Sovereign debt crises and financial bailouts: the anatomy and components of an everlasting relationship (I)

Ojo, Marianne (2012): Sovereign debt crises and financial bailouts: the anatomy and components of an everlasting relationship (I).

Abstract

This paper highlights why financial bailouts are an inevitable and necessary element in global efforts aimed at ensuring that financial stability is sustained. How could such bailouts be conducted in such a way that moral hazard does not become a too frequent, ever recurring issue? Systemic risks constitute a crucial reason for the need to avoid global instability.

Adequately and promptly responding to “too big to fail” institutions and nations also constitutes a crucial component of the need to avoid and contain the spread of systemic risks.

• Item Type: MPRA Paper
• Language: English
• Keywords: systemic risks; financial regulation; sovereign debts; bailouts; moral hazard; supervision; monetary; fiscal policies; IMF; monetary unions; regional unions; ECB
• Subjects: K - Law and Economics > K2 - Regulation and Business Law; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook; D - Microeconomics > D0 - General > D00 - General; G - Financial Economics > G0 - General > G01 - Financial Crises

References

Ojo M, “Bailouts and Longer Term Refinancing Operations: When Temporary Cures Generate Longer Term Economic” RePeC and SSRN papers <http://mpra.ub.uni-muenchen.de/38483/ and http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2041654 >

Spence M, “Why Do Economies Stop Growing?” Thursday 24 May 2012 <www.businessdayonline.com>

Wilson J, “Official at ECB Hints at Fresh Bond Move” 2012 <www.businessdayonline.com>