Working Paper Revision

What Does It Take? Quantifying Cross-Country Transfers in the Eurozone

Abstract: We measure the cross-country transfers that result from unconventional monetary policy in the Eurozone. The ECB funds its balance sheet expansion mostly by issuing bank reserves and cash in core countries. The national central banks (NCBs) in periphery countries then borrow from the core NCBs at below-market rates, and use these funds to finance asset purchases and bank lending. This arrangement exposes taxpayers in core countries to credit and currency risk without corresponding compensation. By comparing the cross-country distribution of NCB income to a counterfactual scenario without non-marketable intra-Eurozone claims, we document significant and persistent cross-country transfers in the Target2 system.

JEL Classification: E42; E52; F33; G15;

https://doi.org/10.20955/wp.2025.024

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2026-05-28

Number: 2025-024

Related Works

• Working Paper Revision (2026-05-28) : You are here.
• Working Paper Original (2025-09-22) : What Does It Take? Quantifying Cross-Country Transfers in the Eurozone