German Law Professor Files Criminal Complaint Against Bundesbank

A German law professor filed a criminal complaint against the Bundesbank’s board over Target2 imbalances on the central bank’s accounts.

Bernd Schuenemann, based in Munich, asked prosecutors to investigate whether Bundesbank President Jens Weidmann and the members of the bank’s board are guilty of collaborate embezzlement, according to a statement published today by the Foundation for Family Businesses in Germany and Europe, which supports the complaint.

Brun-Hagen Hennerkes, the foundation’s chairman, said the complaint is aimed at revealing what potential indirect costs may arise from imbalances in the euro area’s cross-border payment system, known as Target2. A Bundesbank spokesperson was not immediately available to comment.

As capital from crisis-stricken countries like Greece and Italy has sought safety in northern havens such as Germany and the Netherlands, and banks from southern states have borrowed cash from the European Central Bank, imbalances have built up. While Germany, the Netherlands, Luxembourg and Finland have a net claim on the ECB, countries including Greece, Italy, Spain have net liabilities.

Those imbalances have caused controversy in Germany, where academics including the Ifo Institute’s Hans-Werner Sinn have charged that the Target2 system allows the financing of southern states’ balance-of-payments deficits by the north.

The ECB and the Bundesbank maintain such imbalances are a natural consequence of the crisis and will diminish once funding conditions in the euro area return to normal. The claims would only become an issue if the Eurosystem were to collapse, they say.

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