The Increase in TARGET Balances in the Euro Area Since 2015

The TARGET2 platform, which is owned by the Eurosystem, processes payments in euro with reserves, i.e. central bank money. The cross-border payment transactions channelled through this platform give rise to central bank claims and liabilities which, when aggregated and netted, produce the so-called TARGET balances. Since 2015, when various extraordinary monetary stimulus measures were introduced by the ECB, there has been a marked increase in aggregate TARGET balances, to levels above those reached during the sovereign debt crisis which took place in the first few years of the current decade. Unlike then, the recent developments do not reflect financial stress or general funding problems in euro area economies, as during the sovereign debt crisis, but are instead mainly linked to the execution of the Eurosystem’s asset purchase programme (APP).