Negative Feedback Loop between the Sovereign Risk and the Banking Risk : Origins, Remedies and Outcome
Co-organized with the Euro50 group and the support of the Irish Ministry of Finance, this conference addressed the key topics of sovereign spillovers and negative interactions between the banking risk and the sovereign risks, a salient feature of Eurozone crisis. The goal was to better understand this negative loop in order to reduce risks of financial fragmentation in Europe. The keynote speech was delivered by Michael Noonan, Ireland’s Minister of Finance, and the panelists, including several deputy governors, explored the case of sovereign debt affecting banks. It was agreed that the road to recovery in the financial sector needed close assessment of policy options, which were elaborately discussed during last session of the conference in a roundtable format also aimed at summarizing the outcomes of the conference.