Arbeitspapier
Bankruptcy Codes and Risk Sharing of Currency Unions
Since the Eurozone Crisis of 2010-12, a critical debate on the viability of a currency union has focused on the role of a fiscal union in adjusting for country heterogeneity. However, a fully-fledged fiscal union may not be politically feasible. This paper develops a two-country general equilibrium model to examine the benefits of the bankruptcy code of a capital markets union - in the absence of a fiscal union - as an alternative mechanism to improve the financial stability and welfare of a currency union. When domestic credit risks are present, I show that a lenient bankruptcy code in the cross-border capital markets union removes the pecuniary externality of banking insolvency, so it leads to a Pareto improvement within the currency union. Moreover, the absence of floating nominal exchange rates removes a mechanism to neutralise domestic credit risks; I show that softening the bankruptcy code can recoup the lost benefits of floating nominal exchange rates. The model provides the financial stability and welfare implications of bankruptcy within a capital markets union in the Eurozone.
- Sprache
-
Englisch
- Erschienen in
-
Series: Tinbergen Institute Discussion Paper ; No. TI 2021-009/IV
- Klassifikation
-
Wirtschaft
Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
International Monetary Arrangements and Institutions
International Financial Markets
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- Thema
-
Equilibrium default
bankruptcy code
fiscal union
capital markets union
financial stability
bank credit and inside money
price-level and exchange rate determinacy
liquidity-intermediary asset pricing
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Wang, Xuan
- Ereignis
-
Veröffentlichung
- (wer)
-
Tinbergen Institute
- (wo)
-
Amsterdam and Rotterdam
- (wann)
-
2021
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Wang, Xuan
- Tinbergen Institute
Entstanden
- 2021
Ähnliche Objekte (12)
Chronotope, technology affordances, and task design: using WeChat to facilitate Chinese learning in the classroom
A Macro-Financial Perspective to Analyse Maturity Mismatch and Default
Concept and implementation of a graphical editor for composite application templates
Exploring the effects of missing data on the estimation of fractal and multifractal parameters based on bootstrap method
Banks, Money, and the Zero Lower Bound on Deposit Rates
Designing financial support for SMEs during crises: The role of bank lending
Intergenerational differences in the environmental concerns of plastic waste business owners: environmental knowledge, environmental risk exposure, and community connection as mediators
Analysis on the political construction of scale of state-level new areas
Existence and blow-up of solutions in Hénon-type heat equation with exponential nonlinearity
Existence of normalized solutions for the coupled elliptic system with quadratic nonlinearity
Improving the MPI-IO performance of applications with genetic algorithm based auto-tuning
Support for Small Businesses amid COVID-19
Chronotope, technology affordances, and task design: using WeChat to facilitate Chinese learning in the classroom
A Macro-Financial Perspective to Analyse Maturity Mismatch and Default
Concept and implementation of a graphical editor for composite application templates
Exploring the effects of missing data on the estimation of fractal and multifractal parameters based on bootstrap method
Banks, Money, and the Zero Lower Bound on Deposit Rates
Designing financial support for SMEs during crises: The role of bank lending
Intergenerational differences in the environmental concerns of plastic waste business owners: environmental knowledge, environmental risk exposure, and community connection as mediators
Analysis on the political construction of scale of state-level new areas
Existence and blow-up of solutions in Hénon-type heat equation with exponential nonlinearity
Existence of normalized solutions for the coupled elliptic system with quadratic nonlinearity
Improving the MPI-IO performance of applications with genetic algorithm based auto-tuning
Support for Small Businesses amid COVID-19
Chronotope, technology affordances, and task design: using WeChat to facilitate Chinese learning in the classroom
A Macro-Financial Perspective to Analyse Maturity Mismatch and Default
Concept and implementation of a graphical editor for composite application templates
Exploring the effects of missing data on the estimation of fractal and multifractal parameters based on bootstrap method
Banks, Money, and the Zero Lower Bound on Deposit Rates
Designing financial support for SMEs during crises: The role of bank lending
Intergenerational differences in the environmental concerns of plastic waste business owners: environmental knowledge, environmental risk exposure, and community connection as mediators
Analysis on the political construction of scale of state-level new areas
Existence and blow-up of solutions in Hénon-type heat equation with exponential nonlinearity
Existence of normalized solutions for the coupled elliptic system with quadratic nonlinearity
Improving the MPI-IO performance of applications with genetic algorithm based auto-tuning