Comment by thebear | Hacker News Reader

Comment by thebear | Hacker News Reader

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In addtion to the things that other commenters have mentioned, there is one more difference between having your currency pegged to the Euro and being a Euro country: when goods are traded between two Euro countries, these goods aren't really paid for. Instead, the sale is transacted through the so-called TARGET2 system. Wikipedia describes it like this:

A Dutch importer, for example, might place an order with a Spanish company. Payments to and from the accounts of the buyer and seller are channeled via central banks, so the Spanish exporter's bank gets a credit with the Banco de España, which in turn has a claim on the ECB. The Dutch importer's bank owes its local central bank, leaving De Nederlandsche Bank with a debit at the ECB.

The idea behind this was that the liabilities within the TARGET2 system would cancel each other out. To everybody's utmost surprise, however, this has not happened. For example, Germany is currently being owed over 650 billion Euros. Needless to say, the countries who owe this money don't have it anymore.

> when goods are traded between two Euro countries, these goods aren't really paid for

This is a very politically biased and misleading perspective on reality.

Consider an alternative world in which the central banks of the Eurozone would have been consolidated entirely. That is, no more Bundesbank, no more De Nederlandsche Bank, only the ECB. All commercial banks would have central bank accounts directly there.

In this world, everything in the real economy would look exactly the same as it does in our world.

However, this alternative world would not have Target balances in its central bank system, and therefore nobody (including you) would ever even think to write that "goods aren't really paid for".

But how can it be that goods are paid for in this alternative world while they aren't paid for in our world? The answer is that that just doesn't make sense.

Goods are paid for even in our, non-hypothetical world. Yes, there are flow imbalances, but guess what: That happens in every region ever that has a unified currency.

If you don't like that, then please just be honest and come right out and say so. Don't try to cloud your opinion in misleading rhetoric.

> The idea behind this was that the liabilities within the TARGET2 system would cancel each other out. To everybody's utmost surprise, however, this has not happened.

So the eurosystem has been in the making for many decades, developed by many central bankers, and you are now here implying all of those central bankers would assume such a thing (it all cancels out) and could not predict that it would in reality NOT?

Of course, over any given time span --a month, a year-- not all trades will cancel each other out immediately. That's exactly why they have accounts and claims as core of the system. To keep track and balance/settle eventually in a stable "supra-national" unit, rather than one wildly fluctuating or politically-manipulated national or another.

Pretty neat if you ask me. Sucks for "notorious net debtors" of course..

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