Why a Selective Default Does Not Mean Grexit

Confusion reigned supreme in the euro area over the weekend. The decision of the Greek government to call for a referendum over the terms of the programme, needed to unlock money for the IMF debt repayment due on Tuesday, plunged the euro finance ministers into despair, while they fought a deal was very close. It […]

Myths and Realities of European QE

The effects of the ECB’s quantitative easing are still unclear and may be insufficient to drag economies out of low growth and high unemployment rates. In effect, removing market pressures might affect incentives to pursue the structural reforms that Europe needs, such as completing the single market and restructuring banks and corporates. There is nothing […]

Revisiting Banking Union in a Single Currency Area (Part 2)

The current banking union framework remains far from ideal if the currency union dimension is taken into account. While decisions so far have been focusing on the moral hazard of banks, these measures fail to solve an additional market failure in the Euro area caused by the moral hazard of governments competing on funding costs, […]

Revisiting Banking Union in a Single Currency Area (Part 1)

Evidence suggests that financial integration in the Euro area is retrenching at a quicker pace than outside the union. Home bias persists. Meanwhile, governments continue to compete on their funding costs via interventions to support ‘their’ banks, avoiding spill over effects on costs of public debt but so distorting the level playing field with massive […]

Global Commodities Markets After Financialisation

Markets are in constant flux and commodities markets are no exception. Their market structure has evolved at an incredible pace over the past decade. Size and interconnection, fuelled by easy access to financial leverage, have made top commodities trading houses ‘too-physical-to-fail’. Greater transparency of physical holdings, greater scrutiny in intra-day futures volumes, management of conflicts […]