We have learned from the history of socialism and from the financial crisis that a mere risk-shifting or mutualization
does not make debt nor the related structural weaknesses disappear.
He says the law enabling CompSource still exists under the new legislation; "if it is true mutualization
it would not have a separate-enabling statute.
There will be three parts to any kind of fiscal union in Europe: a programme of direct bank recapitalization - in Europe's case, by the European Stability Mechanism; an EU-wide system of deposit insurance that both prevents a run on banks in weaker countries and reduces moral hazard; and some form of debt mutualization
The French think that because they have swallowed the painful medicine of the fiscal compact and thus given away some of their cherished budgetary sovereignty, Germany should be keener to discuss euro bonds (the mutualization
of European debt), pan-European bank deposit insurance and a bank resolution regime.
This summer it recalibrated again, saying a more limited form of debt mutualization
was advisable but only when tied to strict fiscal conditionality -- a position so close to Merkel's as to be indistinguishable to most Germans.
This requires debt mutualization
, fiscal transfers between member states, and, of course, federal institutions to give all of this legitimacy.
of bank losses across states can reasonably be achieved, of course, only if there is area-wide supervision and area-wide provision of resources, such as is done in the United States through the FDIC.
The infamous New York fire in late 1835 drew people's attention to the need to provide for sudden and large losses, and the financial panic of 1837 spurred a move toward mutualization
for upstart life insurance companies.
Box 1: Core CCP Service Netting, Novation and Mutualization
I consider here an example of trade exposures among three institutions to demonstrate how a CCP clearing changes the risk associated with these exposures.
They are going in the opposite way to the natural traffic, the natural flow of digital, which is all about mutualization
, about increasing scale, about building communities.
Addressing 'service' requires addressing 'priority,' and addressing priority requires distinguishing among chronological, logical, and hierarchical relations, which Beals does to argue that Levinasian service 'is not a reversal of priority or a mutualization
of priority but, rather, is a pacific inversion of priority .
1986, "Ownership Structure and Control: The Mutualization
of Stock Life Insurance Companies," Journal of Financial Economics 16, 73-98.