| Summary: | 碩士 === 國立臺北大學 === 國際財務金融碩士在職專班 === 101 === This paper aimed to find out the appropriate interpretation of the increase in the TARGET2 (T2) balance. Based on previous studies, some have argued that the increase in T2 liabilities was correlated with deposit flight and current account (CA) financing. Our analysis of T2 imbalances was conducted within the euro area member countries, from two perspectives: countries’ balance of payments and International Investment Position (IIP). Firstly, we examined the relationship between T2 balances and CA deficits. It is shown that after 2008, T2 liabilities of some periphery countries are statistically significant associated to CA balances. Secondly, we used the structure of IIP to investigate recent cross-border capital movements. The results we obtained indicate that the volatility of T2 balances reflects private foreign lending outflows from securities and interbank markets. As such, the evolution of national T2 imbalances reflects not only concern regarding credit exposures but also potential Eurozone's internal imbalances exposures.
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