Sovereign Ratings Add to Europe Instability, IMF Paper Says
This article is for subscribers only.
Sovereign rating announcements in Europe have had “significant” spillover effects in the region, revealing their potential to stir financial instability, International Monetary Fund economists said in a study.
The research was released yesterday, just as Portugal and Greece were downgraded by Standard & Poor’s, adding pressure on policy makers to stem the debt turmoil that led to bailouts of Greece and Ireland. Cuts to levels near the lowest investment grade for “relatively large economies” such as Greece have had a systematic impact on other countries sharing the euro, the study said.