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Geneva Reports on the World Economy 4: Transparency, Risk Management and International Financial Fragility (International Center for Monetary and Banking Studies (Icmb)) by Draghi, Mario; Giavazzi, Francesco; Merton, Robert C; International Center for Monetary and Banking Studies; Centre for Economic Policy Research (Great Britain) is a book available to read on EtoBox.

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Discussions of the role of derivatives and their risks, as well as discussions of financial risks in general, often fail to distinguish between risks that are taken consciously and ones that are not. To understand the breeding conditions for financial crises, the prime source of concern is not risk per se, but the unintended, or unanticipated accumulation of risks by individuals, institutions or governments including the concealing of risks from stakeholders and overseers of those entities. This report, the fourth in the ICMB/CEPR series of Geneva Reports on the World Economy, analyses specific situations in which significant unanticipated and unintended financial risks can accumulate. The focus is, in particular, on the implicit guarantees that governments extend to banks and other financial institutions, and which may result in the accumulation, often unrecognised from the viewpoint of the government, of unanticipated risks in the balance sheet of the public sector. <p> Using the structural analogy between guarantees and options, the report shows that a government's exposure to risk arising from a guarantee is non-linear. For instance, in the case of a government which guarantees

Author

Draghi, Mario; Giavazzi, Francesco; Merton, Robert C; International Center for Monetary and Banking Studies; Centre for Economic Policy Research (Great Britain)

Publisher

Geneva, Switzerland: International Center for Monetary and Banking Studies ; London, [England]: Centre for Economic Policy Research ; [Washington, D.C.: distributed by the Brookings Institution Press]

Published

2003

Language

EN

ISBN

9781898128687

Subjects

Economics, Finance, Management