Target2 robust enough to withstand liquidity shocks – ECB study
Research modelled effects of “extreme collateral deteriorations” on Target2 participants
The European Target2 settlement system is likely to be resilient enough to withstand "even very severe liquidity shocks caused by the most extreme collateral deteriorations", a European Central Bank (ECB) study argues.
An ad hoc ECB group used the Target2 simulator to run a series of stress tests. The tests observed the effects of changing the level of the credit lines on real transaction level data from the 2008–13 period.
The study group had access to all the granular Target2 transaction data
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