The policy of Euro-area officialdom in the period 2010-2011 was to avoid, at all costs, a default and restructuring of the sovereign debt of a member of the monetary union. This policy was motivated principally, but not exclusively, by a fear that the international capital markets, if forcibly reminded of the precarious position of overindebted, growth-challenged members of a monetary union, might recoil generally from lending to European sovereigns. In short, they feared contagion.The only alternative to permitting a debt restructuring, of course, was an official sector bailout. The afflicted countries -- Greece (until 2012), Portugal, Ireland and Cyprus -- received loans from official sector sources sufficient to allow them to repay in full their maturing bond indebtedness. Whenever and wherever the crisis erupted, contagion was thus held in check by the blunt technique of smothering the outbreak -- in money.The proponents of this policy argued at the time, and argue now, that many European sovereigns in 2010 were far too fragile to endure a bout of market contagion. They argued that an acute crisis needed to be averted in order to buy time for the implementation of a gradual but more durable remedy. Had the intervening eight years been used to reduce the debt vulnerabilities of the peripheral (and even some core) states, this argument would now be powerful, indeed invincible.Unfortunately, the opposite happened. Average state indebtedness in Europe today is about one-third larger than it was in 2008. Both the member states and the market saw the reprieve as spreading a reliable official sector safety net under their exposure. So they kept on borrowing and lending. Only the zero interest rate policies of the world’s major central banks during this period have kept debt servicing costs at tolerable levels.
{"title":"Talking One's Way Out of a Debt Crisis","authors":"L. Buchheit, G. Gulati","doi":"10.2139/SSRN.2772658","DOIUrl":"https://doi.org/10.2139/SSRN.2772658","url":null,"abstract":"The policy of Euro-area officialdom in the period 2010-2011 was to avoid, at all costs, a default and restructuring of the sovereign debt of a member of the monetary union. This policy was motivated principally, but not exclusively, by a fear that the international capital markets, if forcibly reminded of the precarious position of overindebted, growth-challenged members of a monetary union, might recoil generally from lending to European sovereigns. In short, they feared contagion.The only alternative to permitting a debt restructuring, of course, was an official sector bailout. The afflicted countries -- Greece (until 2012), Portugal, Ireland and Cyprus -- received loans from official sector sources sufficient to allow them to repay in full their maturing bond indebtedness. Whenever and wherever the crisis erupted, contagion was thus held in check by the blunt technique of smothering the outbreak -- in money.The proponents of this policy argued at the time, and argue now, that many European sovereigns in 2010 were far too fragile to endure a bout of market contagion. They argued that an acute crisis needed to be averted in order to buy time for the implementation of a gradual but more durable remedy. Had the intervening eight years been used to reduce the debt vulnerabilities of the peripheral (and even some core) states, this argument would now be powerful, indeed invincible.Unfortunately, the opposite happened. Average state indebtedness in Europe today is about one-third larger than it was in 2008. Both the member states and the market saw the reprieve as spreading a reliable official sector safety net under their exposure. So they kept on borrowing and lending. Only the zero interest rate policies of the world’s major central banks during this period have kept debt servicing costs at tolerable levels.","PeriodicalId":286175,"journal":{"name":"PSN: Responses to Financial Crises (Development) (Topic)","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-04-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128447169","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Liquidity supply by a Lender of Last Resort (LOLR) can be pivotal for both the conduct of monetary policy and safeguard of financial stability. During the financial crisis, the importance of liquidity provision significantly increased at both the macro-level – through the European Central Bank – and also for individual credit institutions in the guise of Emergency Liquidity Assistance through the National Central Banks (NCBs). This article examines the legal framework in which the ECB and the NCBs carry out their respective roles as LOLR. The question of who holds competence for liquidity supply is discussed in light of the LOLR functions pertaining to financial stability and monetary policy, as are the availability of effective measures and the legal prerequisites and limitations, particularly with regard to the prohibition of monetary State financing, the imperative of price stability and State aid rules. In view of recent reforms of banking supervision in the eurozone, the question of centralizing Emergency Liquidity Assistance within the ECB also arises.
