* Italy's Target 2 net liabilities at 386.1 bln euros
* Germany's net claims at 814.4 bln euros
(Adds German figure, detail)
By Francesco Canepa and Valentina Za
FRANKFURT/MILAN, March 7 Italy's debt and
Germany's credit with the European Central Bank hit all-time
highs last month, data showed on Tuesday, as money flowed into
the euro zone's strongest economy and out of one of its
The data lays bare the yawning economic imbalances inside
the euro zone and highlights the potential for colossal
sovereign defaults if the bloc were to fall apart, as that debt
would then need to be repaid.
Italy's net debt to the ECB's Target 2 payment system, which
settles cross-border payments in the euro zone, rose to a record
386.1 billion euros ($408 billion) in February just as Germany's
net claims set their own all-time high at 814.4 billion euros.
The gap is testament to Germany's strong exports but also
reflects savers' preference for parking their money in what is
perceived to be the euro zone's safe haven while banks in Italy
are under pressure and anti-euro sentiment is on the rise.
As these payments are not settled by national central banks,
their total amount only represents the money that each of them
would have to pay or receive if the currency club were to be
dissolved, as ECB President Mario Draghi recently said in a
letter to two Italian lawmakers.
The threat of defaults on cross-border debts has often been
credited as one element keeping the euro zone together
throughout the financial crisis.
Italy's Target 2 position worsened during the euro zone's
sovereign crisis as foreign investors dumped Italian assets and
withdrew funding to its banks.
The Bank of Italy has said the widening seen since last year
was driven instead by Italians selling some of their domestic
government bonds to put a larger share of their savings into
The ECB has also blamed the growing Target 2 imbalances on
the massive bond purchases it is carrying out to boost euro zone
inflation, as many of the sellers are foreign institutions with
bank accounts in Germany.
But this fails to explain why more of those proceeds are not
then reinvested in other euro zone countries, which would
rebalance the countries' Target 2 positions.
($1 = 0.9460 euros)
(Editing by Giulia Segreti and Hugh Lawson)