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How Europe should harness market forces to deal with sovereign credit risk

Fri, 03/19/2010 - 20:00 EDT  in
 

Mathias Hoffmann, 20 March 2010If a European Monetary Fund does happen, how would it work? This column proposes a European Sovereign Insurance Scheme to sell bond insurance on EMU members' sovereign debt. In good times the insurance fees would allow the EMF to build up a capital cushion. In bad times, the EMF could use these funds to facilitate an orderly unwinding of the default – while imposing tough conditions.Full Article: How Europe should harness market forces to deal with sovereign credit risk

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