At present, the market is severely mispricing Greece’s sovereign risk relative to the country’s fundamentals. As a result of the mispricing, financial intermediation in Greece has become dysfunctional and the privatisation of state-owned assets has stalled. This mispricing is partially due...

The pricing of sovereign credit risk is a necessary component of the financial architecture of the European Monetary Union. However, unnecessarily high and volatile risk premia on government bonds are currently preventing effective financial intermediation within the euro area, thereby...

Die Krise der Europäischen Währungsunion ist durch den Konflikt um das Hilfsprogramm für Zypern im März 2013 erneut aufgeflammt. Nach einem gescheiterten Anlauf haben die Finanzminister der Euroländer nunmehr eine ordnungspolitisch vertretbare Lösung gefunden. Ihre Vorgehensweise hat...

Several proposals have been made on how sovereign risk premia in the euro area should be brought down, namely i) permanent pooling of funding through joint bond issuance, ii) temporary liquidity assistance through multilateral funds, iii) debt buybacks using multilateral funds, and iv) debt...

This Policy Brief by Christian Kopf examines the merits of a new proposal from France aimed at resolving the Greek debt crisis in which French commercial banks would swap €85.5 billion in Greek government bonds maturing between 2011 and 2014 into a combination of new long-term Greek bonds with...

The current “rules of the game” of the European Monetary Union, namely a fixed exchange rate, open capital accounts and the prohibition of monetary financing of government debt, have re-introduced sovereign default risk to its member states. Against this backdrop, this paper discusses...

Latin American domestic bond markets have developed rapidly in the past few years. Yield curves have been extended, issuance has shifted towards long-term, fixed-rate bonds, and non-resident participation has increased. Several factors have contributed to this process: Pension reform, increased...

This study offers an in-depth economic analysis of the two main proposals for the creation of a European unemployment insurance scheme. One proposes the creation of a harmonised European unemployment benefit scheme that would apply automatically to every eligible unemployed person. The...