Euro Area

[gaelic cowboy]

German Target2 exposure is over 700bn euros. IF the southern Europeans leave that debt defaults.

How? if you leave the debt is still in Euro and since it is in fact the ECB that is owed the money it can just delete the word debt on it's balance sheet and insert the word asset.

Plus most of this is either capital flight from weaker country banks or normal day to day trade ie paying German exporters for there products.

And in any case using the word debt and owed in relation to target2 is faulty as target2 is not a debt, the increase in the money supply in Germany will be mirrored by a reduction of the same amount in Italy.