Advanced Search
MyIDEAS: Login to save this paper or follow this series

From the Stability Pact to ESM - What next?

Contents:

Author Info

  • Claudia M. Buch

Abstract

Europe is struggling with the resolution of the severe debt crisis and is in the process of overhauling its institutional set up. One element of the reform agenda is the European Stability Mechanism (ESM) which is intended to provide liquidity assistance to countries in case financial stability in the Euro Area is at stake. The ESM shall enter into force in July 2012, following ratification of the member states. It will have five instruments at its disposal: direct loans to countries, purchases of assets on the primary or secondary market, contingent credit lines, and funds for bank recapitalization. In this contribution, it is argued that establishing an explicit crisis resolution mechanism is in principle useful. However, the ESM is defined too broadly, and its scope should be limited to the provision of emergency liquidity assistance only under narrowly defined circumstances. Using the option to recapitalize banks might help addressing a potential debt overhang problem. Yet, the current framework has deficiencies in this regard and lacks the necessary backing by complementary institutional reforms, notably a regime for cross-border bank resolution.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.iaw.edu/RePEc/iaw/pdf/iaw_dp_85.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institut für Angewandte Wirtschaftsforschung (IAW) in its series IAW Discussion Papers with number 85.

as in new window
Length: 32 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:iaw:iawdip:85

Contact details of provider:
Postal: Ob dem Himmelreich 1, D-72074 Tübingen
Phone: (+49) 7071 98 96 -0
Fax: (+49) 7071 98 96 -99
Email:
Web page: http://www.iaw.edu/
More information through EDIRC

