The Peterson Institute just published Reality Check for the Global Economy in its Briefings series. As the title suggests, this collection of short essays edited by Olivier Blanchard and Adam Posen aims to give some facts-based perspective following the wild market gyrations observed in February, which arguably included some excessive pessimism in parts of the investor community.
My contribution to the project focuses on European banks and current uncertainties about them, including the use of Contingent Convertible (CoCo) debt, the unfinished clean-up of the euro area banking system (especially in Italy), and broader open questions about the future European approach to bank crisis resolution. I argue that all three issues are important but not new, and that the fact that investors are now acknowledging them more realistically is a welcome development.
Click here to download the entire PIIE briefing in PDF format. My piece was also republished today (with minor updates) on the Bruegel Blog.
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