Munich Personal RePEc Archive

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).

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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.

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