Friday Finance

Group "Club Finance"

Crisis: the return of sovereign risk?

Please note: session starts at 8:15 a.m. sharp The reaction of most governments to the crisis has been to pull in the fiscal lever. All over the world, we are witnessing a transfer of debt from private to public players, with an almost unprecedented explosion in public deficits; in some European states, the most exposed to the consequences of the real estate crises, sovereign interest rates have risen sharply, for example in Greece, Ireland, Spain and even Austria. Beyond this, some leading financiers are even talking about the risk of default for certain major states, such as the United Kingdom and Russia, raising the spectre of a major currency crisis. What about the sustainability of European public finances in the face of exploding deficits? How can the euro zone withstand such a drift in its public finances? What are the exposures associated with emerging countries, notably in Eastern Europe, for the major European banks and indirectly for the States that support them: the United Kingdom, the Euro, Japan and the United States? Can we totally rule out violent currency crises between major geographical zones? What risks are investors in sovereign bonds exposed to?