Abstract
Euro crisis has made a stronger impact on the financial market, on the back of the emergence of sovereign risk and concern for a financial system crisis. In this paper, I will first summarize how euro crisis has evolved and how the financial market has been affected by it so far, for the purpose of keeping a record of facts. I will then point out the nature of sovereign risk observed in the financial market, such as rating migration and negative feedback loop with concern for a financial system crisis, by focusing on some of the key drivers behind sovereign risk premium.
