2013年-ECB欧洲央行_Target_balances_and_monetary_policy_operations_12页_704kb

TARGET BALANCES AND MONETARY POLICY OPERATIONS SUMMARY

Core Content

TARGET balances are positions on the balance sheets of national central banks (NCBs) in the euro area, reflecting cross-border payment flows settled in central bank money. These balances are a result of the Eurosystem's monetary policy operations and the decentralised distribution of liquidity among NCBs. They are essential for understanding the financial dynamics within the Eurosystem and the monetary union's stability.

Main Points

• Definition and Function:
  TARGET is the real-time gross settlement (RTGS) system used by the Eurosystem to settle cross-border payments in central bank money. It provides settlement services to approximately 1,000 participants via 24 central banks, including all euro area NCBs and the ECB.

• Formation of TARGET Balances:
  TARGET balances are created through the settlement of cross-border payments. When a bank in one country makes a payment to a bank in another, the NCB of the paying bank sees a reduction in its current account, while the NCB of the receiving bank sees an increase. These balances are netted daily, resulting in a net position for each NCB against the ECB.

• Impact of Financial Crises:
  During the financial and sovereign debt crises, particularly after the 2008 Lehman Brothers collapse, the interbank market became dysfunctional, leading to a significant increase in TARGET balances. The Eurosystem provided liquidity to solvent banks through fixed-rate, full allotment tenders, which helped prevent disorderly deleveraging and supported price stability.

• Geographical and Institutional Factors:
  TARGET balances reflect the imbalances in cross-border payment flows and are influenced by the structure of multi-country banking groups. Centralised liquidity management within such groups can lead to larger cross-border flows and imbalances. The Eurosystem's operations are designed to manage these imbalances and ensure stability.

• Liquidity Absorption and Provision:
  TARGET balances are linked to liquidity absorption and provision in the Eurosystem. For example, during the sovereign debt crisis, capital flowed into more resilient countries, increasing TARGET claims for those NCBs and liquidity absorption in the Eurosystem.

• Monitoring Financial Markets:
  TARGET2 payment data is used to monitor the euro area money markets, including interbank lending and liquidity conditions. This data provides insights into the functioning of the unsecured overnight money market, which became fragmented and less active during the crisis.

Key Information

• TARGET2:
  Replaced TARGET in 2007, with a transition period until 2008. It is used to settle cross-border payments in central bank money.

• Liquidity Needs:
  The Eurosystem accommodates liquidity needs of solvent banks, particularly in times of market dysfunction, by providing funding through various mechanisms such as main refinancing operations, long-term refinancing operations, and the deposit facility.

• Risk Management:
  The Eurosystem employs a risk control framework that ensures only financially sound counterparties receive funding, always backed by eligible collateral. This framework mitigates financial risk associated with its operations.

• Financial Integration and Segmentation:
  The notion of "cross-border" payments is complex, as they can involve transactions within multi-country banking groups. The financial integration of the euro area has led to both segmentation and increased liquidity flows, affecting TARGET balances.

• Policy Relevance:
  TARGET balances highlight underlying tensions in the Economic and Monetary Union (EMU). Addressing macroeconomic imbalances, re-establishing trust in banking systems, and strengthening EMU institutions are critical for long-term stability.

Chart Highlights

• Chart 1: Illustrates the distribution of TARGET balances across euro area NCBs, showing negative balances for countries under strain and positive for more resilient ones.
• Chart 2: Demonstrates how TARGET balances emerge from cross-border payments and liquidity management.
• Chart 3: Shows the aggregate TARGET liabilities and total liquidity provision by the Eurosystem.
• Chart 4: Reflects the relationship between TARGET claims and liquidity absorption in the Eurosystem.
• Chart A: Compares EONIA and TARGET2 data, showing the contraction of the unsecured overnight money market post-Lehman Brothers.
• Chart B: Illustrates the proportion of cross-border unsecured overnight interbank activity in the total euro area interbank activity.

Conclusion

TARGET balances are a direct outcome of the Eurosystem's monetary policy operations and the nature of cross-border payment flows. They do not represent financial risk per se but rather reflect the operational risks of the Eurosystem. Understanding these balances is crucial for assessing the health of the monetary union and the functioning of financial markets. The Eurosystem's risk-sharing framework and collateral policies are key in managing these balances and ensuring the stability of the euro area.