How can the euro area’s return to fiscal sustainability be organised in view of soaring debt levels and the sovereign debt crisis? How can debts be financed efficiently, not least to prevent debt crises in weaker countries where high debt levels compounded by a hike in risk premiums on government bonds can create a debt […]
Rising interest rates expose the interaction between hidden losses on long-duration assets and flighty uninsured deposits. This column uses confidential data for 139 euro area banks to analyse this mechanism. It estimates that unrealised losses on loans and bonds held at amortised cost averaged about 30% by September 2023, and were largest for smaller retail […]
It also sees the European Central Bank as having concluded its easing cycle. The dollar edged up against the euro and the yen, but remained within striking distance of Friday’s lows, after weak U.S. jobs data boosted bets on Federal Reserve rate cuts and triggered a sharp selloff in the greenback. Investors are awaiting services […]
Safe assets are the building blocks of modern financial markets. This column examines the sectoral dynamics of safe assets across advanced economies since the 1980s. It shows that foreign demand for these assets has steadily increased, with the financial sector playing a key role in meeting it. However, because financial institutions often back the safe […]
