That worked in the Eurozone until 2007, with a small but very important "snag": the tendency toward equilibirum has to be achieved in both the good & services account AND in the capital account separately. Compensating large and growing imbalances in the trade accounts with "vendor financing" from the net exporters, as occurred since the Euro was created, accumulates growing net debt/net asset positions among the trading partners, which are ultimately unsustainable.
Cumulative imbalances can be reduced, with lower annual imbalances in the trade account as net importers back and net exporters both cut back. Or the imbalances can be shifted around among the participants and trading partners. To say that the "BIS Admits TARGET2 Is A Stealth Bailout Of Europe's Periphery", the borrowers, as Zero Hedge does, overlooks the basic reality that all imbalances are, at their root, bilateral, and that relief provided by a third party (the Central Banks) to borrowers, also represents a relief to its creditors.
The transfer of the trade and capital imbalances from individual borrowers and lenders to their respective Central Banks, as has been reflected in the TARGET 2 imbalances since 2008, does NOT change the nature or the unsustainability of the trade or capital imbalances.
It only masks more serious consequences of persistent trade and capital imbalances.
For a short time....
Mariana Abrantes de Sousa
Economist, UC Berkeley *73, Princeton *75
TARGET 2 imbalances unsustainable
Sources: Billy blog on Mario Draghi uses TARGET 2 http://bilbo.economicoutlook.net/blog/?p=35239&cpage=1
Zero hedge on TARGET 2 http://www.zerohedge.com/news/2017-03-06/bis-admits-target2-stealth-bailout-europes-periphery
TARGET 2 for Dummies https://www.rischiocalcolato.it/2016/11/target-2-for-dummies-stupidi-perche-lo-sbilancio-target-2-un-indice-sfiducia.html