The EC's Public Debt Disease: Discipline with Credit Spreads and Cure with Price – May 1991

01 May 1991

In a single currency world, a key credit test will be the proportion of a member state's income spent on interest payments. Markets will discipline excesses and require higher interest rates. Price stability - with lower real interest rates - will cause a remarkable leap in credit quality.

In a single currency world, a key credit test will be the proportion of a member state's income spent on interest payments. Markets will discipline excesses and require higher interest rates. Price stability - with lower real interest rates - will cause a remarkable leap in credit quality.

© Graham Bishop