Financial Fragility in the Current European crisis
The paper argues that the European financial system in the years following the great financial crisis started in 2007 has become increasingly fragile. Minsky’s notion of fragility, on which it is based, is related to history, policy and institutions. In the current European environment, fragility depends on the rise of shadow banks’ assets, the expansion of derivatives and the changes in financial regulation. All these elements have jointly triggered several feedback loops. In Minsky’s opinion, policies should have the scope of thwarting self-enforcing feedback loops. Yet the policies that have been implemented so far seem to have produced the opposite effects. They have created new feedback loops that nurture fragility again. This outcome, however, is not surprising for policies may change initial conditions and have unintended consequences, as Minsky has taught us since a long time.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: Department of International Politics, Social Sciences Building, City University London, Whiskin Street, London, EC1R 0JD, United Kingdom|
Phone: +44 (0)20 7040 8500
Web page: http://www.city.ac.uk/arts-social-sciences/international-politics/
More information through EDIRC
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.:
- Arce, Oscar & Mayordomo, Sergio & Peña, Juan Ignacio, 2013.
"Credit-risk valuation in the sovereign CDS and bonds markets: Evidence from the euro area crisis,"
Journal of International Money and Finance,
Elsevier, vol. 35(C), pages 124-145.
- Ã“scar Arce & Sergio Mayordomo & Juan Ignacio PeÃ±a, 2012. "Credit-Risk Valuation in the Sovereign CDS and Bonds Markets: Evidence from the Euro Area Crisis," Faculty Working Papers 22/12, School of Economics and Business Administration, University of Navarra.
- Éric Tymoigne, 2011. "Measuring Macroprudential Risk: Financial Fragility Indexes," Economics Working Paper Archive wp_654, Levy Economics Institute.
- Gary A. Dymski, 2010. "Why the subprime crisis is different: a Minskyian approach," Cambridge Journal of Economics, Oxford University Press, vol. 34(2), pages 239-255, March.
- Manganelli, Simone & Hartmann, Philipp & Maddaloni, Angela, 2003.
"The euro area financial system: structure, integration and policy initiatives,"
Working Paper Series
0230, European Central Bank.
- Philipp Hartmann & Angela Maddaloni & Simone Manganelli, 2003. "The Euro-area Financial System: Structure, Integration, and Policy Initiatives," Oxford Review of Economic Policy, Oxford University Press, vol. 19(1), pages 180-213.
- Domenica Tropeano, 2011. "Financial Regulation After the Crisis," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 40(2), pages 45-60, July.
- Coudert, V. & Gex, M., 2010. "Credit default swap and bond markets: which leads the other?," Financial Stability Review, Banque de France, issue 14, pages 161-167, July.
- Schmidt, Reinhard H. & Hackethal, Andreas & Tyrell, Marcel, 1999. "Disintermediation and the Role of Banks in Europe: An International Comparison," Journal of Financial Intermediation, Elsevier, vol. 8(1-2), pages 36-67, January.
- Domenica Tropeano, 2010.
"The current financial crisis, monetary policy and Minsky's structural instability hypothesis,"
60-2010, Macerata University, Department of Finance and Economic Sciences, revised Jun 2010.
- Domenica Tropeano, 2010. "The Current Financial Crisis, Monetary Policy, and Minsky's Structural Instability Hypothesis," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 39(2), pages 41-57, July.
- Jan Kregel, 2010. "No Going Back: Why We Cannot Restore Glass-Steagall's Segregation of Banking and Finance," Economics Public Policy Brief Archive ppb_107, Levy Economics Institute.
When requesting a correction, please mention this item's handle: RePEc:dip:dpaper:2013-09. 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: (Research Publications Librarian)
If references are entirely missing, you can add them using this form.