The Hundred-Billion-Euro Bomb: Euro-Zone Central Bank System Massively Imbalanced – SPIEGEL ONLINE – News – International

So, the will of the political class to preserve the union is strong. It is the rabble that might not like the terms.

After weeks of work, Sinn had assembled enough pieces to create a picture that would make any one shudder: Since the 2007 financial crisis, immense imbalances have formed within the otherwise harmless payment system that exists between the central banks of the 17 euro-zone member states. While Italy, Spain, Ireland, Portugal and Greece, all hit hard by the debt crisis, show deficits totaling over €600 billion, the claims owed the Bundesbank have climbed to €498 billion.

‘Caught in a Trap’

As long as the monetary union continues to exist, this isn’t a catastrophe. The money is virtual, created by central banks, and its existence doesn’t mean that an equivalent amount is lacking elsewhere. But as soon as a country leaves the euro zone, or the currency union collapses entirely, things get critical.

via The Hundred-Billion-Euro Bomb: Euro-Zone Central Bank System Massively Imbalanced – SPIEGEL ONLINE – News – International.

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