By José Viñals
The risk free nature of government bonds, one of the cornerstones of the global financial system, has come into question as the global crisis unfolds.
One thing is now very clear: government bonds are no longer the risk-free assets they once were. This carries far reaching implications for policymakers, central bankers, debt managers, and how the demand and supply sides of government bond markets function.
Filed under: Financial Crisis, Advanced Economies, Emerging Markets, International Monetary Fund, Public debt | Tagged: financial stability, risk aversion, balance sheets, cross-border linkages, sovereign risk, credit ratings, banking system, financial sector, financial risk, stress tests, government bonds, risk-free assets, contingent liabilities | 33 Comments »