Greece has reached a point where, under any plausible macroeconomic scenario, public debt will continue growing faster than GDP. Fiscal consolidation alone cannot close the solvency gap. A substantial reduction in the stock of debt is needed. Even post-debt restructuring, there is no guarantee...

Greece has reached a point where, under any plausible macroeconomic scenario, public debt will continue growing faster than GDP. Fiscal consolidation alone cannot close the solvency gap. A substantial reduction in the stock of debt is needed. Even post-debt restructuring, there is no guarantee...

Emerging economies may not have fully decoupled, but global influence has moved from the slow-growing G7 to booming China contributing to EM growth outperformance. And most EM weathered the crisis remarkably well despite some initial scepticism. Behind this success lie two fundamental...

Since end-March, 10y US yields have increased 76bp, more than in other G7 markets (Figure 1), and a dollar index relative to major currencies indeed weakened 7.5%, (13.8% relative to developing countries, Figure 2). In this note, we argue that the narrowing of the US current account (CA) deficit...

We present a unified framework in order to help understand how the current crisis would reshape the global financial balance. We believe that as risk appetite slowly returns, the negative risk premium that benefited US Treasuries and the dollar will rapidly reverse. As the Fed is likely to err...

Few months after the onset of the crisis, the flight to safe assets at world level benefited the US treasuries, while the financial deleveraging favored the US dollar. Once the economic and market conditions return to normal, we will see a reversal of these trends (i.e., a weakened dollar and an...