Size in Banking: Efficiency of Scale vs. Abuse of Power

by Guest Authors: Eric De Keuleneer, DeKeuleneer.com and Nastassia Leszczynska Editor’s Note: This is posted as a companion article to The Great Debate©:  Will Dodd-Frank be Effective? Introduction: Economies of scale, optimal size and competition in banking It is worth looking at the last decennia in the banking sector to reflect on the relation between …

EU: The Pitfalls of Official First-loss Bond Insurance

by Daniel Gros, as posted at Voxeu At 4am Thursday (October 27) EZ leaders agreed the rough outline of a package of measures designed to end the EZ crisis. This column argues that a central pillar of the package will not work. The so-called first-loss insurance of EZ sovereign debt relies on an incomplete analysis …

China: Unsustainable Rise in Debt?

An unsustainable rise in debt is, for me, one of the key indicators that the investment-driven model has passed its useful life and is generating negative growth while posting positive growth numbers. Examples of this are the financing of the copper import trade, real estate financing and local government asset transfers that force haircuts on private bond holders.