The financial health of banks and sovereigns is intertwined in a "sovereign-bank nexus" that may multiply and accelerate vulnerabilities in each sector, and lead to adverse feedback loops. Increasing resilience requires reducing the likelihood of severe stress in each sector, as well as lowering the potency of the nexus. However, designing effective reforms requires a clear understanding of the interaction between and the magnitude of the different channels that give rise to the nexus. This paper identifies these channels, assesses their empirical relevance, and discusses the policy implications of these findings
- ISBN10 1484359623
- ISBN13 9781484359624
- Publish Date 1 August 2019
- Publish Status Active
- Publish Country GB
- Imprint International Monetary Fund (IMF)
- Format Paperback
- Pages 53
- Language English