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Intra-eurozone Payments Imbalances: Implications for the TARGET2 Payments System

Author

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  • Bill Lucarelli
Abstract
In the wake of the recent European debt crisis, there have emerged serious payments imbalances between the core/surplus countries and the peripheral/deficit countries, which threaten the internal cohesion of the eurozone. In the absence of political union or fiscal federalism, these centrifugal dynamics appear to be irreversible. This article examines the role performed by the TARGET2 (Trans-European Automated Real Time Gross Settlement Express Transfer System) payments system and the very real possibility of default by the indebted, peripheral countries as a result of the imposition of austerity policies by the European Central Bank (ECB)/European Union (EU)/International Monetary Fund (IMF) (Troika). It is proposed that the current, neoliberal path toward austerity and wage repression (or internal devaluation) is ultimately unsustainable and, indeed, self-defeating. JEL Classification: B5, B14, B16, B23

Suggested Citation

  • Bill Lucarelli, 2017. "Intra-eurozone Payments Imbalances: Implications for the TARGET2 Payments System," Review of Radical Political Economics, Union for Radical Political Economics, vol. 49(3), pages 343-357, September.
    • Handle: RePEc:sae:reorpe:v:49:y:2017:i:3:p:343-357
    DOI: 10.1177/0486613417703972
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    References listed on IDEAS

    as
    1. Martina Cecioni & Giuseppe Ferrero, 2012. "Determinants of TARGET2 imbalances," Questioni di Economia e Finanza (Occasional Papers) 136, Bank of Italy, Economic Research and International Relations Area.
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    11. Sergio Cesaratto, 2013. "The implications of TARGET2 in the European balance of payments crisis and beyond," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 10(3), pages 359-382.
    12. Aldo Barba & Giancarlo De Vivo, 2013. "Flawed Currency Areas and Viable Currency Areas: External Imbalances and Public Finance in the Time of the Euro," Contributions to Political Economy, Cambridge Political Economy Society, vol. 32(1), pages 73-96.
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    Cited by:

    1. Missos, Vlassis & Domenikos, Charalampos & Pontis, Nikos, 2024. "Hardening the EU core-periphery lines, 2009–2019: Dependency, neoliberalism, welfare reformation and poverty in Greece," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 171-182.
    2. Joana Sousa Leite & Rita Soares & João Filipe & Nuno Nóbrega, 2020. "Banco de Portugal TARGET balance: evolution and main drivers," Working Papers o202001, Banco de Portugal, Economics and Research Department.

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    More about this item

    Keywords

    euro; TARGET2; currency; disinflation; austerity; neoliberalism;
    All these keywords.

    JEL classification:

    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
    • B14 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Socialist; Marxist
    • B16 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Quantitative and Mathematical
    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies

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