Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/98629
Authors: 
Aizenman, Joshua
Year of Publication: 
2012
Series/Report no.: 
Working Papers, UC Santa Cruz Economics Department 705
Abstract: 
The evolution of institutions in the US and other unions provides clear lessons. There are large gains from buffering currency unions with a union-wide deposit insurance, and partial debt mutualisation. The credibility of a union deposit insurance scheme requires transparent funding and supervision, with a reliable backstopping mechanism. Establishing the credibility of such a scheme benefits from partial debt mutualisation and the formation of a dedicated union-level tax collection needed to serve these liabilities. Limited debt mutualisation does not preclude the existence of a vibrant independent debt market for the union's states, restricted by each state's tax revenue.
Document Type: 
Working Paper

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