Intertwined Sovereign and Bank Solvencies in a Model of Self-Fulfilling Crisis

Working Paper No. 12/178

Large fiscal financing needs, both in advanced and emerging market economies, have often been met by borrowing heavily from domestic banks. As public debt approached sustainability limits in a number of countries, however, high bank exposure to sovereign risk created a fragile inter-dependence between fiscal and bank solvency. This paper... READ MORE...

Publication date: July 2012
ISBN 9781475505269

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Publication date: July 2012