Target 2 Commitments from National Central Banks
Weidmann repeated his concern about the TARGET2 imbalances, but said this did not pose a risk to its balance sheet.
"For me, the Bundesbank's TARGET2 claims do not pose a standalone risk, because I think that a breakup of the currency union is simply absurd," Weidmann wrote.He added that he did not expect a euro zone member with TARGET2 liabilities to leave the currency union, and even in such an unthinkable event the losses would be shared by all central banks in the euro system according to the individual share of paid-in capital - known as the capital key.
The comfort the President of the Bundesbank gains in knowing that his is not a "stand alone" must also presumably come from knowing that his banks exposure is for only 27.1341% of the total exposures as calculated from the information on these Capital Keys provided by the ECB as linked from here.
Of course alongside the Bundesbank in compensating for a withdrawal from the Euro stand many other nations also likely to join in the rush for the exit when the true horror of what Trichet and Draghi have wrought finally begins to be known. (Note behind the Bundesbank come these supposedly substantial countries with their percentage shares France - 20.38%, Italy - 17.91%, Spain - 11.90%, Finland - 1.25%)
No wonder the Bundesbank is now reported to be seeking an exit mechanism! Parachute or ejector seat I wonder?
Labels: ECB Bankruptcy