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The future for Eurozone financial stability policy

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  • Karl Whelan

Abstract

The past few months have exposed serious problems in relation to Europe’s ability to cope with financial stress. Placing the new Financial Stability funds on a permanent basis, in the form of a new European Monetary Fund will be required if Europe is to deal effectively with the serious debt problems of some Eurozone countries. However, this fund should exist to manage sovereign defaults in an orderly manner, not to prevent them altogether. Bank supervisors also need to publish regular stress tests, change their regulations on the risk weighting of sovereign debt and put new resolution procedures in place. Together, these reforms will allow Europe to deal with future sovereign debt problems without provoking a crisis.

Suggested Citation

  • Karl Whelan, 2010. "The future for Eurozone financial stability policy," Working Papers 201027, School of Economics, University College Dublin.
  • Handle: RePEc:ucn:wpaper:201027
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    File URL: http://hdl.handle.net/10197/2660
    File Function: First version, 2010
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    References listed on IDEAS

    as
    1. Barry Eichengreen, 2010. "The Breakup of the Euro Area," NBER Chapters, in: Europe and the Euro, pages 11-51, National Bureau of Economic Research, Inc.
    2. Adrian Blundell-Wignall & Patrick Slovik, 2010. "The EU Stress Test and Sovereign Debt Exposures," OECD Working Papers on Finance, Insurance and Private Pensions 4, OECD Publishing.
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    More about this item

    Keywords

    Economic stabilization--European Union countries; Financial crises--European Union countries; Euro;
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