Soaring Target2 Imbalances Stoke German Risk Angst: Euro Credit

German angst is growing as an entry on the Bundesbank’s balance sheet swells to a sum worth about 20 percent of economic output, a sign of the extent to which Europe’s largest economy is funding the region’s laggards.

The European Central Bank’s Target2 system, which calculates debts between the euro region’s central banks, shows the Bundesbank is owed 489 billion euros ($656 billion), up almost 65 percent from a year earlier. German central bank President Jens Weidmann wrote to ECB President Mario Draghi last month to warn about growing systemic risks, Frankfurter Allgemeine Zeitung newspaper reported Feb. 29.