Cookies?
Library Header Image
LSE Research Online LSE Library Services

There is a good reason for EU banks to hold their own country's sovereign debt

Saka, Orkun (2020) There is a good reason for EU banks to hold their own country's sovereign debt. LSE European Politics and Policy (EUROPP) blog (14 Jan 2020). Blog Entry.

[img] Text (europpblog_2020-01-14-there-is-a-good-reason-for-eu-banks-to-hold) - Published Version
Download (166kB)

Abstract

The so called ‘moral suasion’ hypothesis indicates that governments may implicitly force their domestic banks to hold a larger chunk of government bonds when they experience stress. But is this reason to shift responsibilities from national to supranational institutions? Orkun Saka argues that there is in fact a good reason for EU banks to hold their own country’s sovereign debt: commercial banks have an informational advantage that allows them to act as buyers of last resort, absorbing local assets while potentially uninformed foreign banks may shed their exposure.

Item Type: Online resource (Blog Entry)
Additional Information: © 2020 The Author
Divisions: LSE
Subjects: J Political Science > JN Political institutions (Europe)
H Social Sciences > HG Finance
H Social Sciences > HB Economic Theory
Date Deposited: 28 Feb 2020 11:45
Last Modified: 26 Jul 2020 23:47
URI: http://eprints.lse.ac.uk/id/eprint/103620

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics