{"title":"Exploitation of Eurosystem loopholes and their quantitative reconstruction","authors":"Karl Svozil","doi":"10.1111/ecaf.12688","DOIUrl":null,"url":null,"abstract":"<p>This article identifies and analyses six key strategies used to exploit the Eurosystem's financial mechanisms, and attempts a quantitative reconstruction: inflating TARGET balances, leveraging collateral swaps followed by defaults, diluting self-imposed regulatory rules, issuing money through Emergency Liquidity Assistance (ELA), acquisitions facilitated via the Agreement on Net Financial Assets (ANFA), and the perpetual (re)issuance of sovereign bonds as collateral. These practices stem from systemic vulnerabilities or deliberate opportunism within the Eurosystem. While it does not advocate for illicit activities, the article highlights significant weaknesses in the current structure and concludes that comprehensive reforms are urgently needed.</p>","PeriodicalId":44825,"journal":{"name":"ECONOMIC AFFAIRS","volume":"45 1","pages":"17-26"},"PeriodicalIF":1.0000,"publicationDate":"2025-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ecaf.12688","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"ECONOMIC AFFAIRS","FirstCategoryId":"91","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/ecaf.12688","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
This article identifies and analyses six key strategies used to exploit the Eurosystem's financial mechanisms, and attempts a quantitative reconstruction: inflating TARGET balances, leveraging collateral swaps followed by defaults, diluting self-imposed regulatory rules, issuing money through Emergency Liquidity Assistance (ELA), acquisitions facilitated via the Agreement on Net Financial Assets (ANFA), and the perpetual (re)issuance of sovereign bonds as collateral. These practices stem from systemic vulnerabilities or deliberate opportunism within the Eurosystem. While it does not advocate for illicit activities, the article highlights significant weaknesses in the current structure and concludes that comprehensive reforms are urgently needed.
期刊介绍：
Economic Affairs is a journal for those interested in the application of economic principles to practical affairs. It aims to stimulate debate on economic and social problems by asking its authors, while analysing complex issues, to make their analysis and conclusions accessible to a wide audience. Each issue has a theme on which the main articles focus, providing a succinct and up-to-date review of a particular field of applied economics. Themes in 2008 included: New Perspectives on the Economics and Politics of Ageing, Housing for the Poor: the Role of Government, The Economic Analysis of Institutions, and Healthcare: State Failure. Academics are also invited to submit additional articles on subjects related to the coverage of the journal. There is section of double blind refereed articles and a section for shorter pieces that are reviewed by our Editorial Board (Economic Viewpoints). Please contact the editor for full submission details for both sections.
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