Wednesday Jul 30, 2014 Search
Weather | Athens
32o C
25o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Why Greece isn’t like U.S. revealed in bonds

The vulnerability of economies to sovereign debt crisis may depend on who’s holding their bonds.

That’s a signal from a new index designed by International Monetary Fund economists. It seeks to show which advanced economies have the flightiest sources of investment and so are most at risk of sudden capital outflows.

The gauge, published in a working paper this month, runs from zero to 100. A higher score means that the country is more prone to a sudden buyers’ strike from investors. A country with a zero rating would have all its debt held by the domestic central bank, while a 100 reading means all the country’s debt would be owned by foreign investors such as insurance companies and hedge funds, excluding governments and banks.

Created by IMF economists Serkan Arslanalp and Takahiro Tsuda, the index is based on a dataset from 24 major advanced economies and $42 trillion of sovereign debt holdings from 2004 to 2011.

The measure suggested the euro-area economies that received bailouts exhibited high risk of outflows as early as 2010. Greece was rated at 75 in the fourth quarter of 2009, when it could still borrow in the market. With results of 39 and 44 respectively at the end of 2011, Spain and Italy are less threatened because of the high share of debt in the hands of domestic banks, the report said.

With scores of less than 25 at the end of 2011, Australia, Japan, Switzerland and the U.S. were among those identified as having safer sources of finance. Germany scored 40 a year ago.

The index can explain some classic “puzzles” of why certain countries can sustain much higher debts without market pressure, said Arslanalp and Tsuda.

For example, while Japan has a debt equivalent to more than 200 percent of gross domestic product, a lot of it is held domestically and so is less at risk of flight, they said, while the U.K., Germany and U.S. may be in a similar class.

The study also found a rising share of foreign investors in sovereign debt markets even after $400 billion of withdrawals from the euro region’s most strained nations from mid-2010 to the end of 2011.

Banks are also increasingly exposed to their own government’s debt. Sixty-nine percent of euro-area bank’s regional debt holdings were of their own sovereign issues at the end of 2011, up from 57 percent at the end of 2007. In Greece, Italy and Spain, the ratio was closer to 100 percent.

The results “show that large funding gaps may arise in a number of countries in case of severe foreign outflows, requiring large absorption by domestic banks,” said Arslanalp and Tsuda.

[Bloomberg]

ekathimerini.com , Friday December 7, 2012 (14:55)  
Six firms submit bids to lease Vouliagmeni beach
IMF´s Lagarde not sure yet about debt relief for Greece
Deals reached for twin plot on Afandou, for 42 million
More delays and red tape for companies’ tax rebates
Greek foremen avoid jail after firing on migrant laborers [Update]
A Greek fruit exporter and three foremen arrested last year over a shooting attack against migrant labourers avoided jail or were acquitted altogether on Wednesday, a judicial source said. T...
Wine cup used by Pericles found in grave north of Athens
A cup believed to have been used by Classical Greek statesman Pericles has been found in a pauper's grave in north Athens, according to local reports Wednesday. The ceramic wine cup, smashed...
Inside News
SOCCER
Verona´s Moras donates bone marrow to brother
Hellas Verona defender Vangelis Moras is in Australia to donate bone marrow to his older brother Dimitris, who has leukemia. The transplant will take place on Saturday. Dimitris flew to Aust...
VOLLEYBALL
Volleyball national team second in European League
Much as the national volleyball team tried to repeat in the finals of the European League the feat it had achieved in the semifinals, it failed to overturn the advantage Montenegro had got f...
Inside Sports
EDITORIAL
Populism eating up education
The fact that the issue of education is not topping the list of priorities for the current coalition government, but instead, has been left in the hands of incapable politicians is utterly i...
COMMENTARY
A valued but mistreated professional
I did not know much on a personal level about Dimitris Stefanou, Greece’s former administrative reform general secretary who died earlier this week at the age of 46. I did, however, have a s...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Verona´s Moras donates bone marrow to brother
2. Greek foremen avoid jail after firing on migrant laborers [Update]
3. Wine cup used by Pericles found in grave north of Athens
4. SYRIZA, DIMAR representatives to hold talks Thursday
5. Two of four suspects in Nea Manolada strawberry farm shooting convicted
6. Six firms submit bids to lease Vouliagmeni beach
more news
Today
This Week
1. Six firms submit bids to lease Vouliagmeni beach
2. IMF's Lagarde not sure yet about debt relief for Greece
3. Coalition submits new proposals for Greek coastline
4. EU Commissioner Damanaki unlikely to return to Greek politics
5. Wine cup used by Pericles found in grave north of Athens
6. Police arrest one, seek another three over counterfeit goods
Today
This Week
1. Unequal after death
2. Greek sovereign debt at 174.1 percent of GDP in first quarter
3. Hedge fund Dromeus turns Greek tragedy to triumph with 160 pct gain
4. Quadriplegic woman on life support 'dies due to unpaid power bills'
5. Front-line threats
6. Defense Minister Avramopoulos to represent Greece at European Commission
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.