Eurozone Finances Have Deteriorated

[i] Eurostat:

[ii] The ECB’s capital keys in the eurozone amount to 69.6176% of the total, while Germany’s is 18.367% of that total. The figure calculated in the text assumes that in the event of a TARGET2 failure the losses will be confined to euro-area national banks in the first instance. The non-euro national banks include the Bank of England, with 14.3374%, and presumably the BoE has a liability in the event the losses cannot be contained to the euro-area.

[iii] See Evergreening in the euro area; Steinkamp, Tornell and Westermann, working paper No. 113 July 2018, which describes how zombie companies are being kept afloat and their loans ending up as Target2 collateral.

[iv] estimate.

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