Markus K Brunnermeier, Sam Langfield, Marco Pagano, Ricardo Reis, Stijn Van Nieuwerburgh, Dimitri Vayanos, 20 September 2016

The Eurozone lacks a safe asset that is provided by the region as a whole. This column highlights why and how European Safe Bonds, a union-wide safe asset without joint liability, would resolve this problem, and outlines steps to put them into practice. For given sovereign default probabilities, these bonds would be as safe as German bunds and would approximately double the supply of euro safe assets. Moreover, owing to general equilibrium effects, they would weaken the diabolic loop between sovereign risk and bank risk.

David Miles, 03 May 2016

Capital requirements for banks are a key issue in the post-Crisis environment. In this video, David Miles discusses the importance of creating incentives for banks to start using equity rather than debt to finance themselves. The combination of asymmetric information and limited liability can give banks an incentive to take on more risk; capital requirements would force banks to take on less risk. This video was recorded in April 2016 at the First Annual Spring Symposium on Financial Economics organised by CEPR and the Brevan Howard Centre at Imperial College.

Chiara Angeloni, Guntram Wolff, 19 April 2012

Europe’s sovereign debt crisis has reignited the debate over the link between sovereign and banking risk. This column presents data from the July stress test and December Capital Exercise of European Banking Authority. It finds that holdings of sovereign debt is not the main driver of bank stock market performance but that investors do take into account the riskiness of sovereign debt in the bank’s host country.

Events

  • 17 - 18 August 2019 / Peking University, Beijing / Chinese University of Hong Kong – Tsinghua University Joint Research Center for Chinese Economy, the Institute for Emerging Market Studies at Hong Kong University of Science and Technology, the Guanghua School of Management at Peking University, the Stanford Center on Global Poverty and Development at Stanford University, the School of Economics and Management at Tsinghua University, BREAD, NBER and CEPR
  • 19 - 20 August 2019 / Vienna, Palais Coburg / WU Research Institute for Capital Markets (ISK)
  • 29 - 30 August 2019 / Galatina, Italy /
  • 4 - 5 September 2019 / Roma Eventi, Congress Center, Pontificia Università Gregoriana Piazza della Pilotta, 4, Rome, Italy / European Center of Sustainable Development , CIT University
  • 9 - 14 September 2019 / Guildford, Surrey, UK / The University of Surrey

CEPR Policy Research