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Financial Stability, Fiscal Consolidation and Long-Term Investment after the Crisis

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  • Franco Bassanini
  • Edoardo Reviglio

Abstract

In the future there will be a global growing demand for long-term investment, both in mature and in emerging countries, to finance infrastructure, innovation, education, growth, environmental programs. Mature economies will also need to increase their share of long-term investment to exit from the recent crisis, to reinforce their growth rates and global competitiveness and to ensure public debt sustainability. Given the need to enlarge the amount of long-term financing worldwide, policy makers should create a prudential and accounting framework that encourages long-term investment with positive effects for growth and financial market stability. The paper then discusses regulatory issues related to the introduction of a new international and/or European regulatory framework that is more favourable or less penalising for long-term investment, and issues related to the creation of new euro denominated financial instruments for financing infrastructure (long-term equity funds, project bonds and guarantee schemes) and for strengthening stability in EU sovereign bond markets (Eurobonds).

Suggested Citation

  • Franco Bassanini & Edoardo Reviglio, 2011. "Financial Stability, Fiscal Consolidation and Long-Term Investment after the Crisis," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2011(1), pages 31-75.
    • Handle: RePEc:oec:dafkad:5kg55qw1vbjl
    DOI: 10.1787/fmt-2011-5kg55qw1vbjl
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    Cited by:

    1. Lieve Fransen & Gino del Bufalo & Edoardo Reviglio, 2018. "Boosting Investment in Social Infrastructure in Europe," European Economy - Discussion Papers 074, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Myriam J. Maier, 2013. "Potential Instruments That The Ecb Could Take In Order To Face The Euro Zone Crisis," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 8(1), pages 33-48, March.
    3. Amedeo Amato & Sarah Shababi, 2014. "Proposte di modalit? di finanziamento del settore idrico italiano attraverso fondi rotativi e altre strutture," ECONOMIA E DIRITTO DEL TERZIARIO, FrancoAngeli Editore, vol. 2014(3), pages 389-424.
    4. Andrea Sartori, 2013. "I project bond in Italia: problemi e prospettive," CRANEC - Working Papers del Centro di Ricerche in Analisi economica e sviluppo economico internazionale crn1303, Università Cattolica del Sacro Cuore, Centro di Ricerche in Analisi economica e sviluppo economico internazionale (CRANEC).
    5. Inderst, Georg, 2013. "Private infrastructure finance and investment in Europe," EIB Working Papers 2013/02, European Investment Bank (EIB).

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