Оглавление
Marcello Minenna. The Incomplete Currency
List of Figures
List of Tables
Foreword
Preface
Acknowledgments
About the Author
About the Website
Chapter 1. The Building Blocks of the Single European Currency
1.1 The Basic Concepts: Financial Flows, Risks and Probability Distribution
1.1.1 The Risk of Interest Rates
1.1.2 Swap Rate of a Floating Rate Bond
1.1.3 The Credit Risk
1.1.4 The Credit Default Swap (CDS)
1.2 Sovereign Credit Risk, Public Debt and Inflation
1.3 Single Curve of Interest Rate: EURIBOR, Euro Swap, Eurepo
1.3.1 A Single Curve for All Government Bonds of the Euro Area Countries
1.3.2 The European Interbanking Market: EURIBOR, EUROSWAP, OIS
1.3.3 Interbank Warranties: the Collateral and Eurepo Curve
1.4 The Monetary Policy in the Eurozone and the Mechanisms of Transmission
1.4.1 Policy of the ECB and the Prohibition of Sovereign Debt Monetisation
1.4.2 Transmission Mechanisms of the Monetary Policy
1.5 Recognition and Management of the Sovereign Credit Risk
1.5.1 The Credit Default Swap on Sovereign Debt
1.5.2 The Concept of Basis and the Relations of Arbitrage
1.5.3 The Cash Synthetic Basis
Chapter 2. The Eurozone Architecture and the Working Paradigms
2.1 Relationships within the European Financial System
2.1.1 The Intermediation of the Sovereign Debt by the Banking System
2.1.2 The Importance of Collateral: The Roles of the ECB and the Repo Market
2.1.3 The Parameters of the Maastricht Convergence
2.1.4 The Convergence of Interest Rates in the Eurozone as a Purely Financial Phenomenon
2.2 The Transmission Mechanisms between Finance and Real Economy in the Eurozone
2.2.1 Structural and Conjunctural Differences between the Economies of the Eurozone
2.2.2 Permanent Imbalances in Financial Flows and the Inefficiency of the Single Curve of Interest Rates
2.2.3 The Payments System of the Eurosystem: Target2
2.2.4 The Absence of Automatic Rebalancing Systems
Chapter 3. The Single Currency Area in the Context of International Crisis
3.1 Before the Crisis: the Adverse Effects of the Single Currency
3.1.1 Growth of Sovereign Debt
3.1.2 Real Estate Speculative Bubbles
3.2 The Crisis: Divergence of the Sovereign Debt Curves and the Disintegration of the Single Interest Rate Curve
3.2.1 The Paradoxical Dynamics of the Real Interest Rates During the Crisis
3.2.2 The Dynamics and the Unpredictability of the Credit Spreads: the Shadow Currencies
Chapter 4. Dysfunctional Mechanisms of the Eurozone
4.1 The Explosion of Target2 Balances and the Unsustainable Accumulation of the Structural Imbalances
4.1.1 The Current Account and the Permanent Trade Surplus of Germany
4.1.2 The Financial Account and the Flight of Investors From the Peripheral Countries to Germany
4.1.3 Unsettled Credits Circulating in the Eurosystem and the Vendor Financing Cycle
4.1.4 The Role of the ECB in Pandering to the Imbalance of Financial Flows
4.1.5 The Quantification of the Systemic Risk and the Potential Damage
4.2 The Nationalisation of the Public Debt: the Case of Italy
4.3 The Nationalisation of the Public Debt Pushed to the Extreme: the Case of Greece
4.3.1 The Evolution of the Greek debt in the Pre-crisis Period and the Role of the International Banks (2002–2008)
4.3.2 The First International Bail-out (2010–2012)
4.3.2.1 The Process of Debt Nationalisation
4.3.2.2 The Departure of Institutional Investors and the Entry of Governments in the Greek Risk
4.3.3 The Debt Swap of March 2012 and the Fictitious Recapitalisation of the Greek Banking System
4.3.4 The Abandonment by the International Banks and the Transfer of the Exposure to Greece's Risks onto the Eurozone Governments (2012–2015)
Chapter 5. The Pathological Banks-Governments Relationship
5.1 The Spread Intermediation
5.2 Collateral Discrimination on the Interbank Market
5.3 The Divergence Mechanisms in Action: Synergies and Accelerations
5.4 Case Studies: the Divergence Process in Some Peripheral Countries
Chapter 6. Assessing the Risk of a Euro Break-Up
6.1 A Historical Perspective on the Possible Break-up of the Euro
6.2 The Probability of a Euro Break-up
6.3 Costs and Benefits Associated with the Exit from the Euro
Chapter 7. Financial Assistance and Fiscal Agreements in the Eurozone
7.1 The Sovereign Bail-out Funds
7.1.1 The European Financial Stability Facility (EFSF)
7.1.2 The European Stability Mechanism (ESM)
7.2 The Reforms of the Stability and Growth Pact and the Fiscal Compact
Chapter 8. The Extraordinary Interventions of the ECB
8.1 The Securities Market Programme and the Purchases of Covered Bonds
8.2 The Long-term Refinancing Operations of December 2011 and February 2012 (LTROS)
8.3 The Outright Monetary Transactions (OMT)
8.4 The Targeted Long-term Refinancing Operations (TLTROS)
8.5 The Quantitative Easing
8.5.1 The Private Debt Side of the ECB's Quantitative Easing
8.5.2 The Public Debt Side of the ECB's Quantitative Easing
Chapter 9. The European and National Interventions on the Banking Systems
9.1 The Banking Union
9.2 The Hidden Recapitalisation of the Peripheral Banking Systems
9.3 The State Aids to the Banking Systems of the Core Countries
Chapter 10. Mutualisation of the Public Debt and Fiscal Transfers
10.1 The Mutualisation of the Public Debt in the Eurozone
10.1.1 The PADRE Project (Politically Acceptable Debt Restructuring in the Eurozone)
10.1.2 The “European Redemption Fund” and the Visco–Parello Proposal
10.1.3 The “Merkel Plan” of Varoufakis, Holland and Galbraith
10.2 The “Fiscal Currency” and Other Theories for the Unilateral Solution of Problems for Peripheral Countries
10.3 The Fiscal Transfers: Proposals for Structural Balance of Financial Flows
Chapter 11. Proposals of Monetary Policy Interventions to Overcome the Crisis
11.1 Reforming the Statutory Objectives of the ECB: the “Zero-spread Target”
11.2 The Cancellation of Interests on Government Bonds Purchased by the ECB
11.3 The European Public Debt Refinancing Programme (EPDRP)
11.4 A Far More Pervasive Intervention: Partial Debt Monetisation
11.5 The Purchase Programme of Asset-backed Securities Guaranteed by Sovereign States and Supranational Institutions
11.6 A Measure of Direct Support to the Real Economy: the Cancellation of Impaired Debts of the Non-financial Private Sector
11.7 A Proposal for an Authentic Sustainability of the Greek Public Debt
Chapter 12. Transparency as a Tool to Prevent Excessive Risk-taking and Contrast the Crisis
12.1 The Need for a Market Logic as the Basis of the Financial Sector's Regulation
12.2 Implications of the Lack of Transparency on Risks at a Macro Level
12.3 Fair Value and Probability Scenarios as a Solution to the Problem of Risk Transparency
Annex A
References
Index
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