German savers should applaud the growing TARGET balances

FRANKFURT — The eurozone crisis is not over, France’s reforms are slipping and the Bundesbank has set aside billions in new provisions against what it sees as risky European Central Bank moves, Germany’s central bank said on Tuesday. Presenting Bundesbank 2012 results that showed a sharp increase in its risk provisions, the German central bank’s chief, Jens Weidmann, urged governments to tackle the roots of their troubles with reforms.

Pietro Alessandrini, Michele Fratianni, Andrew Hughes Hallett, Andrea F Presbitero, 16 May 2012Unsustainable debt along Europe’s periphery is bringing the euro to breaking point. But this column argues that this is not simply the result of fiscal ill-discipline. After 2010, the Eurozone crisis went from a fiscal crisis to a balance-of-payments crisis – with different prescriptions for policy. Full Article: The Eurozone crisis: Fiscal fragility, external imbalances, or both?

Both Angela Merkel and the Bundesbank are walking an extremely fine line of economic policies and treaty arrangements that appear to be in violation of policy statements made by the German Supreme Court regarding transfer unions. Moreover, the Bundesbank president is now in what amounts to an open Feud with Merkel. Bundesbank 228 Billion Euros in Debt Rescuing Europe

BRUSSELS — Within minutes of eurozone finance ministers reaching a deal to cut Greece’s debt late on Monday, commentators on Twitter were dismissing it as another exercise in “kicking the can down the road”. To an extent that is true. Under the agreement, the euro zone and the International Monetary Fund will give Greece two more years to reach its budget goals and will find another 44-billion euros (US$57-billion) to keep the country afloat in the meantime.

Ossi Leppänen, 18 April 2012Since the start of the crisis the Eurosystem balance sheet has grown from €1200 billion in June 2007 to around €2900 billion in March 2012. But this is spread unevenly among different central banks within the Eurozone, raising the thorny issue of intra-area (TARGET) balances. This column argues that these balances signal a need for change and restructuring in the Eurozone banking sector. Full Article: Restructuring Eurozone banks to address Eurosystem imbalances