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The Secret System that Blew Another Hole in the Euro.
The Target-2 settlement system was introduced in 2007, as a replacement for Target (Trans-European Automated Real-time Gross Settlement Express Transfer System).
The first Target was the large-scale payments system between central banks that had been introduced with the euro in 1999.
Under the system, when a Greek makes a large euro payment to a German, his Greek bank makes a payment to the Greek central bank, which in turn makes a payment to the Bundesbank. Once it reaches the German central bank, it pays the German bank, which pays the German.
For ordinary trade transactions, that’s all fine and good. Greek exports to Germany are balanced with German exports to Greece.
If, however, there’s a big trade imbalance between the two countries, then gradually an imbalance grows up between the central banks. As it develops, the Bank of Greece ends up owing the Bundesbank more and more money.
Even more serious is when Greek citizens rush to get their money out of Greek banks and put it in German banks. Every million euros Greek citizens remove from their banks is a million euros by which the Bundesbank increases its exposure to the Bank of Greece.
You can see how this could be big problem-especially since that’s the arrangement all around the Eurozone.
——- > Deutsche Bank profits hit amid debt crisis.
Deutsche Bank has reported a sharp fall in profits, in part due to weaker performance in investment banking during the eurozone debt crisis.
Net income for the first three months of the year was 1.4bn euros ($1.9bn; £1.1bn), down 35% on the 2.1bn euros the bank made a year earlier.
Revenue was down 12% at 9.2bn euros.
The bank said although the business environment was “more stable” than at the end of last year, it was “far less favourable” than a year earlier.
————————————————————————————————————————————————- . # READ MORE from OVERVIEW: http://besplatneakcije.tumblr.com/danasoverwiew & from World’s Business News: http://besplatneakcije.tumblr.com/world —————————————————————>
Business Psychology: To Avoid Stupid Mistakes, Think In French.
Thinking in a non-native language seems to make people more rational. Over the past decade, the growing field of behavioral economics has shown all the ways that human beings don’t act the way traditional economics says they should.
A big part of the problem is that our gut instincts can be tripped up by certain sorts of questions about probability. In one example, most people would choose a medicine that they were told will save the lives of 200,000 people out of 600,000 than a medicine that would allow 400,000 people out of 600,000 to die, even though the number of lives saved is the same.
————————————————————————————————————————————————- ########## READ MORE from OVERVIEW: http://besplatneakcije.tumblr.com/danasoverwiew # Is This Man the World’s Worst CEO — or Just the Greediest? # Why The Next Shoe To Drop Post-Instagram Is Apple Buying Twitter for $10 Billion. # Four Reasons Why Facebook Is Shrinking. # ‘Can I Help You?’ Three Ways The Japanese Do Customer Service Better. # —————————————————————>