Banks as buyers of last resort for government bonds?

Daniel Gros

CEPS Papers from Centre for European Policy Studies

Abstract: A key remaining issue for the completion of the Banking Union is the concentrated exposure of banks in many countries to their own sovereign. This paper examines the belief that banks should be allowed to buy large amounts of their own sovereign in the expectation that they can stabilise the market in a crisis and argues that it is mistaken. The author cites two reasons for this conclusion: banks are only intermediaries for private savings, and banks have a higher cost of funding than do their sovereign. The overall conclusion is that governments should make it more attractive for households (and other real money investors) to hold government debt directly.

Pages: 8 pages
Date: 2017-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://www.ceps.eu/system/files/DG_BanksAsBuyers.pdf (application/pdf)

Related works:
Working Paper: Banks as Buyers of Last Resort for Government Bonds? (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eps:cepswp:13226

Access Statistics for this paper

More papers in CEPS Papers from Centre for European Policy Studies Contact information at EDIRC.
Bibliographic data for series maintained by Margarita Minkova ().