Sovereign debt
European Court of Justice hears case against OMTs
European Central Bank’s programme for buying sovereign debt to be considered by Europe's top court; ruling could have implications for monetary policy
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 calls for ‘modified pari passu clauses’ in new international sovereign bonds
Executive board supports contractual reforms making process of sovereign debt restructuring ‘more orderly’; Staff paper outlines stronger collective action clauses
Polish paper explores market perception of sovereign credit risk
Working paper finds macroeconomic and institutional developments were 'weakly correlated’ with market perception of sovereign credit risk in eurozone during crisis
Summers calls on Fed and US Treasury to 'fully' coordinate debt management
Paper published today finds Treasury purchases of long-term bonds offset ‘about a third’ of QE benefits to US economy post-crisis; Fed governor dismisses controversial proposal
Supreme Court clears Central Bank of Sri Lanka over Greek investment
Sri Lankan governor and monetary board members cleared over investment in Greek government bonds; Supreme Court says investment decisions ‘best left to central bank’
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
Debt accumulation in advanced countries historically absorbed by increases in short-term foreign debt
IMF paper examines how composition of public debt answered to consolidation periods between 1900-2011; common pattern was broken during 1980s and 1990s
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