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Since 2011 the trans-European payment system TARGET2 has been heavily criticised. TARGET2 is argued to create automatic financial risks for the economically stronger core countries of the European Monetary Union. TARGET2 risks only materialise in case of a country leaving the Monetary Union. We show that a sound analysis of these risks has to explicitely consider the Community's bank note traffic. So far, four substantial suggestions have been made to reform TARGET2. These suggestios aim at limiting the core countries' risks relating to the payment system. We discuss the consequences of these reforms and conclude that they are no meaningful options in the present crisis. [ABSTRACT FROM AUTHOR]

Since 2011 the trans-European payment system TARGET2 has been heavily criticised. TARGET2 is argued to create automatic financial risks for the economically stronger core countries of the European Monetary Union. TARGET2 risks only materialise in case of a country leaving the Monetary Union. We show that a sound analysis of these risks has to explicitely consider the Community's bank note traffic. So far, four substantial suggestions have been made to reform TARGET2. These suggestios aim at limiting the core countries' risks relating to the payment system. We discuss the consequences of these reforms and conclude that they are no meaningful options in the present crisis. [ABSTRACT FROM AUTHOR]