This World Bank Discussion Paper brings together two contributions on external debt issues. The first paper discusses the insurability of sovereign debt against default. The second paper reviews numerous studies that have been conducted over the years to identify the variables that could predict...

We look at the effect of capital rules on a banking system that is connected through correlated credit exposures and interbank lending. The rules, which combine individual bank characteristics and interconnectivity measures of interbank lending, are to minimize a measure of system-wide losses....