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Prospects Weekly: Renewed concerns earlier in the week about the Greek bail-out plan

Global Macroeconomics Team's picture
Renewed concerns earlier in the week about the Greek bail-out plan and the possibility of a credit rating downgrade for several European economies drove borrowing costs up. The European Central Bank’s (ECB) announcement on Thursday to defend the Euro has helped ease concerns somewhat.

The Influence of Greece's Debt Crisis on the Banking Sector

Sergio Schmukler's picture

The crisis in Greece and the Eurozone has escalated as depositors flee banks in fear not only of the consequences of sovereign default but also of Greece abandoning the Euro. Unfortunately, this development makes the crisis much deeper and more difficult to manage. As we (along with Eduardo Levy Yeyati) highlighted in a VoxEU piece in June 2011, the main risk of the Greek debt crisis was its potential spillover to the banking sector.

Prospects Weekly: Market confidence has been rattled once again

Global Macroeconomics Team's picture

Market confidence has been rattled once again following recent election results in France and Greece. However, credit default swaps rates, while up, remain well below their fall 2011 highs. Through March, retails sales have continued strengthening among both developing and high-income economies, although weakness still persists in the Euro Area.

Prospects Daily: European sovereign credit risk rises to eight-week high

Global Macroeconomics Team's picture

Important developments today:

1. European sovereign credit risk rises to eight-week high following Greek debt swap insurance payouts

2. Italy in recession

Prospects Daily: Bank deposits are moving out of riskier European countries

Global Macroeconomics Team's picture

Important developments today:

1. Bank deposits are moving out of riskier European countries.

Prospects Daily: Portuguese government bonds advance following successful short-term debt auction

Global Macroeconomics Team's picture

Important developments today:

1. Portuguese government bonds advance following successful short-term debt auction.

2. Deceleration in Eurozone manufacturing activity slows.

Prospects Weekly: Global financial markets are eager for policy action

Global Macroeconomics Team's picture

Global financial markets are eager for policy action. Bond yields for high-spread Euro Area sovereigns remain high, but eased somewhat this week with successful bond issuances by France and Spain and optimism that EU leaders will reach agreement to resolve the debt crisis at the forthcoming December 9th EU summit.

Prospects Weekly: Financial market volatility remains sharply elevated

Global Macroeconomics Team's picture

Financial market volatility remains sharply elevated this week as market attention shifted from Greece, to Italy and even France. Concern about counterparty risk kept European banking-sector spreads high, even as banks mark-down and sell-off distressed Euro Area sovereigns to repair their capital base. Continued turbulence and credit tightening could prompt sudden reversals in global capital markets. In 2012, developing country external financing requirements are estimated at $1trn (7.1% of GDP), of which two-thirds is accounted for by short-term debt. Developing Europe and Central Asia, with debts coming due equal to 7.6% of GDP, is the developing region most vulnerable to a tightening of financial conditions. Worries about faltering world demand, led by expectations of recession in Europe, have contributed to deep declines in international commodity prices.

Prospects Daily: European equities rally, while Greek bond yields climb above 100%

Global Macroeconomics Team's picture

Important developments today:

1. European equities rally, while Greek bond yields climb above 100%

2. ECB cuts policy rate by 25 basis points


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