Italy cap­i­tal out­lows rise to 27 bln in March

Financial Mirror (Cyprus) - - FRONT PAGE -

A net to­tal of 27 bln eu­ros in cap­i­tal flowed out of Italy in March, ac­cord­ing to a pub­li­ca­tion by the Banca d’Italia.

“This could be par­tially due to spec­u­la­tive over­seas bank trans­fers by Ital­ian banks, which are now in­vest­ing the money that they re­ceived from the Euro­pean Cen­tral Bank’s bond ac­qui­si­tions in the con­text of the QE pro­gram out­side of Italy,” ex­plained Hans-Werner Sinn, Pres­i­dent of the Ifo In­sti­tut.

The out­flow seems to mark a con­tin­u­a­tion of a process trig­gered by the an­nounce­ment of QE that started as early as Au­gust 2014, with limited tem­po­rary back­flows oc­cur­ring in Oc­to­ber 2014 and Jan­uary 2015. The Tar­get over­draft credit that Italy has re­ceived from the Eurosys­tem - and that made such cap­i­tal out­flows pos­si­ble - now stands at 192 bln eu­ros.

It re­mains un­clear where the money from Italy has been trans­ferred to, added Sinn.

Ger­many is one po­ten­tial des­ti­na­tion. The Bun­des­bank has stated that its own claims against the Eurosys­tem rose by a sub­stan­tial 18 bln eu­ros in March and now to­tal 532 bln eu­ros. This means that the Bun­des­bank has granted other cen­tral banks in the Eurosys­tem over­draft credit to­talling 532 bln eu­ros via the Tar­get sys­tem. Tar­get claims can­not be de­clared due and, un­like in the US Fed­eral Re­serve Sys­tem, they are not set­tled in the Eurosys­tem. In­ter­est is merely added to the debt at a rate of 0.05%.

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