As the bond market begins, finally, to price in greater relative risk in euro zone sovereigns, the intellectual underpinnings of the idea of a global division between emerging market and developed market bonds will be fundamentally tested.

The fund invests in developed financial markets outside Norway.

The market s reaction was to send Spanish government bond rates even higher.

The aging of developed markets is well known, but the latest data show that emerging markets are aging at an even faster pace.

Since then, emerging market currencies and fixed income securities (government and corporate bonds) have taken a hit.

Because emerging economies have relatively weak asset markets, their citizens seek safe haven in advanced country government bonds.

In addition, state bonds are not treated as equals, and the markets penalize profligate states.

Markets are now signaling that US Treasury bonds are much more valuable assets than they were a month ago.

The markets, not political debt ceilings, are taken seriously the introduction of Eurobonds would remove that disciplining function.

(iv) The facilitation, as appropriate, of access by the developing countries to advanced communication technology available on the open market

A serious discussion of global capital account regulations would benefit both advanced and emerging market economies.

(iv) The facilitation, as appropriate, of access by the developing countries to advanced communication technology available on the open market

(iv) The facilitation, as appropriate, of access by the developing countries to advanced communication technology available on the open market

The current differences in the interest rates of euro zone government bonds show that the financial markets regard a break up as a real possibility.

Sovereign creditworthiness will continue to diverge, with a further deterioration in advanced countries and continued improvement in emerging markets.

The LDCs welcomed the recent market access initiatives taken by developed countries in their favour.

As a result, sovereign risk today is a greater problem in advanced economies than in most emerging market economies.

Open economy macroeconomists examine the instabilities of international finance. Advanced training in economics requires learning about market failures in detail, and about the myriad ways in which governments can help markets work better.

In 2003, Mexico successfully issued new bonds which included CACs without incurring an increase in spreads, thus paving the way for a more frequent inclusion of CACs in emerging market bond issues.

Almost all major crises in emerging markets have been connected with shifts in exchange rates and monetary policy in advanced countries.

It goes without saying that developing and emerging market countries no longer look at the advanced countries as they once did.

So today s emerging market economies should be richer than today s advanced economies were back then, right?

Jamaica, for example, would issue aluminum bonds Nigeria would issue oil bonds Sierra Leone would issue iron ore bonds and Mongolia would issue copper bonds.

It could authorize the ECB to lend directly to governments that cannot borrow from the markets on reasonable terms until a eurobond regime is introduced.

That adds up to close to 4 annual growth for the global economy, with advanced economies growing at around 2 and emerging market countries growing at about 6 .

Emerging markets, failing to do the same, have punched below their weight. They have allowed the advanced countries to drive the G 20 process.

The major emerging economies also have growing systemic effects on growth and employment across a broad range of countries, including the advanced ones.

While Merkel opposes Hollande s proposal to create Eurobonds with a view to financing industrial projects, they cannot afford to waste time in reassuring jittery markets with a message of cohesion.

The supposed threat posed by government debt levels hasn t hurt these markets, at least in the relatively few countries that have inflation indexed bonds.

But continued high growth in emerging markets depends on avoiding a second major downturn in the advanced economies, which continue to absorb a large (though declining) share of their exports.

Some will object that there is little point in creating GDP linked bonds in advanced countries, because there is little uncertainty about GDP growth there.

This asymmetry has spurred huge capital flows from the former to the latter, which are likely to continue.

After all, developed markets, the favorite targets for SWF investments, were the first to be hit by the 2007 2008 financial crisis.

Opening up markets in developed countries is certainly one way of striking a better balance in multilateral trade efforts.

Southern Europe, however, is pushing hard for a complete changeover to Eurobonds to get rid of the interest rate premiums relative to Germany that markets are demanding of them.

I'm taking data from the U.N. it's the same as the World Bank has on the scale of income differences in these rich developed market democracies.

Seventh, the reasons for advanced economies high unemployment and anemic growth are structural, including the rise of competitive emerging markets.

Faced with weak demand in advanced countries, Asian economies are working to rebalance their sources of growth by shifting toward domestic and regional markets.

Emerging market countries could also invest in euros, if only they were offered such liquid assets as US Treasury bonds therein lies the current debate over the proposed creation of eurobonds.

Indeed, some emerging markets for example, Colombia had been issuing public debt at record low interest rate spreads over US treasuries.

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Indeed, growth in many emerging market economies starting with China is highly dependent on retrenching advanced economies.

So the recent slowdown of growth in emerging markets is not just cyclical, owing to weak growth or outright recession in advanced economies it is also structural.

As we have seen in recent days, it will take a big change in economic policy and very radical, coordinated action among all advanced and emerging market economies to avoid disaster.

Finally, sovereign risk is rising consider the troubles faced by investors in Dubai, Greece, and other emerging markets and advanced economies.