...The money that was credited into the Irish bank's account to allow it to pay the German bank did not come from anywhere. It just kind of appeared into the system.
This money started appearing across the periphery of the euro area as the crisis continued leading to imbalances in the TARGET2 system, like a credit created without a matching debit. It is important to note that the transnational imbalances only existed as the funding crisis was concentrated in particular countries.
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