Eurozone national central banks act merely as Target Two payment processors

Evidence

Eurozone countries still have their own central banks, but they are central banks in name only. They are really the payments processors for exchanges between Eurozone countries through a network called the Target Two system. Some economists are very worried that imbalances in this system threaten to bankrupt the German central bank. Others discount the possibility entirely. It is indicative of EU institutions that knowledgeable insiders cannot even agree on how these institutions actually operate. — Mark Blyth, Austerity, 805

Categorization

• XREF: Connects to the mechanics of eurozone crisis — relates to Mattei’s and other austerity work on the structural flaws of the single currency that generated the 2010-12 crisis and ensuing austerity. — connects to: The ECB lacks the lender-of-last-resort powers the Fed and Bank of England exercise — Mark Blyth, Austerity: The History of a Dangerous…, 246
• QUESTION: The Target Two imbalances thesis is contestable; worth digging into Merler and Pisani-Ferry’s sudden-stops analysis to see which economists are right.