Related research

Keywords: Euro Area; ESM;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Sascha O. Becker & Mathias Hoffmann, 2003. "Intra-and International Risk-Sharing in the Short Run and the Long Run," CESifo Working Paper Series 1111, CESifo Group Munich.
  2. Jari John & Tobias Knedlik, 2011. "New IMF Lending Facilities and Financial Stability in Emerging Markets," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 41(2), pages 225-238, September.
  3. Schuknecht, Ludger & von Hagen, Jürgen & Wolswijk, Guido, 2008. "Government risk premiums in the bond market: EMU and Canada," Working Paper Series 0879, European Central Bank.
  4. Joe Peek & Eric S. Rosengren, 2003. "Unnatural Selection: Perverse Incentives and the Misallocation of Credit in Japan," NBER Working Papers 9643, National Bureau of Economic Research, Inc.
  5. Hepp, Ralf & von Hagen, Jürgen, 2010. "Interstate risk sharing in Germany: 1970-2006," ZEI Working Papers B 03-2010, ZEI - Center for European Integration Studies, University of Bonn.
  6. Berka, Martin & Devereux, Michael B., 2011. "What determines European real exchange rates?," Working Paper Series 1687, Victoria University of Wellington, School of Economics and Finance.
  7. Domenico Giannone & Michele Lenza & Lucrezia Reichlin, 2010. "Business Cycles in the Euro Area," NBER Chapters, in: Europe and the Euro, pages 141-167 National Bureau of Economic Research, Inc.
  8. Rose, Andrew & Wieladek, Tomasz, 2011. "Financial protectionism: the first tests," Discussion Papers 32, Monetary Policy Committee Unit, Bank of England.
  9. Giannetti, Mariassunta & Simonov, Andrei, 2009. "On the Real Effects of Bank Bailouts: Micro-Evidence from Japan," CEPR Discussion Papers 7441, C.E.P.R. Discussion Papers.
  10. Hepp, Ralf & von Hagen, Jürgen, 2009. "Fiscal Federalism in Germany: Stabilization and Redistribution Before and After Unification," CEPR Discussion Papers 7246, C.E.P.R. Discussion Papers.
  11. Ricardo J. Caballero & Takeo Hoshi & Anil K. Kashyap, 2008. "Zombie Lending and Depressed Restructuring in Japan," American Economic Review, American Economic Association, vol. 98(5), pages 1943-77, December.
  12. Ehrmann, Michael & Fratzscher, Marcel & Gürkaynak, Refet S. & Swanson, Eric, 2007. "Convergence and anchoring of yield curves in the euro area," Working Paper Series 0817, European Central Bank.
  13. William T. Dickens & Lorenz Goette & Erica L. Groshen & Steinar Holden & Julian Messina & Mark E. Schweitzer & Jarkko Turunen & Melanie Ward, 2006. "The interaction of labor markets and inflation: analysis of micro data from the International Wage Flexibility Project," Proceedings, Federal Reserve Bank of San Francisco.
  14. Hans-Werner Sinn & Timo Wollmershäuser, 2012. "Target loans, current account balances and capital flows: the ECB’s rescue facility," International Tax and Public Finance, Springer, vol. 19(4), pages 468-508, August.
  15. Giannetti, Mariassunta & Laeven, Luc, 2011. "The Flight Home Effect: Evidence from the Syndicated Loan Market During Financial Crises," CEPR Discussion Papers 8337, C.E.P.R. Discussion Papers.
  16. Jonathan Eaton & Mark Gersovitz & Joseph E. Stiglitz, 1986. "The Pure Theory of Country Risk," NBER Working Papers 1894, National Bureau of Economic Research, Inc.
  17. Yuliya Demyanyk & Charlotte Ostergaard & Bent E. Sorensen, 2008. "Risk sharing and portfolio allocation in EMU," European Economy - Economic Papers 334, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  18. Kohler, Wilhelm, 2012. "Resolving sovereign debt crises: Opening or closing the tap?," University of Tuebingen Working Papers in Economics and Finance 39, University of Tuebingen, Faculty of Economics and Social Sciences.
  19. Florence Bouvet, 2010. "EMU and the dynamics of regional per capita income inequality in Europe," Journal of Economic Inequality, Springer, vol. 8(3), pages 323-344, September.
  20. Schmitz, Birgit & von Hagen, Jürgen, 2011. "Current account imbalances and financial integration in the euro area," Journal of International Money and Finance, Elsevier, vol. 30(8), pages 1676-1695.
  21. Hoshi, Takeo & Kashyap, Anil K, 2010. "Will the U.S. bank recapitalization succeed? Eight lessons from Japan," Journal of Financial Economics, Elsevier, vol. 97(3), pages 398-417, September.
  22. Becker, Sascha & Egger, Peter H & Fenge, Robert & von, Ehrlich Maximilian, 2008. "Going NUTS: The Effect of EU Structural Funds on Regional Performance," Stirling Economics Discussion Papers 2008-27, University of Stirling, Division of Economics.
  23. Stefan Gerlach & Mathias Hoffmann, 2008. "The Impact of the Euro on International Stability and Volatility," European Economy - Economic Papers 309, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  24. Silvia Merler & Jean Pisani-Ferry, 2012. "Sudden stops in the euro area," Policy Contributions 718, Bruegel.
  25. Hans-Werner Sinn, 2010. "Rescuing Europe," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 11(SPECIALIS), pages 1-22, 08.
  26. Richard Baldwin & Virginia DiNino & Lionel Fontagn� & Roberto A. De Santis & Daria Taglioni, 2008. "Study on the Impact of the Euro on Trade and Foreign Direct Investment," European Economy - Economic Papers 321, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  27. Okawa, Yohei & van Wincoop, Eric, 2012. "Gravity in International Finance," Journal of International Economics, Elsevier, vol. 87(2), pages 205-215.
  28. Michele Boldrin & Fabio Canova, 2001. "Inequality and convergence in Europe's regions: reconsidering European regional policies," Economic Policy, CEPR & CES & MSH, vol. 16(32), pages 205-253, 04.
  29. Sebnem Kalemli-Ozcan & Bent E. Sorensen & Belgi Turan, 2007. "Where does Capital Flow? A Comparison of U.S. States and EU Countries 1950-2000," European Economy - Economic Papers 295, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iaw:iawdip:85. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rolf Kleimann).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.