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Letter from Professor Costas Milas Published in Financial Times
Professor Costas Milas
The Financial Times published a letter from Professor Costas Milas, lecturer in Economics, in which he questioned the use of government bond yields as reliable indicators of sovereign risk in Eurozone economies. Costas made the case that peripheral economies faced with a high risk of default are currently experiencing borrowing costs that might contradict all publicly available information.
Costas also commented to the Financial Times about how Basel changes will hit Greece’s debt, stating that ‘weak growth might force Ireland and Greece to restructure their debt. The Basel III agreement, which sets core tier one capital ratio at 7 per cent, poses an additional threat to Greece. In an attempt to calm financial markets, European banks are expected to adjust to the new rules sooner than later. European banks are also expected to set a capital ratio of about 12 per cent in good times. This will definitely put pressure on Greek banks to do the same since they already face extremely high borrowing costs.
With Greece in recession until late 2011 and very weak growth expected afterwards, such a move will deprive the domestic market from credit to consumers and companies, pushing the country into making debt restructuring even more likely'.
Costas is no stranger to the media as he is regularly called upon to comment on the state of the economy by BBC Radio Stoke and contributes as a business commentator to the two largest, and most prestigious, Greek newspapers, Kathimerini and To Vima.
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