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Working Paper No. 3: Leading indicators of financial stability for the euro area

Working Paper No. 3: Leading indicators of financial stability for the euro area


This paper is in support of The Analytical note No. 235, September 2011, "European economic governance: what indicators to prevent imbalances and strengthening convergence?".

Particular, it provides a more comprehensive list of graphics.

The crisis has revealed that even in states whose public finances showed a public balance to the balance before the crisis could be subject to significant financial imbalances. Everyone in the euro area is convinced of the need to establish mechanisms to prevent systemic risk more comprehensive than those currently provided by the Pact of Stability and Growth. However, if this enlargement is a consensus, the choice of indicators of imbalance remains open. The current proposals reveals at least two separate readings, though not exclusive, potential sources of instability in the euro area. One blames excessive imbalances to widening gaps in competitiveness between Member States, the other to a credit expansion accompanied by a sharp increase in the prices of assets, movable or immovable.

The purpose of this study is to test the relevance and robustness of indicators in debate and make proposals on the basis of lessons learned from the analysis of previous crises.

  • Author: Thomas Brand
  • Keywords : Leading Indicators; financial crisis.


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