Europe Fears Bail-Ins: Capital Flight Intensifies in Italy, France, Spain; Are German Banks Safe?

Courtesy of Mish.

Fear!

Money parked at the ECB at a negative rate of 0.3% hit a new high at the beginning of 2016.

Above chart from Statista.

Possible Explanations

1. Fear of losses elsewhere
2. No demand for loans
3. No creditworthy borrowers
4. Capital impairment at banks
5. Failure of ECB policy

To encourage more lending, ECB president Mario Draghi cut the deposit rate for money parked at the ECB from -0.2% to -0.3% on December 3.

Clearly that did not work.

Let's now take a good look at Target2 imbalances, an excellent measure of capital flight from eurozone countries to other eurozone countries.

Target2 Imbalances in Billions of Euros

I created the above table using data from the ECB Statistical Data Warehouse

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