Currency union with or without banking union

Vincent Bignon, Régis Breton () and Mariana Rojas Breu ()
Additional contact information
Mariana Rojas Breu: LEDa - Laboratoire d'Economie de Dauphine - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres
Authors registered in the RePEc Author Service: Mariana Rojas-Breu

Post-Print from HAL

Abstract: We build a symmetric two‐country monetary model with credit to study the interplay between currency integration and credit markets integration. The currency arrangement affects credit availability through default incentives. We capture credit markets integration by the extra cost incurred to obtain credit for cross‐border transactions and, with the euro area context in mind, label as banking union a situation where this cost is low. For high levels of the cross‐border credit cost, currency integration may magnify default incentives, leading to more credit rationing and lower welfare. The integration of credit markets restores the optimality of the currency union.

Keywords: banks; currency union; credit; default; limited commitment (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-ban
Note: View the original document on HAL open archive server: https://hal.science/hal-02313956v1
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in International Economic Review, 2019, 60 (2), ⟨10.1111/iere.12373⟩

Downloads: (external link)
https://hal.science/hal-02313956v1/document (application/pdf)

Related works:
Journal Article: CURRENCY UNION WITH OR WITHOUT BANKING UNION (2019)
Working Paper: Currency union with or without banking union (2018)
Working Paper: Currency union with or without banking union (2018)
Working Paper: Currency union with or without banking union (2018)
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:hal:journl:hal-02313956

DOI: 10.1111/iere.12373

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().