| Issue Date | View | Title | Author(s) | Type of Publication | Series/Report no. | Abstract |
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2011
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Book
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View Abstract
Understanding the role of banks in cross-border finance has become an urgent priority. Cross-border banks have played a central role in the dynamics of the global crisis of 2007-2009. First, European banks had a surprisingly large exposure to the US securitised asset markets, which arose to a significant extent through global banks acting either on the buying or selling side in these markets. Second, the breakdown in credit and asset markets was an international phenomenon, with cross-border linkages suffering disproportionately due to greater information problems vis-à-vis cross-border counterparties and the differences in regulatory regimes. Third, currency mismatches in funding became evident, with European banks suffering a dollar shortage that ultimately required resolution through a major currency swap initiative among the main central banks. Fourth, the provision of fiscal support for distressed banks was especially problematic in relation to cross-border activities. The rescue of multi-country banks, such as Dexia and Fortis, required the governments involved to devise ad hoc, ex-post burden-sharing agreements. In relation to emerging Europe, there were also fears that the policies of home-country governments might encourage parent banks to fail to support the operations of affiliates. This report analyses key aspects of cross-border banking, takes a European focus and derives policy recommendations based on them. Chapter 1 of the report first documents the evolution of cross-border banking in Europe in the two decades prior to the crisis. We then turn to the role cross-border banking played during the crisis of 2007-2009, with a key focus on whether crossborder activities have exacerbated the crisis or helped to mitigate it. We also analyse the regulatory response to cross-border problems in the crisis.
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2012
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Book
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View Abstract
Tres años después de la quiebra de Lehman Brothers el panorama económico internacional parece desolador. Las primas de riesgo de España e Italia han llegado a superar los 400 puntos básicos, las perspectivas de crecimiento de los países de la OCDE se debilitan y todas las bolsas del planeta sufren continuos sobresaltos. La cohesión política y económica de la Unión Europea se debilita ,la crisis de la deuda amenaza a Italia y Grecia en el centro de la nueva encrucijada europea. “Lo peor es ya perfectamente posible”, afirman Josep Borrell y Andreu Missé tras analizar como la crisis fiscal griega se ha convertido en la crisis del euro. Nadie sabe a ciencia cierta con qué nos vamos a encontrar a la vuelta de la esquina, pero en esta obra sus autores nos desvelan las claves para comprender como hemos llegado hasta aquí y cuales pueden ser las vías de salida. Con un lenguaje preciso, coloquial y ciertamente sorprendente el lector de esta obra no tendrá un momento de respiro. Como dicen Borrell y Missé ,“no se trata de una nueva crisis, sino la misma de hace cuatro años que se propaga de forma cada vez más sistémica. El círculo vicioso financiero se ha trasladado a la economía real”…”pero antes de rendirse ,los europeos deberían imaginar como seria el mundo sin una Europa unida”
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2011
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Book
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View Abstract
The European University Institute and the Wharton Financial Institutions Center held a conference in Florence, Italy in April 2011 that brought together leading economists, lawyers, historians and policy makers to discuss the current economic situation in the Eurozone with particular emphasis on the issue of sovereign default. This book summarizes the views presented there. The first part considers the current situation including the situations in Greece, Ireland, Portugal, Spain, the German constitution, EU law, the constraints on the ECB to buy up Eurozone government debt, and the European Financial Stability Fund. The second part covers how Eurozone sovereign bankruptcy might work, including collective action clauses, banking regulation given risky sovereign debt, the prevention of banking crises, and the sovereign equivalent of debtor-in-possession financing. The final part considers alternatives to sovereign bankruptcy including the possibility of leaving the Eurozone temporarily, an historical comparison of suspension of the Gold Standard, Argentina and other recent defaults, and the long run solution of Eurozone wide bonds and fiscal authority.
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2011
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Book
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View Abstract
Financial crises have been pervasive for many years. Their frequency in recent decades has been double that of the Bretton Woods Period (1945-1971) and the Gold Standard Era (1880-1993), comparable only to the period during the Great Depression. Nevertheless, the financial crisis that started in the summer of 2007 came as a great surprise to most people. What initially was seen as difficulties in the U.S. subprime mortgage market, rapidly escalated and spilled over first to financial markets and then to the real economy. The crisis changed the financial landscape worldwide and its full costs are yet to be evaluated. One important reason for the global impact of the 2007-2009 financial crisis was massive illiquidity in combination with an extreme exposure of many financial institutions to liquidity needs and market conditions. As a consequence, many financial instruments could not be traded anymore, investors ran on a variety of financial institutions particularly in wholesale markets, financial institutions and industrial firms started to sell assets at fire sale prices to raise cash, and central banks all over the world injected huge amounts of liquidity into financial systems. But what is liquidity and why is it so important for firms and financial institutions to command enough liquidity? This book brings together classic articles and recent contributions to this important field of research. It is divided into five parts. These are (i) liquidity and interbank markets; (ii) the public provision of liquidity and regulation; (iii) money, liquidity and asset prices; (iv) contagion effects; (v) financial crises and currency crises. The aim is to provide a comprehensive coverage of role of liquidity in financial crises.
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2010
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Book
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View Abstract
Explains how and why financial innovation drives economic growth and presents specific solutions to our most pressing economic challenges.--Shows how modern financial instruments and capital structures can be used to expand prosperity and unleash valuable new ideas.-Explains how financial innovation can go wrong, and how to keep that from happening.-Helps entrepreneurs, development specialists, and policymakers develop realistic financial strategies for raising more capital at better terms with lower cost. Financial innovation has become crucial to driving global economic growth and improving society, but, as the past few years have demonstrated, when financial innovation is misunderstood or mismanaged, it can have disastrous consequences. in this practical, accessible book, two renowned experts explain how sophisticated capital structures can enable companies and individuals to raise capital in larger amounts for longer terms and at lower cost, bridging capital gaps and accomplishing tasks that would otherwise be impossible. They outline the background and history of financial innovation, showing how new instruments have evolved, and how they have been used and misused. They thoroughly demystify complex capital structures, presenting a practical toolbox for anyone who needs to raise capital for either private or public purposes. Readers will learn why capital structure matters; how to analyze capital structures; and how to avoid the potentially catastrophic pitfalls of financial innovation. The authors present clear, thorough discussions of the current role of financial innovation in capitalizing business, housing, cities, regions, nations, and new ideas. They conclude with a full chapter of crucial 'lessons learned' in financing the future. This is the first book in a new series on financial innovation that is a collaboration between Wharton School Publishing and Milken Institute. Future titles will focus on specific policy areas such as health care and energy.
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