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Toma Tomov
- 26 November 2025
- FINANCIAL STABILITY REVIEW - ARTICLEFinancial Stability Review Issue 2, 2025Details
- Abstract
- Trade turmoil in April 2025 saw a marked change in cross-asset behaviour compared with typical patterns. Notably, the US dollar depreciated strongly while US Treasury yields rose – the opposite of what usually happens in a risk-off environment. This prompted discussions as to whether the safe-haven properties of US dollar-denominated assets might be changing. This is particularly important for euro area financial stability since euro area investors hold US dollar-denominated securities in an amount equivalent to €6 trillion, which represents a significant share of their portfolios. As policy uncertainty remains high and alternative safe assets are scarce, investors’ risk management practices may be evolving. Immediate and decisive implementation of policies associated with the savings and investments union and the capital markets union would help foster an alternative market of safe assets for euro area and global investors.
- JEL Code
- G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
G15 : Financial Economics→General Financial Markets→International Financial Markets
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
F31 : International Economics→International Finance→Foreign Exchange
- 11 June 2025
- THE INTERNATIONAL ROLE OF THE EURO - BOXThe international role of the euro 2025Details
- Abstract
- The Box examines the borrowing behaviour of US firms that issue euro-denominated bonds, commonly referred to as "Reverse Yankees," and explores the factors influencing their choice of issuance currency, including the risk-free rate differentials between the US and euro area, credit spreads, and the cost of hedging foreign exchange risk. Empirical evidence suggests that both declining hedged and unhedged borrowing costs in euro provide an incentive for US firms to issue more Reverse Yankee bonds. Changes in expected borrowing costs play an important role for the euro’s appeal as an international funding currency.
- JEL Code
- F31 : International Economics→International Finance→Foreign Exchange
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
G15 : Financial Economics→General Financial Markets→International Financial Markets
E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest Rates: Determination, Term Structure, and Effects
F34 : International Economics→International Finance→International Lending and Debt Problems
- 9 January 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2024Details
- Abstract
- This box explores the resilience of US equity markets since 2023 in spite of monetary policy tightening and persistent geopolitical tensions. Market dynamics have been driven by strong earnings growth expectations linked to advances in artificial intelligence, particularly for the so-called Magnificent Seven stocks, and by buoyant risk appetite. Elevated valuations and the significant stock market concentration make the US equity market vulnerable to adverse shocks, such as disappointing earnings or macroeconomic surprises.
- JEL Code
- G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
G15 : Financial Economics→General Financial Markets→International Financial Markets
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy