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10 June 2012

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Peter

1. The increase to the capital of EIB has more than a 10x effect in terms of spending because EIB (like any bank) is levered, so the effect is much larger. Of course the bank will have to raise debt to fund this increase.

2. State-led investment is only useful if the investment is "NPV positive" from a GDP sense otherwise it will just result in a debt crisis down the road. I don't have enough information to know if this is the case in China, but anecdotes suggest it is.

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John Ross

  • Is Senior Fellow at Chongyang Institute for Financial Studies, Renmin University of China

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