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: Advanced Economies, Emerging Markets, Financial Crisis, International Monetary Fund, Public debt | Tagged: balance sheets, banking system, contingent liabilities, credit ratings, cross-border linkages, financial risk, financial sector, financial stability, government bonds, risk aversion, risk-free assets, sovereign risk, stress tests | 33 Comments »