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Chinese and European Financial Systems: Instability Drivers and Contagion Channels

Author

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  • Paolo Canofari

    (Luiss School of European Political Economy)

  • Alessandro Ponte

    (Stony Brook University)

Abstract

This paper identifies systemic risk levels in the Eurozone and China. We first analyze the political and macro-financial factors underlying potential financial instability in both currency areas. Then, we examine the impact of a possible breakup of the Eurozone on the Chinese financial system and the risk of redenomination of Chinese assets expressed in Euros. Finally, considering the increasing credit gap in the Chinese economy and the enduring political instability in several Eurozone countries, we warn against a possible opening of contagion channels between China and Europe.

Suggested Citation

  • Paolo Canofari & Alessandro Ponte, 2018. "Chinese and European Financial Systems: Instability Drivers and Contagion Channels," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(4), pages 311-324, November.
    • Handle: RePEc:kap:iaecre:v:24:y:2018:i:4:d:10.1007_s11294-018-9713-9
    DOI: 10.1007/s11294-018-9713-9
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    Cited by:

    1. Alessandro Del Ponte & Paolo Canofari & Audrey De Dominicis, 2021. "Financial and trade relationships between the Eurozone and China in the age of resilience," Asia Europe Journal, Springer, vol. 19(4), pages 489-506, December.
    2. Azmat Gani & Tareq Rasul, 2020. "The Institutional Quality Effect on Credits Provided by the Banks," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 26(3), pages 249-258, August.

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