Looking Beyond the Euro Area Sovereign Debt Crisis

Three years into the euro area sovereign debt crisis, investors continue to shun periphery government bonds, European banks are under severe funding pressures in both the dollar and euro private term markets, and the euro area is facing an anemic growth outlook. On the face of it, the scenario portends gloom. But upon closer examination of the inner workings of the European Union (EU) governance system, the ongoing adjustment in the banking sector, and the rewiring of the landscape of euro sovereign debt markets, the future scenario looks more balanced, particularly following the conclusion of the protracted negotiations on Greek bond exchanges under an EU-backed voluntary private sector involvement (PSI) scheme. As euro area leaders formulate significant structural reforms to deal with the continent's longstanding fiscal and governance shortcomings, this note argues that striking a balance between market disciplines and centralized rule-making is the best way forward.

Bibliographic Details

Main Author:	Dailami, Mansoor
Language:	English
Published:	World Bank, Washington, DC 2012-03
Subjects:	ADVANCED COUNTRIES, ADVANCED ECONOMIES, ASSET CLASS, ASSET LIQUIDATION, ASSET PORTFOLIOS, ASSET QUALITY, ASSETS, BAILOUT, BALANCE SHEET, BALANCE SHEETS, BANK ACTIVITY, BANK CREDIT, BANK EXPOSURES, BANK FAILURE, BANK HOLDING, BANK HOLDING COMPANY, BANK OF GREECE, BANK POLICY, BANK RECAPITALIZATION, BANK REGULATION, BANK RISK, BANKING AUTHORITY, BANKING INDUSTRY, BANKING INSTITUTIONS, BANKING SECTOR, BANKING SYSTEM, BANKING SYSTEM ASSETS, BASIS POINTS, BOND, BOND ISSUANCE, BOND ISSUES, BOND MARKETS, BOND SPREADS, BOND YIELD, BOND YIELDS, BONDHOLDERS, CAPITAL MARKET, CDS, CENTRAL BANK, CENTRAL BANKS, CENTRAL GOVERNMENTS, COLLATERAL, COLLECTIVE ACTION, COLLECTIVE ACTION CLAUSES, COMMON MARKET, CORPORATE BOND, CORPORATE BONDS, CREDIBILITY, CREDIT DEFAULT, CREDIT DEFAULT SWAP, CREDIT QUALITY, CREDIT RATING, CREDIT RATINGS, CREDIT RISK, CREDITOR, CURRENCY, CURRENT ACCOUNT, CURRENT ACCOUNT DEFICIT, CURRENT ACCOUNT DEFICITS, DEBT ACCUMULATION, DEBT CRISES, DEBT CRISIS, DEBT HOLDINGS, DEBT INSTRUMENTS, DEBT MATURITIES, DEBT OBLIGATIONS, DEBT RATINGS, DEBT RESTRUCTURING, DEBT SUSTAINABILITY, DEBT-SERVICING COSTS, DERIVATIVES, DEVELOPING COUNTRIES, EMERGING ECONOMIES, EMERGING MARKETS, EMERGING-MARKET, EQUITY FLOWS, EUROPEAN CENTRAL BANK, EXCESSIVE DEBT, EXCESSIVE DEBT ACCUMULATION, EXCHANGE MARKET, EXCHANGE RATE, EXCHANGE RATE REGIMES, EXPORTERS, EXPOSURES, EXTERNAL FINANCING, FINANCIAL AFFAIRS, FINANCIAL CRISIS, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL SECTOR, FISCAL CAPACITY, FISCAL DISCIPLINE, FLOATING EXCHANGE RATE, FOREIGN CAPITAL, FOREIGN DEBT, FOREIGN EXCHANGE, FOREIGN EXCHANGE MARKETS, FOREIGN MARKETS, FREE ASSET, GLOBAL CAPITAL, GLOBAL CAPITAL MARKETS, GLOBAL INVESTOR, GLOBAL INVESTORS, GOOD GOVERNANCE, GOVERNANCE SYSTEM, GOVERNMENT BONDS, GOVERNMENT DEBT, GOVERNMENT DEFICITS, GOVERNMENT SECURITIES, GROSS DOMESTIC PRODUCT, HARMONIZATION, HOLDING, HOLDINGS, HOME COUNTRY, INCOME, INDIVIDUAL BANKS, INSOLVENT, INSURANCE, INTERBANK MARKETS, INTEREST PAYMENTS, INTEREST RATE, INTEREST RATES, INTERNATIONAL SETTLEMENTS, INVESTMENT FLOWS, INVESTOR BASE, INVESTOR UNCERTAINTY, LIQUIDATION, LIQUIDITY, LONG-TERM DEBT, MACROECONOMIC CONDITIONS, MACROECONOMIC POLICY, MACROECONOMIC RISKS, MANDATES, MARKET CONDITIONS, MARKET DISCIPLINE, MARKET ECONOMIES, MARKET FAILURE, MARKET PARTICIPANTS, MARKET PRACTICE, MARKET SIZE, MARKET VOLATILITY, MATURITY, MATURITY SPECTRUM, MONETARY FUND, MONETARY POLICY, MONEY MARKET, MORAL HAZARD, NATIONAL BANK, NATIONAL DEBT, NEGOTIATIONS, NET EQUITY, OUTSTANDING GOVERNMENT DEBT, PENSION, POLITICAL ECONOMY, POLITICAL RISK, PORTFOLIO, POTENTIAL DEBT, PRESENT VALUE, PRINCIPAL REPAYMENTS, PRIVATE CAPITAL, PRIVATE CREDITORS, PRIVATE MARKETS, PRIVATE SECTOR CREDITORS, PUBLIC DEBT, PUBLIC DEBT MARKET, PUBLIC DEBT MARKETS, PUBLIC FINANCES, PUBLIC POLICY, RECAPITALIZATION, REDEMPTION, REPAYMENT, REPAYMENT CRISIS, RESERVE, RESERVE CURRENCY, RESERVE HOLDINGS, RESOLUTION MECHANISM, RESTRUCTURING PLAN, RETURNS, RISK AVERSION, RISK EXPOSURE, RISK MANAGEMENT, RISK PROFILES, SHORT-TERM DEBT, SOVEREIGN BOND, SOVEREIGN BONDS, SOVEREIGN BORROWERS, SOVEREIGN DEBT, SOVEREIGN DEBT CRISES, SOVEREIGN DEBT CRISIS, SOVEREIGN DEBT MARKET, SOVEREIGN DEBT MARKETS, SOVEREIGN DEBT RESTRUCTURING, SOVEREIGN RATINGS, SOVEREIGN RISK, SOVEREIGN SECURITIES, SOVEREIGN YIELD, SYSTEMIC RISK, TERM DEPOSITS, TIER 1 CAPITAL, TRADING, TRANSPARENCY, TREASURIES, TREATY, TURNOVER, TYPES OF DEBT, WHOLESALE FUNDING, WORKOUTS, WORLD DEVELOPMENT INDICATORS, YIELD CURVE, YIELD SPREAD, YIELD SPREADS,
Online Access:	http://documents.worldbank.org/curated/en/2012/03/15908672/looking-beyond-euro-area-sovereign-debt-crisis https://hdl.handle.net/10986/10050
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