{"title":"The Lender of Last Resort in the Eurozone","authors":"Armin Steinbach","doi":"10.54648/cola2016034","DOIUrl":"https://doi.org/10.54648/cola2016034","url":null,"abstract":"Liquidity supply by a Lender of Last Resort (LOLR) can be pivotal for both the conduct of monetary policy and safeguard of financial stability. During the financial crisis, the importance of liquidity provision significantly increased at both the macro-level – through the European Central Bank – and also for individual credit institutions in the guise of Emergency Liquidity Assistance through the National Central Banks (NCBs). This article examines the legal framework in which the ECB and the NCBs carry out their respective roles as LOLR. The question of who holds competence for liquidity supply is discussed in light of the LOLR functions pertaining to financial stability and monetary policy, as are the availability of effective measures and the legal prerequisites and limitations, particularly with regard to the prohibition of monetary State financing, the imperative of price stability and State aid rules. In view of recent reforms of banking supervision in the eurozone, the question of centralizing Emergency Liquidity Assistance within the ECB also arises.","PeriodicalId":286175,"journal":{"name":"PSN: Responses to Financial Crises (Development) (Topic)","volume":"171 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114474573","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
As long as bubble size is relatively small, bubbles increase production level, but once the size becomes too large, then bubbles reduce it. Given this non-monotonic relationship, this paper investigates the relationship between bubbles and government bailouts. It shows that bailouts for bursting bubbles may positively influence ex ante production efficiency and relax the existence condition of stochastic bubbles. The level of bailouts has a non-monotonic relationship with production efficiency and a “partial bailout” policy achieves production efficiency. Moreover, it examines the welfare effects of bailout policies rigorously and shows that even non-risky bubbles may be undesirable for taxpayers.
{"title":"Asset Bubbles and Bailouts","authors":"T. Hirano, Masaru Inaba, Noriyuki Yanagawa","doi":"10.2139/ssrn.3167835","DOIUrl":"https://doi.org/10.2139/ssrn.3167835","url":null,"abstract":"As long as bubble size is relatively small, bubbles increase production level, but once the size becomes too large, then bubbles reduce it. Given this non-monotonic relationship, this paper investigates the relationship between bubbles and government bailouts. It shows that bailouts for bursting bubbles may positively influence ex ante production efficiency and relax the existence condition of stochastic bubbles. The level of bailouts has a non-monotonic relationship with production efficiency and a “partial bailout” policy achieves production efficiency. Moreover, it examines the welfare effects of bailout policies rigorously and shows that even non-risky bubbles may be undesirable for taxpayers.","PeriodicalId":286175,"journal":{"name":"PSN: Responses to Financial Crises (Development) (Topic)","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-09-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124493129","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Given no generally accepted framework for financial stability, policymakers in developing Asia need to manage, not avoid, financial deepening. This paper supports Asian policymakers' judgment through analysis of the recent events in the United States and Europe and of earlier crisis episodes, including Asia during the 1990s. There is no simple linear relationship between financial repression and stability—financial repression not only has costs but, so doing can itself undermine stability. Bank-centric financial systems are not inherently safer than systems that include meaningful roles for securities and capital markets. Domestic financial systems should be steadily diversified in terms of both number of domestic competitors and types of savings and lending instruments available (and thus probably types of institutions). Financial repression should be focused on regulating the activities of financial intermediaries, not on compressing interest rates for domestic savers. Cross-border lending should primarily involve creation of multinational banks' subsidiaries in the local economy—and local currency lending and bond issuance should be encouraged. Macroprudential tools can be useful, and, if anything, are more effective in less open or less financially deep economies than in more advanced financial centers.
