Most Germans and Dutch do not know it, but they are financing the rest of the euro zone

Germany and the Netherlands have a huge external surplus that they have not wanted to lend to the rest of the euro zone since 2010. But in reality, German y’s and the Netherlands’ excess savings are being intermediated in a way that channels them to the other euro-zone countries without the Germans or the Dutch directly lending their savings to these countries: First, there has been intermediation by the European System of Central Banks: the TARGET2 system enables the excess liquidity of German and Dutch banks to be lent to banks in the other euro-zone countries via the national central banks; Another form of intermediation is now being put in place with the issuance by the European Commission of European bonds that will be used to finance loans and grants to the other countries under the Next Generation EU plan . Thus, German and Dutch savings will finance investments in the peripheral countries through the European Commission.