Chasing unicorns: The European single safe asset project

2018 ◽  
Vol 22 (2) ◽  
pp. 139-164 ◽  
Author(s):  
Daniela Gabor ◽  
Jakob Vestergaard
Keyword(s):  
Global Financial Crisis ◽  
Shadow Banking ◽  
Bond Markets ◽  
Government Bonds ◽  
Market Participants ◽  
Sovereign Bond ◽  
The Past ◽  
Capital Markets Union ◽  
Government Bond Markets ◽  
The Global Financial Crisis

For the past 20 years, Economic and Monetary Union (EMU) institutions have sought to engineer a single safe asset that would provide a credible store of value for capital market participants. Before 2008, the European Central Bank used shadow banking to create a single safe asset that we term shadow money, and in doing so also erased borders between Euro area government bond markets. Lacking appropriate ECB support, shadow euros could not withstand the pressures of the global financial crisis and brought down several periphery euro government bonds with them. Two new plans, the Capital Markets Union and the Sovereign Bond-Backed Securities, again turn to shadow banking, this time by using securitization to generate an entirely private safe asset or a public–private safe asset. Such plans cannot solve the enduring predicament of EMU’s bond markets architecture: that Member States have competed for investors (liquidity) since the introduction of the euro, betraying a deep hostility towards collective political solutions to the single safe asset problem. Technocratic-led, market-based initiatives need to persuade EMU states that there is little threat to their ability to issue debt in liquid markets. Without ECB interventions, market-based engineering of single safe assets runs the danger of repeatedly destabilizing national bond markets.

Can fiscal sovereignty be reconciled with fiscal discipline?

2012 ◽  
Vol 62 (2) ◽  
pp. 141-160 ◽  
Author(s):  
George Kopits
Keyword(s):  
Risk Premium ◽  
Global Financial Crisis ◽  
Market Access ◽  
Bond Markets ◽  
The European Union ◽  
Sovereign Risk ◽  
Fiscal Discipline ◽  
The Past ◽  
The Global Financial Crisis ◽  
The International Monetary Fund

Over the past two decades, international bond markets have become the chief disciplinarian of fiscal policy, displacing the International Monetary Fund and the European Union in this role. This trend culminated in the wake of the global financial crisis, as countries that had indulged in moral hazard and fiscal profligacy during the Great Moderation were vulnerable to a sharp rise in sovereign risk premium and in some cases to loss of market access. The article compares the response of new governments in Hungary and United Kingdom to restore policy credibility. A major lesson is that governments that adopt a rules-based fiscal framework, including fiscal watchdogs and transparency norms, are far more successful in anchoring fiscal expectations and in achieving fiscal sovereignty than those that do not.

scholarly journals EUROPEAN FINANCIAL MARKET INTEGRATION: A CLOSER LOOK AT GOVERNMENT BONDS IN EUROZONE COUNTRIES

2020 ◽  
Vol 3 (1) ◽  
pp. 78-86
Author(s):  
Paulo Alexandre ◽  
Rui Dias ◽  
Paula Heliodoro
Keyword(s):  
Financial Crisis ◽  
Market Integration ◽  
Global Financial Crisis ◽  
Bond Yields ◽  
Government Bonds ◽  
Sovereign Bond ◽  
Sovereign Bonds ◽  
Debt Markets ◽  
Debt Market ◽  
The Global Financial Crisis

This research aims to test the interdependencies between the Eurozone, US and Japanese debt markets, through the yields of 10-year sovereign bonds. The sample covers the period from 2002:01 to 2019:07. The analysis aims to provide answers to two questions: Has the global financial crisis accentuated the interdependencies in the Eurozone debt markets? If yes, how did it influence the movements in sovereign bond yields? The results suggest that the global financial crisis did not accentuate the levels of interdependence between the main Euro zone debt markets. In addition, the results suggest the existence of high movements in periods of crisis and not crisis. We also found that yields on PIIGS sovereign bonds decreased their interdependencies with their peers in the years 2002 to 2019, with the exception of the Greek debt market.

On the formation of a New Paradigm of fiscal Policy

2013 ◽  
pp. 152-158 ◽  
Author(s):  
V. Senchagov
Keyword(s):  
Public Finance ◽  
Fiscal Policy ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Domestic Demand ◽  
Real Economy ◽  
New Paradigm ◽  
Monetary Aggregate ◽  
The Past ◽  
The Global Financial Crisis

Due to Russia’s exit from the global financial crisis, the fiscal policy of withdrawing windfall spending has exhausted its potential. It is important to refocus public finance to the real economy and the expansion of domestic demand. For this goal there is sufficient, but not realized financial potential. The increase in fiscal spending in these areas is unlikely to lead to higher inflation, given its actual trend in the past decade relative to M2 monetary aggregate, but will directly affect the investment component of many underdeveloped sectors, as well as the volume of domestic production and consumer demand.

The Pandemic Exposes an Ailing US Governance Model

2020 ◽  
Vol 119 (820) ◽  
pp. 310-316
Author(s):  
Alasdair Roberts
Keyword(s):  
Financial Crisis ◽  
Developing World ◽  
Global Financial Crisis ◽  
Political Polarization ◽  
Washington Consensus ◽  
The Past ◽  
Governance Model ◽  
Governance Challenges ◽  
The Global Financial Crisis ◽  
Current Governance

Since the 1990s and Bill Clinton’s embrace of key parts of Ronald Reagan’s legacy, mainstream US governance has been guided by a bipartisan consensus around a formula of shrinking the federal government’s responsibilities and deregulating the economy. Hailed as the ultimate solution to the age-old problem of governing well, the formula was exported to the developing world as the Washington Consensus. Yet growing political polarization weakened the consensus, and in a series of three major crises over the past two decades—9/11, the global financial crisis, and the COVID-19 pandemic—US policymakers opted for pragmatism rather than adherence to the old formula, which appears increasingly inadequate to cope with current governance challenges.

