The sovereign-bank nexus continues to endanger the stability of the euro area. We present a proposal how to mitigate spillovers of risks from sovereigns to banks. It encompasses risk-based large exposure limits and risk-adequate capital requirements, with the large exposure limits being most important – both conceptually and empirically. Based on a recent snapshot of […]
Alexander Schäfer is an economist at the German Council of Economic Experts’ staff where he is responsible for financial market policy. His research focuses on financial market regulation and in particular on bail-out expectations in the aftermath of the subprime crisis. He absolved a doctoral degree at the University of Mainz (Chair of Professor Beatrice Weder di Mauro), an MSc in Economics from the Bocconi University and spent his undergraduate studies at the universities of Mainz and Paris I – Panthéon-Sorbonne. Prior to starting his doctoral thesis, he worked in the investment banking and asset management industry where he was responsible for equity derivatives transactions.