The TARGET2 debate is indeed a recurring "hot topic", by now mainly relegated to commentaries in newspapers in Germany (FAZ), where mainly Eurozone critics and pro-Austerity fanatics predict time and again that once these imbalances have to be settled creditor Central Banks are on the hook. But there is also the view that all of this is just an "accounting phenomenon" (this paper has a good explanation of the issue, going into some detail http://www.ebr.edu.pl/pub/2019_2_48.pdf ).

Minor thing: " The outer extent of the graph, about 1.75 billion euros at present" - I think it should be trillions

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The typo is now fixed, thanks.

I would also argue against the idea that TARGET2 balances are "just" an accounting phenomenon. They are a way of accounting for something. That something is the cumulative imbalances in the eurozone payment system. It is part of a political-economic phenomenon: TARGET2 doesn't merit fanatical obsession, nor is it a meaningless and automatic mechanism.

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Thanks Daniel, was not a critique on your post - I really appreciate you taking up this issue and explaining it in clear terms. You are right - the imbalances matter in that they tell us about real-economy imbalances and frailties in the monetary union.

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