EU policies

Harald Benink, Harry Huizinga, 16 May 2015

QE in the Eurozone is unusual in that the risks of sovereign debt defaults are shared between the ECB and the national central banks. This column argues that if such risk sharing were applied to the Outright Monetary Transactions programme, it could potentially create insolvency problems for countries with large public debts, especially in a low-growth scenario.

Bruno Maçães, 08 May 2015

Europe’s institutional architecture is evolving in response to the EZ Crisis and years of economic malaise. This column, by Portugal’s Secretary of State for Europe, argues a flexible institutional framework that allows for stronger economic policy coordination, convergence and solidarity.

Charles Wyplosz, 27 April 2015

It seems that there will be no agreement between Greece and its Eurozone partners. Short of cash, the Greek government will have no choice but to suspend payment of its maturing debts. This column looks at what happens next. In brief, it will be very much up to the ECB to decide.

Jon Danielsson, Chen Zhou, 25 April 2015

Regulators and financial institutions increasingly depend on statistical risk forecasting. This column argues that most risk modelling approaches are highly inaccurate and confidence intervals should be provided along with point estimates. Two major approaches, value-at-risk and expected shortfall are compared, and while the former is found to be superior in practice, it is also easier to be manipulated by forecasters. 

Natalia Tente, 21 April 2015

The Basel III countercyclical capital buffer framework obliges nations to set appropriate capital buffer rates for their bank’s credit exposure at home and in third countries. This column proposes criteria for selecting these third countries. The idea is to focus only on the third-country exposures that, firstly, could jeopardise stability of the domestic banking sector and, secondly, can be actually addressed by means of the policy. Variables and thresholds to operationalise this idea are proposed.

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