Barry Eichengreen, Emilios Avgouleas, Miguel Poiares Maduro, Ugo Panizza, Richard Portes, Beatrice Weder di Mauro, Charles Wyplosz, Jeromin Zettelmeyer, 20 March 2018

Greece’s third economic programme has been relatively successful, but before it can return to private market financing, the country will require more official debt relief. This column introduces a new CEPR Policy Insight which asks how much debt relief is required and how it should be delivered. Any debt relief package for Greece that wishes to avoid shifting the burden of repayment several generations into the future will need to include some degree of face-value debt relief.

Stefan Avdjiev, Leonardo Gambacorta, Linda Goldberg, Stefano Schiaffi, 20 March 2018

The post-crisis period has seen a considerable shift in drivers of international bank lending and international bond issuance, the two main components of global liquidity. This column describes how the sensitivity of cross-border lending to global risk conditions declined substantially post-crisis, becoming similar to that of international bond issuance. This fall largely reflects a change in the composition of international lenders.

Nathan Converse, Eduardo Levy Yeyati, Tomás Williams, 20 March 2018

The share of fund assets held in exchange-traded funds has risen from 3.5% in 2005 to 14% in 2017, and to 20% for funds in emerging market assets. This column uses reported investor flows to argue that this is related to increased exposure of aggregate portfolio equity capital inflows to global risk. On this evidence, exchange-traded fund flows amplify the global financial cycle.

Paul De Grauwe, Yuemei Ji, 19 March 2018

A number of economists and officials have recently proposed different schemes aimed at using financial markets to impose the right amount of discipline in the euro area. This column argues that this would not eliminate the inherent instability of the sovereign bond markets in a monetary union. During crises this instability becomes systemic, and no amount of financial engineering can stabilise an otherwise unstable system.

Luca Dedola, Luc Laeven, Silvia Margiocco, 19 March 2018

In September 2017, the ECB held its second Annual Research Conference. This column surveys the contributions to the conference, which brought together academics and central bankers working at the cutting edge of economics, covering a wide range of research relevant for the ECB. ECB Vice-President Vítor Constâncio highlighted the value that the ECB attaches to research, which “contributes to shaping the intellectual framework that we use to understand economic developments and to take policy decisions”. Other speakers included Olivier Blanchard, Peter Diamond, Hyun Song Shin, and Jeremy Stein.

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