We analyse the impact of the financial crisis on the structure and the dynamics of the Italian interbank market, focusing on monthly bank assets and liabilities data between January 2007 and December 2010. The analysis is developed using an ad hoc dataset based on supervisory reports. The data contain nominative information, which allow us to identify different reporting entities and counterparts. We distinguish between intra-group and extragroup transactions, domestic and foreign counterparties, secured and unsecured positions, and short and long-term loans. We also analyse the relationships between large, medium and small groups and characterize the direction of funds between the group's parent companies and the other banks in the group.

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This paper examines how domestic holdings of government debt affect sovereign default risk and government debt management. I develop a dynamic stochastic general equilibrium model with both external and domestic debt that endogenously generates output contraction upon default. Domestic holdings of government debt weaken investors' balance sheets and induce a contraction of credit and output upon default. I calibrate the model to the Argentinean economy and show that the model reproduces key empirical moments. Introducing domestic debt also yields relevant normative implications. While domestic debt is crucial to determining the risk of default, the efficient internal-external composition of debt cannot be achieved without government intervention. Pigouvian subsidies can restore efficiency.JEL classification: F34, F41, H63.