The Economics of Target Balances - From Lehman to Corona

Target balances are the largest single item in some of the balance sheets of the Eurosystem's national central banks (NCBs), and yet very little is known about them by the general public and even by economists. This book shows that Target balances measure overdraft credits between the NCBs that resemble ordinary fiscal credit and which have grown disproportionately, exceeding one billion euros. There is, however, no parliamentary legitimation for the Target balances. The book sheds light on the economic significance of the balances, questions their limitlessness, and addresses controversial views that have been expressed regarding them. It uses the Target statistics to analyze the course of the euro crisis and the ECB's policy reactions from the time of the Lehman bankruptcy up to the outbreak of the Corona crisis. It analyses the credit risks involved for the Eurosystem and concludes with a reform proposal.   

This book will be of interest to non-specialist economists and policy makers.



Hans-Werner Sinn is President emeritus at the ifo Institute for Economic Research and Professor emeritus at the University of Munich. He founded and directed  the international CESifo research network and the Center for Economic Studies. He has received four honorary doctoral degrees,  has delivered numerous distinguished academic lectures, has taught in a number of countries, and was both President of the International Institute of Public Finance (the world organization of Public Sector economists) and the German Economic Association (Verein für Socialpolitik). In recent years, his work has focused primarily on the euro, the financial crisis, the European Central Bank, green energy, demography, migration, and Brexit. He previously conducted extensive research into German reunification, taxation, systems competition, and insurance.