A Global Perspective on Securitized Debt

2018 ◽  
Author(s):  
Steven L Schwarcz
Keyword(s):  
United States ◽  
Financial Crisis ◽  
Capital Market ◽  
Global Financial Crisis ◽  
The United States ◽  
Global Perspective ◽  
Capital Markets Union ◽  
The Global Financial Crisis ◽  
Asset Backed Securities ◽  
The Eu

Securitisation represents a significant worldwide source of capital market financing. European investors commonly invest in asset-backed securities issued in U.S. securitisation transactions, and vice versa One of the key goals of the European Commission's proposed Capital Markets Union (CMU) is to further facilitate securitisation as a source of capital market financing as a viable alternative to bank-based finance for companies operating in the EU. To that end, this chapter explains securitisation and attempts to put its rise, its decline after the global financial crisis, and its recent CMU-inspired revival into a global perspective. It examines not only securitisation's relationship to the financial crisis but also post-crisis comparative regulatory approaches in the EU and the United States.

Financialization

2018 ◽  
pp. 276-290
Author(s):  
Ravi Roy ◽  
Thomas D. Willett
Keyword(s):  
Financial Markets ◽  
Financial Services ◽  
Capital Mobility ◽  
Global Financial Crisis ◽  
Economic Globalization ◽  
The Past ◽  
The World ◽  
The Global Financial Crisis ◽  
National Economies ◽  
Global Financial System

The size and scope of financial sectors throughout the world have grown exponentially in tandem with the rise of globalization and increased capital mobility. The terms “economic globalization” and “financialization” are often discussed as inextricably related phenomena. Although the rapid increase in the number and variety of financial services and products during the past four decades has helped spur economic growth and create wealth on an unprecedented scale, the devastating fallout from the global financial crisis of 2008–2009, and the economic turbulence that followed, demonstrates how poorly managed financial sectors can simultaneously cause enormous pain. This chapter argues that if the opportunities created by economic globalization and financialization are to be maximized, while at the same tempering volatile financial markets, then the global financial system (and the national economies connected with it) must be fundamentally restructured. A number of ways that should be taken under consideration are discussed.

How firms borrow in international bond markets

2018 ◽  
Vol 26 (1) ◽  
pp. 135-169
Author(s):  
Alberto Fuertes ◽  
Jose María Serena
Keyword(s):  
Emerging Economies ◽  
Design Methodology ◽  
Choice Behavior ◽  
Global Financial Crisis ◽  
Securities And Exchange Commission ◽  
Bond Markets ◽  
Data Set ◽  
Content Type ◽  
Parametric Analyses ◽  
The Global Financial Crisis

Purpose This paper aims to investigate how firms from emerging economies choose among different international bond markets: global, US144A and Eurobond markets. The authors explore if the ranking in regulatory stringency –global bonds have the most stringent regulations and Eurobonds have the most lenient regulations – leads to a segmentation of borrowers. Design/methodology/approach The authors use a novel data set from emerging economy firms, treating them as consolidated entities. The authors also obtain descriptive evidence and perform univariate non-parametric analyses, conditional and multinomial logit analyses to study firms’ marginal debt choice decisions. Findings The authors show that firms with poorer credit quality, less ability to absorb flotation costs and more informational asymmetries issue debt in US144A and Eurobond markets. On the contrary, firms issuing global bonds – subject to full Securities and Exchange Commission requirements – are financially sounder and larger. This exercise also shows that following the global crisis, firms from emerging economies are more likely to tap less regulated debt markets. Originality/value This is, to the authors’ knowledge, the first study that examines if the ranking in stringency of regulation – global bonds have the most stringent regulations and Eurobonds have the most lenient regulations – is consistent with an ordinal choice by firms. The authors also explore if this ranking is monotonic in all determinants or there are firm-specific features which make firms unlikely to borrow in a given market. Finally, the authors analyze if there are any changes in the debt-choice behavior of firms after the global financial crisis.

scholarly journals Does the Forty Year’s Success Myth of the Korea Shipbuilding Industry Come to an End?

2017 ◽  
Vol 3 (2) ◽  
pp. 151
Author(s):  
Hong-Yul Jeong
Keyword(s):  
Financial Crisis ◽  
National Economy ◽  
Global Financial Crisis ◽  
Ripple Effect ◽  
Shipbuilding Industry ◽  
The Past ◽  
The Global Financial Crisis ◽  
Key Industries ◽  
Offshore Plants ◽  
Future Plans

<p><em>Shipbuilding industry, having a great ripple effect on national economy, has been fostered by some countries as the national key industries. Korea also has supported shipbuilding industry as one of the industries politically fostered by the state. Accordingly, the shipbuilding industry of Korea has started to developed since 1970’s, reaching the world’s top position in 2000</em><em>’</em><em>s with reference to all the relevant indices.</em></p><p><em>However, after the global financial crisis in 2008, the shipbuilding industries of Korea focused on offshore plants, resulting in huge deficit and being outranked by China.</em></p><p><em>In this article, the past growing procedure of Korea’s shipbuilding industry was briefly reviewed, and the future plans for regaining the past glories as the shipbuilding power were sought.</em><em></em></p>

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