Sovereign credit default swap spreads as tools of ensuring the international financial security of the Eurozone countries

Abstract

The article investigates the state of the Eurozone countries’ financial security in the context of the world economic environment globalization. For the purpose of this, financial security is considered in terms of institutional, instrumental, and interdisciplinary dimensions. The subject of research is the tools of the Eurozone countries’ financial security ensuring. The goal is to research the dependence of the financial activity of the euro area countries on the results of credit rating assessments by rating agencies using the credit default swap instrument in the context of the Eurozone countries’ financial security ensuring.The objective is the process of the Eurozone countries’ financial security ensuring in the context of the world economic environment globalization. General scientific methods are used, such as system analysis – to determine the peculiarities of the financial security ensuring,regression analysis - to determine the relationship between the spreads of sovereign credit default swaps and the eurozone credit rating class. The following results are obtained: on the basis of the regression analysis of the spreads of sovereign credit default swaps and the eurozone credit rating classindicators the influence of sovereign credit risk figure on investment attractiveness of the Eurozone countries is determined; the approaches of the credit default swaps usage in the context of the researching of the credit rating impact on the investment attractiveness of the sovereigns are systematized; examination of dependence between credit ratings and sovereign credit default swap spreads is applied as the main research tool. Conclusions: for the sake of the Eurozone countries’ financial security enhancement, the authors offer replacement of the credit ratings of leading credit rating agencies with alternative credit risk indicators : market assessments of credit risk, instruments for internal credit risk assessment and third party valuation, as well as the ways of strengthening the Eurozone’s financial security through the establishment of permanent threat monitoring system and estimation of their quantity and quality variables are suggested in the article.