Sovereign debt
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
Richmond Fed paper examines sovereign debt duration
Working paper models trade-off between issuing shorter or longer-term debt; governments could be choosing the wrong durations by missing the ‘debt dilution’ problem
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
Euro area bank lending restricted by sovereign debt exposure, say DNB researchers
There is a direct link between deteriorating creditworthiness of foreign sovereign debt and lending by banks holding such debt, according to a working paper from the Dutch central bank
Asian central bank FX reserves not properly recognised by rating agencies, says Sheng
CBRC adviser and former Hong Kong SFC chief Andrew Sheng points to inconsistent approach in sovereign debt ratings; doubts international crisis co-ordination is possible
Bank of Italy research finds evidence of investors ‘waking up’ to sovereign risk
Working paper suggests widening eurozone sovereign spreads caused by ‘complacent’ investors suddenly paying closer attention to risks
Bundesbank research says sovereign default can be the best option
Discussion paper finds it may be optimal to choose a costly default over legal repayment, but only when a country is facing disaster
IMF strikes €1 billion funding deal with Cyprus
Staff team agrees Fund’s contribution to overall bail-out package; Christine Lagarde praises Cyprus’s ‘ambitious’ programme of reforms
IMF urges ‘more forceful action’ to end Europe’s woes
Report on European financial stability says situation remains ‘tenuous’ in eurozone; calls on authorities to act fast to repair balance sheets and set up banking union
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