FRANKFURT--The European Central Bank said Thursday it will publish the individual balances of national central banks in the European TARGET payment system, making it easier to track the flow of payments across the eurozone.
"The ECB will, as of this month, publish data on the individual TARGET balances of the euro area national central banks (NCBs) on a monthly basis," it said in its Economic Bulletin.
Don't beat yourself if you've forgotten the details of how this works. In simple terms, when money flows out of one country, say Greece, and flows into another country, for example Germany, the Bank of Greece gets hit with a liability in the Target system, while Germany's Bundesbank gets a credit.
Put another way, if a lot of Greek depositors decide their money isn't safe in a Greek bank anymore and put it in a German one instead, the Bank of Greece's target liabilities will rise, while the Bundesbank's claims will also rise.
In normal times, Target balances aren't much of a big deal. It would become an issue if a euro member left the currency bloc, but even then the Target liability would remain with the country. In recent years, as money has flowed into Germany, some economists have eyed growing Bundesbank claims with worry. Recently, the prospect of Greece potentially leaving the eurozone raised questions about whether the Bank of Greece would repudiate its liabilities under the Target system.
The ECB also has provided a helpful warning on using Target data. "Interpreting TARGET balances within an integrated financial system like the euro area requires caution," it said. "For instance, these balances also reflect money transfers within large, cross-border banking groups where the central bank money needed by the group is procured centrally at one NCB and then redistributed among group members via TARGET."
All in all, "TARGET balances do not, and are not meant to, provide a complete picture of the net financial flows between countries." Got it?