{"title":"Enhancing Financial Stability in Developing Asia","authors":"A. Posen, Nicolas. Véron","doi":"10.2139/ssrn.2658755","DOIUrl":"https://doi.org/10.2139/ssrn.2658755","url":null,"abstract":"Given no generally accepted framework for financial stability, policymakers in developing Asia need to manage, not avoid, financial deepening. This paper supports Asian policymakers' judgment through analysis of the recent events in the United States and Europe and of earlier crisis episodes, including Asia during the 1990s. There is no simple linear relationship between financial repression and stability—financial repression not only has costs but, so doing can itself undermine stability. Bank-centric financial systems are not inherently safer than systems that include meaningful roles for securities and capital markets. Domestic financial systems should be steadily diversified in terms of both number of domestic competitors and types of savings and lending instruments available (and thus probably types of institutions). Financial repression should be focused on regulating the activities of financial intermediaries, not on compressing interest rates for domestic savers. Cross-border lending should primarily involve creation of multinational banks' subsidiaries in the local economy—and local currency lending and bond issuance should be encouraged. Macroprudential tools can be useful, and, if anything, are more effective in less open or less financially deep economies than in more advanced financial centers.","PeriodicalId":286175,"journal":{"name":"PSN: Responses to Financial Crises (Development) (Topic)","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129917860","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The paper supports the 2015 bailout for Greece in the amount of some 86 billion Euro but it also argues that all international lenders should take a haircut of some 33% to bring Greek debt to a more sustainable level and that the focus for the future should be more on rebuilding the Greek economy and less on austerity.
{"title":"The Real Reasons Why the Germans are Wrong About Greece","authors":"F. Emmert","doi":"10.2139/SSRN.2640466","DOIUrl":"https://doi.org/10.2139/SSRN.2640466","url":null,"abstract":"The paper supports the 2015 bailout for Greece in the amount of some 86 billion Euro but it also argues that all international lenders should take a haircut of some 33% to bring Greek debt to a more sustainable level and that the focus for the future should be more on rebuilding the Greek economy and less on austerity.","PeriodicalId":286175,"journal":{"name":"PSN: Responses to Financial Crises (Development) (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-08-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129563572","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the context of economic crisis, Europe has witnessed a spate of extraordinary political measures pressed by executive discretion. This article examines what emergency rule of this kind implies for the possibility of normal rule thereafter. Political decision-makers face the challenge of drawing a line under the crisis so that the unconventional measures used to handle it do not compromise the polity's norms in lasting fashion. Based on an analysis of the preconditions for plausibly making such an act of separation, I suggest the principal resources for doing so in the EU case are missing. Emergency rule will tend to blend in with normal rule, to the detriment of the political order's legitimate authority. A more dubiously grounded ‘descriptive’ authority may conversely be enhanced by emergency rule, as may compliance for instrumental motivations, producing a polity that is stable even if weakly legitimate.
{"title":"Authority after Emergency Rule","authors":"Jonathan White","doi":"10.1111/1468-2230.12130","DOIUrl":"https://doi.org/10.1111/1468-2230.12130","url":null,"abstract":"In the context of economic crisis, Europe has witnessed a spate of extraordinary political measures pressed by executive discretion. This article examines what emergency rule of this kind implies for the possibility of normal rule thereafter. Political decision-makers face the challenge of drawing a line under the crisis so that the unconventional measures used to handle it do not compromise the polity's norms in lasting fashion. Based on an analysis of the preconditions for plausibly making such an act of separation, I suggest the principal resources for doing so in the EU case are missing. Emergency rule will tend to blend in with normal rule, to the detriment of the political order's legitimate authority. A more dubiously grounded ‘descriptive’ authority may conversely be enhanced by emergency rule, as may compliance for instrumental motivations, producing a polity that is stable even if weakly legitimate.","PeriodicalId":286175,"journal":{"name":"PSN: Responses to Financial Crises (Development) (Topic)","volume":"172 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122884784","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2015-04-01DOI: 10.5709/CE.1897-9254.162
M. Škare, Romina Pržiklas Družeta
The role of fiscal austerity has been questioned for centuries, but a rapidly increasing deficit along with the financial crisis in 2007/2008 influenced a renewed debate on the economics of austerity. This paper analyzes the role of austerity versus the role of economic growth. It also attempts to highlight the role of the theoretical context of austerity policy and the economic history lesson learned during the transition from the Bretton Woods model to Washington’s consensus. Despite numerous studies and polarized debate, no consensus on the implementation of fiscal austerity has been achieved because this complex subject has not been the subject of a sufficient methodological exploration. Emphasis should be placed on defining the methodology of austerity and gathering statistical data to influence the implementation of social transfer policies. In addition, it is necessary not only to take a hybrid approach to fiscal and monetary policy but also to adopt economic laws and quantitative economic relationships. The benchmarking country used in this paper is Croatia. The outcome of this research can serve as the basis for future decision-making and research.
