FRANKFURT, March 20 Money created by the
European Central Bank to shore up euro zone growth and inflation
is piling up in Germany as investors are reluctant to venture
outside the bloc's strongest economy, Bundesbank data showed on
A large amount of the money printed by the ECB to buy bonds
is landing in German bank accounts, often held by foreign
investors, and staying there.
This is pushing up the Bundesbank's claims on the ECB's
Target 2 payment system, which rose to a record high of 814
billion euros ($875.13 billion) in February.
But in its monthly report, the Bundesbank said this money
does not then flow to other parts of the euro zone, even though
bond yields tend to be there higher than in Germany.
That showed investors' reluctance to put their cash to work
in weaker economies and raised questions about the effectiveness
of the ECB's stimulus programme, it said.
"It is remarkable ... that these second-round effects of the
APP ... are not taking place in some countries, including
Germany," the Bundesbank said in its monthly report.
Before the euro zone debt crisis that peaked in 2012, money
flowed out of Germany to seek higher returns in countries such
as Greece, Spain or Italy.
That trend reversed after 2010 as the crisis escalated and
confidence in debt-laden countries has yet to be re-established
despite the ECB's efforts.
The German economy has continued to expand and will do so in
the near future, the Bundesbank said in its report, citing very
strong industrial output driven by high demand from within the
EU's economic powerhouse and from abroad.
Target 2 claims and liabilities of the national central
banks in the euro zone are not a problem as long as the currency
But if the euro zone should break up, debtors -- the
national central banks of countries leaving the bloc -- would
have to pay the money back.
($1 = 0.9282 euros)
(Reporting by Andreas Framke; Editing by Catherine Evans)