Sovereign debt
The challenges for central banks
Demands are being made for central banks to consider financial stability alongside price stability, as a key component of their monetary policy. But that is nothing new for central banks
Sovereign bonds offer ‘return-less risk' says GIC's head of fixed income
The returns on offer from the biggest sovereign bond issuers offer too little return even for the small level of risk associated, says GIC's managing director in charge of fixed income
EU sovereign debt managers fall in line with two-day settlement rule
EU member states' treasuries will settle over-the-counter sovereign bond transactions in a maximum of two days from October this year
Big eurozone economies dragged each other down during eurozone crisis
Sovereign CDS in Spain and Italy showed ‘notable co-dependence' in 2009–12 and also explained much of the widening in Germany's spreads, IMF paper says
Frontier bonds find buyers as investors reach for yield
Pakistan sells $2 billion worth of Eurobonds as investors look for alternatives to US Treasuries; Greece and Swaziland among countries to find success with bonds in own currency
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
Federal Reserve banks earned $81.4 billion in 2013
Total assets as of December 31 were $4tn, an increase of $1.1tn on the previous year; holdings of Treasuries and mortgage-backed securities up $550bn and $585bn respectively
Sovereign credit ratings have asymmetric impact, ECB paper finds
Working paper finds market volatility depends on whether the rating was an upgrade or a downgrade; identifies channels of contagion between countries
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
IMF paper models sovereign restructuring in monetary union
Paper prepared by economists in IMF's fiscal affairs department shows the restructuring country's economy would suffer more if its residents hold most of its sovereign debt
ECB working paper says sovereign spreads driven by fundamentals
Paper finds that before the crisis, eurozone sovereign spreads were somewhat decoupled from fundamentals, but since then, country-specific factors have played a bigger role than regional contagion
Rajan outlines medium-term 'pillars' for improving India's financial system
The five pillars comprise a 'clarified' monetary policy framework and a more liquid sovereign bond market; nation would 'benefit enormously' from the elimination of 'poorly targeted' subsidies
Draghi says sovereign debt risk weights are a question for Basel Committee
Mario Draghi says it is up to the Basel Committee to assign different risk weights on sovereign debt ‘at the proper time’ and seeks to appease politicians' concerns over SME credit
BoE paper proposes new sovereign debt instruments
Economists from the UK and Canadian central banks says that sovereign cocos and GDP-linked bonds could help reduce the likelihood of liquidity and solvency crises
Central Bank of UAE set to bolster ‘under-developed' local bond market
UAE has looked to economies with strong trade balances as role-models to help develop a domestic bond market; may issue government debt in the coming years
Central Bank of Ireland diverges from Basel III on AFS bonds
Irish bank capital numbers would filter out unrealised gains and losses on government bonds
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
Croatia under threat from falling growth and rising debt
Public debt is capped at 60% but is now approaching that limit; there are further signs of weakness in the Croatian and European real economies
German banks move to lower-risk sovereign bonds
Deutsche Bundesbank discussion paper investigates banks exposures to sovereign debt and finds they are increasingly investing in bonds from larger countries with lower inflation
Sovereign default spreads drove European bank risk exposures during crisis
Systemic risk of European banks reached its height in late 2011 at around €500 billion, based on a measure introduced in a recent Fed working paper
Robert Pringle’s Viewpoint: Managing without safe assets – tricky but not impossible
Unless sovereigns provide a credible backstop to the banking system the private sector will have to do the best it can, writes Robert Pringle
Opinion: The ECB should not hold back from eurozone bond purchases
There is no danger in the ECB buying large amounts of eurozone government bonds to bolster market confidence – so long as the right conditions are met – says Natixis chief economist Patrick Artus
Financial fragmentation persistent in face of loose monetary policy stance
ECB article provides evidence of heterogeneous interest rate pass-through in the four largest eurozone economies, based on new models
Laffer curve changes shape when government debt varies
The Laffer curve changes depending whether transfers or government debt are varied to balance the government budget constraint, Banque de France paper shows; curve looks like horizontal 'S' when debt varies