Think tank europe

Derivatives in crisis: Policy choices for Europe

14/09/2009
Author : Istituto per gli Studi di Politica Internazionale (ISPI - Italy)
By Sebastijan Hrovatin, Mattias Levin, Mario Nava, Fabrizio Planta and Peer Ritter
 
Derivatives are a tool to share risks in the economy and can thus provide a benefit to the economy.

The financial crisis has demonstrated that they can also pose significant risks to financial stability. These are related to the exponential growth in derivatives over the last decade, increasing leverage and interconnectedness of financial institutions.

This went largely unnoticed by markets and prudential super-visors, because derivative markets are predominantly organised in bilateral relation-ships, which makes them in-transparent.

The article discusses policy tools to remedy the flaws in derivative markets, taking inspiration from a recent communication by the European Commission.

The views expressed here are the authors' only and they should not be attributed to the European Commission.


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Friday, 10 February 2012
Europe's World - AUTUMN 2011 - #19
The Autumn 2011 issue of Europe's World is out!

We feel it's fair to say that few if any publications in the field of international relations and policy debate have grown as fast or widened their scope so remarkably as Europe's World.

Our 100,000 readers worldwide are drawn from politics, government, business, the media, universities and NGOs.
 
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