Bundesbank Holds Almost 1,000 Billion in Target Claims: What Lies Behind Them?

The Bundesbank’s Target balance has been rising for a decade and has now reached around a billion euros. Cyclically the value of these claims has increased from around 70 billion euros at the end of 2007 to 976 billion euros at the end of June 2018. Hans-Werner Sinn sees Target as a system that facilitates unlimited overdraft credit and that cannot survive because it is out of sync with the scarcity of resources in reality. It will inevitably lead to an overstretching of the claims until the system collapses for economic or political reasons. In his article Hans-Werner Sinn discusses several options that could be implemented individually or together to avoid this outcome. All of these options would uncover the opposing interests of Germany, international investors and the debtor countries, but the options need to be discussed openly.