Sun 14 Aug 2016 / Europe
Importance of ECB’s expanding Target-2
While financial markets have paid vast attention to the European Central Bank’s efforts to inject additional liquidity into the financial system through quantitative easing, much less scrutiny has been applied to the relatively meagre outcome in terms of ‘broad money’ expansion. A primary reason for this has been the ‘peripheral’ banking system’s increased requirement to draw on funding under the Eurosystem’s intra-central bank Target-2 system, under which NCBs manage their assets and liabilities vis-a-vis the ECB.