The problem of legacy information technologies in conjunction with the excessive risks associated with the implementation of huge information technologies such as Enterprise Resource Planning systems have a potential to lead to bank failures, and thus, financial instability. Hence, using a...

This paper presents a proposal for a regulatory regime aimed at reducing systemic risk effectively and internationally. Systemic relevance should be internalized with a levy (or tax), the level of which (or tax rate) rises with the systemic relevance of an institution (Pigouvian taxation). The...

The European Redemption Pact (ERP), a proposal of the German Council of Economic Experts, describes an exit strategy from the debt crisis which currently plagues the euro area. The pact includes a binding commitment of all participating countries to bring public debt ratios below the reference...

One possible solution to the sovereign debt crisis is the European Redemption Pact (ERP) proposed by the German Council of Economic Experts. The ERP provides sustainable financing conditions for participating sovereigns to facilitate bringing public debt ratios below the reference value of 60%...

This paper analyzes if the so called home country bias exists in sovereign ratings: Home country bias could be due to the fact that a rating agency applies higher ratings to a country with which the country where the rating agency is located has stronger relations. For the analysis of a...

There exist different kinds of biases in sovereign ratings. In this paper we analyze one of the possible rating biases, i.e. we examine if rating agencies may have the incentive to rate countries where they earn more money better compared to countries where they earn less (profit maximizing...

Before the beginning of the euro-area crisis, fees (premiums) for Credit Default Swaps (CDS) for the same entity (country) but nominated in different currencies were nearly equal. This is still true for non-euro area countries during the crisis; but these differences increased dramatically for...

This paper analyzes by using a simple theoretical model and thereafter testing empirically the differences between Euro- and US-Dollar nominated sovereign bonds of euro-area countries during the euro-crisis and concludes that the probability of collapse of the Euro(-currency) has a significant...

This paper analyzes if and what kind of sovereign rating bias exists. We analyze three possible biases. Firstly, rating agencies may have the incentive to rate countries where they earn more money better compared to countries where they earn less (profit maximizing bias). Secondly, different...

One possible solution to the sovereign debt crisis is the European Redemption Pact (ERP) proposed by the German Council of Economic Experts. The ERP provides sustainable financing conditions for participating sovereigns to facilitate bringing public debt ratios below the reference value of 60%...