Werner Sinn’s argument that the ECB is conduction a Stealth-Bailout using its Target-2 payment system. I advice reading it, but take some time. It’s very comprehensive.
I agree in almost every point, just – as I pointed here out previously – I don’t see Target-2 as a stealth bailout. The bailout is caused by the relaxation of the collateral standards, not Target-2. Actually we are lucky that Target-2 exists, as it adds a lot transparency to the secretive business of central banks. We wouldn’t have any hard data points on the payment imbalances if the ECBS wouldn’t be split into many national banks. If the Eurosystem would have a single central bank, these imbalances would be well hidden inside some internal portfolios.
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