This paper analyses the implications of a continued divergence of TARGET2 balances for monetary policy in the euro area. The accumulation of TARGET2 claims (liabilities) would make the ECB’s liquidity management asymmetric once the TARGET2 claims in core countries have crowded out central bank...

This paper explores the conflict of real and monetary convergence during the EMU run-up of the future Central and Eastern European (CEE) EU member states. Based on a Balassa-Samuelson model of productivity driven inflation, it compares the policy options which might make the compliance possible,...