Sovereign debt
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
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
ECB paper seeks to balance the arguments of eurosceptics
Researcher says sovereign debt crisis should be seen as a mix of many harmful factors rather than one single problem; offers optimistic view on the prospects for recovery
BIS paper urges policy-makers to consider co-ordinated bond strategy
Research finds effective response to a bond market crisis has become more difficult due to heavily laden central bank balance sheets, raising the need to better co-ordinate a crisis framework
IMF staff present mixed economic outlook following G-20 meeting
Report sounds note of cautious optimism as financial markets recover, but downside risks remain around the implementation of important policies in the US, Japan and Europe
ECB paper scrutinises fiscal multipliers in high-debt countries
Researchers assess impact of fiscal stimuli at different debt levels in Europe; caution that high debt levels may impair government’s ability to stimulate the economy
UK’s Adair Turner advocates stimulus by ‘helicopter money’
Chairman of the UK’s Financial Services Authority says there are circumstances where monetary financing of government deficits is justified, calling for more serious discussion of the topic
Hungary defies IMF to cut rates again
Central bank cuts rates in six consecutive meetings, despite IMF warning that inflation is not well contained and looser policy will do little to boost the economy