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How safe is a safe asset? CEPS Policy Insights No 2018-08/February 2018

De Grauwe, Paul. and Ji, Yuemei (2018) How safe is a safe asset? CEPS Policy Insights No 2018-08/February 2018. [Policy Paper]

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    Abstract

    The European Systemic Risk Board proposes to create a “safe asset” for the eurozone that is based on a repackaging of the risks of sovereign bonds. The hope is that this financial engineering will stabilise an otherwise unstable system of sovereign bond markets in the eurozone. We argue that a financial system that is fundamentally unstable cannot be stabilised by financial engineering. The ESRB-proposal creates the illusion that the sovereign bond markets in the eurozone can be stabilised without the need to share the risk among sovereigns. We argue that sovereign bond markets can only be stabilised via

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    Item Type: Policy Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > banks/financial markets
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > CEPS Policy Insights
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 26 Feb 2018 11:12
    Number of Pages: 8
    Last Modified: 26 Feb 2018 11:12
    URI: http://aei.pitt.edu/id/eprint/93436

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