Other risks [13]

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Bullet points include: Outside financial market context, sovereign risk may also relate to potential for state to renege on other promises. E.g. tax status of pension funds, rewriting of employment contracts, nationalisations, … Some protection afforded by robust legal frameworks (and multilateral treaties). But they too can be reversed if times are tough enough. Reinhart and Rogoff (2009) highlight interconnection between sovereign debt crises and banking crises, and pain that either or both together can generate

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