Target balances are the largest single item in some of the balance sheets of the Eurosystems 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 ECBs 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.  

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.

Chapter 1: Target: An obscure aspect of the Eurosystem.- Chapter 2: The Target credit.- Chapter 3: Current account, capital movements and Target balances.- Chapter 4: The cash balance.- Chapter 5: How the Target balances came about: the first phase of the crisis.- Chapter 6: The case of Greece.- Chapter 7: External crowds out internal money.- Chapter 8: The QE program and the Target balances.- Chapter 9: The rate of interest on Target balances.- Chapter 10: Interest spreads and tiering.- Chapter 11: The Corona Crisis.- Chapter 12: The risks of Target and cash balances.- Chapter 13: Conclusions and policy recommendations.