We visited the Bundesbank in December 2019 to discuss the large imbalances in TARGET2, and to discover how these imbalances were derived from the 600 original account balances.

These are the balances on the 600 nostro and vostro accounts held between the 24 TARGET2-participating National Central Banks and the ECB itself.

We were given the Multilateral Netting and Novation Agreement and an explanation of how the agreement was implemented operationally.

The operation badly mismatches what the Agreement says, but that is only one of the problems which we have revealed and analysed in our paper.

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