Doom Loop or Incomplete Union? Sovereign and Banking Risk
Giorgio Barba Navaretti (),
Giacomo Calzolari (),
José Manuel Mansilla-Fernández and
Alberto Pozzolo ()
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José Manuel Mansilla-Fernández: Universidad Pùblica de Navarra and LdA
No 448, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano
This chapter discusses the foremost regulatory advances and policy proposals for the so-called "doom loop", i.e. the perverse and destabilizing interconnections between sovereigns' and banks liabilities. We discuss how the merits of the proposed regulatory reforms are strictly intertwined with the mechanisms of risk sharing being built up and implemented within the Baking Union, and more broadly within the Eurozone. We argue that it is very unlikely that there might be viable solutions to the regulatory treatment of Sovereign exposures without a strenghtening of risk-sharing mechanisms.
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Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:448
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