{"title":"Fiscal Austerity versus Growth in Croatia","authors":"M. Škare, Romina Pržiklas Družeta","doi":"10.5709/CE.1897-9254.162","DOIUrl":"https://doi.org/10.5709/CE.1897-9254.162","url":null,"abstract":"The role of fiscal austerity has been questioned for centuries, but a rapidly increasing deficit along with the financial crisis in 2007/2008 influenced a renewed debate on the economics of austerity. This paper analyzes the role of austerity versus the role of economic growth. It also attempts to highlight the role of the theoretical context of austerity policy and the economic history lesson learned during the transition from the Bretton Woods model to Washington’s consensus. Despite numerous studies and polarized debate, no consensus on the implementation of fiscal austerity has been achieved because this complex subject has not been the subject of a sufficient methodological exploration. Emphasis should be placed on defining the methodology of austerity and gathering statistical data to influence the implementation of social transfer policies. In addition, it is necessary not only to take a hybrid approach to fiscal and monetary policy but also to adopt economic laws and quantitative economic relationships. The benchmarking country used in this paper is Croatia. The outcome of this research can serve as the basis for future decision-making and research.","PeriodicalId":286175,"journal":{"name":"PSN: Responses to Financial Crises (Development) (Topic)","volume":"258 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133448996","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Financial crisis of 2007 greatly impacted the global banking system. In the main time the rise of Islamic banking system comes as a substitute to the conventional banking system at the global level. Basel III accord come in being in 2011 put forward many regularity and supervisory frame work to establish the viability and credibility of world banking systems. The Islamic banking system increasing its presence in at the global level with assets of US$1.7 Trillion with annual growth rate of 17.6% up till the end of 2013. Five Islamic banking institutions are working in Pakistan as torch bearer. These five are pure Islamic banking companies in Pakistan not any of them is a subsidiary of the convention banks working in Pakistan. Researcher will look into five years business of these Islamic banking companies that how they react to the Basel III regulatory requirement and the role of central bank in Pakistan i.e. State Bank of Pakistan (SBP) in implementation of regulatory and statutory framework of Islamic banking system in Pakistan.Results of this studies reviles that the IBIs working in Pakistan are in better position in implementation of Basel III requirement like quality of capital, leverage ratio and risk management issues. We can consider it as the requirement of IBIs to work in this way as required by the shariah not by the Basel III regulation. IBIs need some indigenous system of regulation that suits to its need. Basel III not a suitable regulatory framework for the IBIs as it was framed for the conventional banking institutions.
{"title":"Basel III: Comrade or Contender for Islamic Banking Intuitions - A Case of Pakistan","authors":"Naeem Hayat, Z. Ali","doi":"10.2139/ssrn.2486315","DOIUrl":"https://doi.org/10.2139/ssrn.2486315","url":null,"abstract":"Financial crisis of 2007 greatly impacted the global banking system. In the main time the rise of Islamic banking system comes as a substitute to the conventional banking system at the global level. Basel III accord come in being in 2011 put forward many regularity and supervisory frame work to establish the viability and credibility of world banking systems. The Islamic banking system increasing its presence in at the global level with assets of US$1.7 Trillion with annual growth rate of 17.6% up till the end of 2013. Five Islamic banking institutions are working in Pakistan as torch bearer. These five are pure Islamic banking companies in Pakistan not any of them is a subsidiary of the convention banks working in Pakistan. Researcher will look into five years business of these Islamic banking companies that how they react to the Basel III regulatory requirement and the role of central bank in Pakistan i.e. State Bank of Pakistan (SBP) in implementation of regulatory and statutory framework of Islamic banking system in Pakistan.Results of this studies reviles that the IBIs working in Pakistan are in better position in implementation of Basel III requirement like quality of capital, leverage ratio and risk management issues. We can consider it as the requirement of IBIs to work in this way as required by the shariah not by the Basel III regulation. IBIs need some indigenous system of regulation that suits to its need. Basel III not a suitable regulatory framework for the IBIs as it was framed for the conventional banking institutions.","PeriodicalId":286175,"journal":{"name":"PSN: Responses to Financial Crises (Development) (Topic)","volume":"65 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-08-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133484722","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Nigeria has long been trying to learn how best to manage boom-bust cycles in global commodity prices, adopting an oil-price benchmark for annual budgets while saving revenues above the benchmark in an excess crude account in the half decade before the 2008/2009 global crisis. The crisis and its aftermath now dictate that the country needs additional lessons on how best to manage surge-shortage cycles in global liquidity. Managing frequent external trade shocks is now only a part of the story, managing frequent external financial shocks, particularly with the intricate interactions between the two, is the other part.
