Euro public debt and the markets: sovereign fundamentals and CDS market dynamics

L. Boone, L. Fransolet and S. Willemann

Financial Stability Review, 2010, issue 14, 19-26

Abstract: At the onset of the crisis, euro area – like all Organisation for Economic Co-operation and Development (OECD) countries – public finances have massively inflated, as is typical in financial crises. The major difference with the past is threefold: the synchronicity across countries of the increase, the debt levels which have been reached; and the existence of credit default swap (CDS) market which has influenced the dynamic of sovereign trading. In this note, we review quickly fundamentals before highlighting the role of the CDS market and the implications for sovereign trading.

Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:fisrev:2010:14:3

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