Re: Re: Destinations for Eurozone Capital Flight!

#91305

Chopera
Participant

@angie wrote:

Am I wrong in thinking that 65 billion Euros leaving just Spain alone in one month is rather alarming, how long could Spanish banks sustain that? đŸ˜¯ Not only Spain but leaving Italy and other countries in huge numbers too, headed to Germany mainly đŸ˜¯

I believe there is an interbank settlement system called Target2 which means that bank transfers between eurozone countries go via the respective central banks. So if money is transferred from a Spanish bank to a German bank, the money paid to the German bank goes via the Bank of Spain and the Bundesbank. I admit I find this system rather complicated, however some people have pointed out that the liability ends up with the Bundesbank. If money is transferred out of Spain into a German bank then the Bundesbank has to lend it back to the Bank of Spain, or something along those lines. Anyway it seems to have caused alarm in Germany, with some people claiming that it has trapped Germany in the eurozone, forever rebalancing the payments as money floods in from other eurozone countries.