Research/Debt Management
Yield curve ‘steepening’ best seen as normalisation – ECB study
Long-term borrowing costs surged but overall structure ‘not in an unusual shape’, say economists
IMF members will meet SDR interest payments, says paper
Fund publication notes interest rates on SDR rose sharply in last two years
Japan’s public debt financing strategy may be unsustainable – research
Public sector financing of its own borrowing hit by losses at public companies and volatility
Eurozone sovereign debt crisis has increased financial fragmentation, paper argues
Eurozone corporate bonds have different risk premia according to which country a company is headquartered in, paper argues; fragmentation has ‘dampened effectiveness’ of ECB policy
Debt repayment problems have ‘severe consequences’ on consumption, paper finds
Quarterly consumption 30% lower when debt repayment problems arise, research suggests, while recovery after the arrears is smaller than the initial decline
IMF paper challenges idea of debt threshold effect
Countries with high levels of public debt can grow just as fast as their peers, provided the debt is on a downward trajectory, research finds
RBI paper explores challenges in public debt management
Research identifies a ‘narrow investor base’ as one hurdle and considers how to encourage greater participation from retail investors in the market for government securities
IMF senior counsel explores legal frameworks for public debt management
Senior counsel at IMF’s legal department discusses the many trade-offs involved in designing the legal frameworks underpinning public debt management
IMF researchers explore central bank security issuance
Working paper finds low-income countries may struggle to issue central bank securities on account of the administrative costs and infrastructure demands
BIS paper proposes defence against market panics
Proposal would see governments link level of borrowing to interest rates, breaking the vicious cycle of rising rates leading to increased default risk
IMF paper says long-term debt creates ‘incentive to default’
Research examines relationship between maturity structure of sovereign debt portfolios and the probability of default; considers impact of uncertainty around future fundamentals
IMF economist analyses effect of floods and storms on Caribbean debt-to-GDP
Both storms and floods have a negative effect on growth, IMF economist finds, but only floods affect debt in the natural disaster-hit region
Countries in monetary union should index sovereign debt to GDP growth
Bank of England working paper finds GDP-indexed bonds should be used more widely, especially by countries with volatile GDP growth or in monetary unions
IMF paper finds highly indebted nations can still grow fast
Results of a new study contradict findings of Reinhart and Rogoff, who argued that growth declines at debt of more than 90% of GDP
Australian sovereign bond market infrastructure developments analysed
Reserve Bank of Australia article provides an overview of the CBS market and assesses recent changes in the market infrastructure
Kenyan governor urges bond market reform
Njuguna Ndung’u calls for a wider trading platform in the secondary market to incorporate OTC products; criticises the ‘slow pace’ of reforms so far
Paper finds global beats local in determining short-run sovereign bond spreads
Global factors tend to drive spread changes particularly during periods of severe market stress
The Dutch are ‘poorly informed’ about country’s debt
Central bank survey finds that the Netherlands’ population underestimates the size of the country’s public debt, and wrongly attributes its creation to support for banks and other European governments
ECB paper examines shifts in fiscal regimes
Study finds responsibility for stabilising debt levels has swung between monetary and fiscal authorities in UK, Germany and Italy; most clearly defined in UK
IMF research warns short-term fiscal consolidation pain could become more serious
Paper says short-term growth impact from fiscal tightening could be worsened if markets or policy-makers overreact; emphasises this does not mean budget cuts should be scrapped
Bank of Finland highlights ‘astonishing’ lack of information on Chinese government debt
Researcher warns opaque debt statistics are to China’s detriment and could threaten renminbi internationalisation; urges government to begin politically difficult process of improving transparency