European Financial Linkages: A New Look At Imbalances
IMF Working Papers, December 1, 2010
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- European Financial Linkages: A New Look At Imbalances
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Bibliographic details
- Authors: Claire Waysand, Kevin Ross, John C De Guzman
- Published: December 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781455211760.001
Dataset and scope
- New database comprising bilateral external financial assets and liabilities, excluding reserve assets and derivatives.
- Covers reported bilateral net international investment positions (IIPs) among European Union countries at the start of the financial crisis.
- Data have some gaps, but overall coverage of reported bilateral net IIPs is described as satisfactory.
Key findings
- Creditor and debtor positions vis-Ã -vis the rest of the EU tended to increase between 2000 and 2008.
- Capital largely flowed from wealthier to catching-up economies.
- The patterns of bilateral positions yield a richer picture of financial linkages and enable mapping of the financing of Euro area imbalances.
- These developments resulted in an increased interdependency among Euro Area economies.
Thematic focus
- Balance of payments and external position analysis using bilateral IIP data.
- Emphasis on financial integration, foreign assets, foreign direct investment, and international investment position across EU and Euro area countries.
- Consideration of country roles (creditor country, debtor country) and regional groupings (Euro area, Baltics, Luxembourg, France, Germany, UK).
Implications (analytical)
- Bilateral IIP data provide a more detailed view of financing channels underlying current account imbalances within the Euro area.
- Increasing creditor–debtor linkages heighten cross-country interdependence, with potential implications for vulnerability transmission during crises.
Source: European Financial Linkages: A New Look At Imbalances, Claire Waysand, Kevin Ross, John C De Guzman, December 1, 2010.