{"title":"Nigeria Confronts Post-Crisis Global Economic Realities","authors":"Ayo Teriba","doi":"10.2139/SSRN.2443336","DOIUrl":"https://doi.org/10.2139/SSRN.2443336","url":null,"abstract":"Nigeria has long been trying to learn how best to manage boom-bust cycles in global commodity prices, adopting an oil-price benchmark for annual budgets while saving revenues above the benchmark in an excess crude account in the half decade before the 2008/2009 global crisis. The crisis and its aftermath now dictate that the country needs additional lessons on how best to manage surge-shortage cycles in global liquidity. Managing frequent external trade shocks is now only a part of the story, managing frequent external financial shocks, particularly with the intricate interactions between the two, is the other part.","PeriodicalId":286175,"journal":{"name":"PSN: Responses to Financial Crises (Development) (Topic)","volume":"118 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-05-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114544113","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
When the global financial crisis hit the shores of Europe, after crossing the Atlantic, the eurozone was considered a safe haven (Jones, 2009; Wyplosz, 2009). Although there were concerns about how the euro would face up to its first major crisis (Feldstein, 2008; Munchau, 2009), the European Union’s (EU’s) single currency was generally viewed as a protective force against the financial storm shaking the world. For instance, The Economist concluded that ‘the Euro has proved a haven in the economic crisis — so much so that no country seriously wants to leave it and plenty want to join’ (The Economist, 2009). Such a view was also shared by sovereign bond investors since, according to Attinasi et al. (2010a, p. 35), there was a ‘flight to safety’ towards the eurozone between September 2008 (when Lehman Brothers failed) and March 2009 (when financial markets began to stabilize). During that period, most eurozone countries saw their sovereign bond yields decline.
当全球金融危机越过大西洋袭击欧洲海岸时，欧元区被认为是一个安全的避风港(Jones, 2009;Wyplosz认为,2009)。尽管有人担心欧元将如何面对它的第一次重大危机(Feldstein, 2008;Munchau, 2009)，欧盟(EU)的单一货币通常被视为对抗震撼世界的金融风暴的保护力量。例如，《经济学人》得出的结论是，“欧元已被证明是经济危机中的避风港——以至于没有国家真的想离开它，而很多国家想加入”(《经济学人》，2009年)。根据Attinasi等人(2010a, p. 35)的说法，主权债券投资者也持有这种观点，因为在2008年9月(雷曼兄弟破产)至2009年3月(金融市场开始企稳)期间，出现了向欧元区“避险”的现象。在此期间，大多数欧元区国家的主权债券收益率都出现了下降。
{"title":"One for All and All for One: The Global Financial Crisis and the European Integration Project","authors":"Patrick. Leblond","doi":"10.2139/ssrn.1923830","DOIUrl":"https://doi.org/10.2139/ssrn.1923830","url":null,"abstract":"When the global financial crisis hit the shores of Europe, after crossing the Atlantic, the eurozone was considered a safe haven (Jones, 2009; Wyplosz, 2009). Although there were concerns about how the euro would face up to its first major crisis (Feldstein, 2008; Munchau, 2009), the European Union’s (EU’s) single currency was generally viewed as a protective force against the financial storm shaking the world. For instance, The Economist concluded that ‘the Euro has proved a haven in the economic crisis — so much so that no country seriously wants to leave it and plenty want to join’ (The Economist, 2009). Such a view was also shared by sovereign bond investors since, according to Attinasi et al. (2010a, p. 35), there was a ‘flight to safety’ towards the eurozone between September 2008 (when Lehman Brothers failed) and March 2009 (when financial markets began to stabilize). During that period, most eurozone countries saw their sovereign bond yields decline.","PeriodicalId":286175,"journal":{"name":"PSN: Responses to Financial Crises (Development) (Topic)","volume":"52 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-08-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126804488","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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