Russian Crisis Hits Latvia, but (So Far) Not as Badly as Feared

From the beginning, it was clear that the economic crisis in Russia would pose multiple problems for Latvia and its Baltic neighbors. Until recently, many businesspeople in Latvia had seen close trade, transportation, and financial linkages as strengths that allowed their country to serve as Russia’s economic portal to the EU. Since the middle of […]

Russian Crisis Hits Latvia, but (So Far) Not as Badly as Feared

From the beginning, it was clear that the economic crisis in Russia would pose multiple problems for Latvia and its Baltic neighbors. Until recently, many businesspeople in Latvia had seen close trade, transportation, and financial linkages as strengths that allowed their country to serve as Russia’s economic portal to the EU. Since the middle of […]

Is Banks’ Home Bias Good or Bad for Public Debt Sustainability?

Introduction and literature Issues related to the entrenched sovereign-bank nexus, particularly home bias—banks’ holdings of sovereign domestic debt—have gained prominence during the Global Crisis in recent years as public debt was rising especially in the European periphery.1Prompted by foreign investors’ flight as well as cheap Long-Term Refinancing Operations (LTRO) funding from the ECB, many peripheral […]

Turkey: The markets’ Cinderella Man

Seen as one of the most vulnerable emerging markets (EMs) not too long ago, Turkey is on a Cinderella run, attracting significant capital inflows. Foreigners’ net equity and bond investments rose by $0.9 and 1.4 billion respectively during the last four weeks. Here is the intro. to my latest Hurriyet Daily News (HDN) column, where […]

The Growth of Shadow Banking

By Gaston Gelos and Nico Valckx: Shadow banking has grown by leaps and bounds around the world in the last decade.  It is now worth over $70 trillion. We take a closer look at what has driven this growth to help countries figure out what policies to use to minimize the risks involved. In our analysis, we’ve found […]

Other Perspectives on the New Bond-Market Conundrum

Last week I commented on a puzzling phenomenon in bond markets this year– long-term rates have been falling at the same time that nearer-term rates have been rising. Bruegel has a review of some of the discussion of this around the web. Nominal yields on different U.S. Treasury securities as a function of years to maturity as of […]

Argentina Defaults: The Day After

Argentina has defaulted. The long-running court drama that ran for over ten years and pitted Argentina against a small group of holdout creditors was decided decisively in favor of the holdouts in June, and Argentina subsequently refused to make payments as required by the courts. As a result, neither the holdouts nor the holders of […]

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