The introduction of collective action clauses in advanced economies' sovereign bonds is an understudied phenomenon. An important concern is whether these clauses produce segmentation, pushing apart the price of those bonds issued with and without collective action clauses (CACs). This paper uses...

Infrequent but turbulent overt sovereign defaults on domestic creditors are a "forgotten history" in Macroeconomics. We propose a heterogeneous-agents model in which the government chooses optimal debt and default on domestic and foreign creditors by balancing distributional incentives v. the...

This paper reviews the first five years of experience with Collective Action Clauses (CACs) for European sovereign debt, focusing on both the legal and the economic dimension. First, we present a chronology of the legislative acts to incorporate CACs in European sovereign debt contracts...

This paper argues that EMU has been and continues to be a politically driven process. In this perspective, it examines the issues and the implications of potential Euroexit and Euro break up: it underlines that these processes would have a prominent political dimension, as was the case for the...

This paper discusses the legal framework for sovereign debt restructuring in the Euro area – both de lege lata and de lege ferenda. Sovereign debt restructurings remain exceptional events that come with profound implications for financial stability and monetary policy transmission. However,...

The euro-area sovereign debt crisis is receding. Europe is on a recovery path, growth is broad-based and unemployment is falling. One after the other, countries hit hardest by the crisis are exiting their adjustment programmes. However, debt remains high in most countries and future debt crises...

Using proprietary data on banks' monthly securities holdings, we show that during the European sovereign debt crisis, domestic banks in fiscally stressed countries were considerably more likely than foreign banks to increase their holdings of domestic sovereign bonds during months when the...

This paper studies the sovereign ratings of the current 19 euro area Member States from 2005 to 2015. It disentangles the rating drivers into a ‘fundamental' and ‘subjective' component using Moody's methodology, and explores which variables explain the ‘subjective' component, that is...

We investigate the relationship of the market pricing of sovereign risk to default, through CDS spreads for 16 Eurozone countries during 2008q1-2013q3. We take into account, through appropriate non-linear GMM estimations the endogeneity problem. We focus on “fiscal space” (DEBT or FISCAL),...

The present paper examines the impact of the current fiscal crisis in the euro area on the Greek banking system and the institutional, regulatory and supervisory measures adopted to preserve its stability. It is divided into 2 Sections:(a) Section 1 deals with the differentiated impact of the...