{"id":1352,"date":"2011-06-04T09:41:56","date_gmt":"2011-06-04T07:41:56","guid":{"rendered":"http:\/\/www.poleconomix.gr\/portal\/?p=1352"},"modified":"2011-06-04T09:46:06","modified_gmt":"2011-06-04T07:46:06","slug":"the-eu%e2%80%99s-rules-to-default-by","status":"publish","type":"post","link":"https:\/\/www.poleconomix.gr\/portal\/the-eu%e2%80%99s-rules-to-default-by\/","title":{"rendered":"The EU\u2019s Rules to Default By"},"content":{"rendered":"<p><a dir=\"ltr\" lang=\"en\" xml:lang=\"en\" href=\"http:\/\/www.project-syndicate.org\/contributor\/483\" target=\"_blank\">Gros, Daniel<\/a>.<\/p>\n<p>Greece\u2019s ballooning public debt is again throwing Europe\u2019s financial markets into turmoil. But why should a debt default by the government of a small, peripheral economy \u2013 one which accounts for less than 3% of eurozone GDP \u2013 be so significant?<\/p>\n<p>The answer is simple: the financial system\u2019s entire regulatory framework was built on the assumption that government debt is risk-free. Any sovereign default in Europe would shatter this cornerstone of financial regulation, and thus would have profound consequences.<\/p>\n<p>This is particularly visible in the banking sector. Internationally agreed rules stipulate that banks must create capital reserves commensurate to the risks that they take when they invest depositors\u2019 savings. But when banks lend to their own government, or hold its bonds, they are not required to create any additional reserves, because it is assumed that government debt is risk-free. After all, a government can always pay in its own currency.<\/p>\n<p><strong>\u03a0\u03b7\u03b3\u03ae: <\/strong>Project Syndicate<\/p>\n<p><a href=\"http:\/\/www.project-syndicate.org\/commentary\/gros23\/English\" target=\"_blank\">\u03c0\u03bb\u03ae\u03c1\u03b5\u03c2 \u03ba\u03b5\u03af\u03bc\u03b5\u03bd\u03bf<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Gros, Daniel. Greece\u2019s ballooning public debt is again throwing Europe\u2019s financial markets into turmoil. But why should a debt default by the government of a small, peripheral economy \u2013 one which accounts for less than 3% of eurozone GDP \u2013 be so significant? The answer is simple: the financial system\u2019s entire regulatory framework was built [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18,37],"tags":[26,27],"class_list":["post-1352","post","type-post","status-publish","format-standard","hentry","category-18","category-37","tag-26","tag-27"],"_links":{"self":[{"href":"https:\/\/www.poleconomix.gr\/portal\/wp-json\/wp\/v2\/posts\/1352","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.poleconomix.gr\/portal\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.poleconomix.gr\/portal\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.poleconomix.gr\/portal\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.poleconomix.gr\/portal\/wp-json\/wp\/v2\/comments?post=1352"}],"version-history":[{"count":3,"href":"https:\/\/www.poleconomix.gr\/portal\/wp-json\/wp\/v2\/posts\/1352\/revisions"}],"predecessor-version":[{"id":1355,"href":"https:\/\/www.poleconomix.gr\/portal\/wp-json\/wp\/v2\/posts\/1352\/revisions\/1355"}],"wp:attachment":[{"href":"https:\/\/www.poleconomix.gr\/portal\/wp-json\/wp\/v2\/media?parent=1352"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.poleconomix.gr\/portal\/wp-json\/wp\/v2\/categories?post=1352"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.poleconomix.gr\/portal\/wp-json\/wp\/v2\/tags?post=1352"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}