The circulation of liquidity in the euro area: interpreting central banks’ TARGET positions

Bulletin No. 262, article 4. Between 2016 and 2022, bank reserves tripled on the liability side of Eurosystem balance sheets before gradually falling back, while, remarkably, the distribution of this liquidity between countries remained relatively stable. However, significant fluctuations affected the national balances resulting from cross-border settlements (“TARGET balances”, named after the original name of the main wholesale settlement system in the euro area).