Written contribution to the public hearing of the Bundestag financial committee on June 3 2013 on the Single European Supervisor. Read more
Bruegel blog
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Stellungnahme zur öffentlichen Anhörung im Bundestag Finanzausschuß: Verordnungsentwurf gemeinsame europäische Bankenaufsicht
1st June 2013
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Blogs review: Dealing with an impaired monetary transmission mechanism
17th May 2013
What's at stake: Dealing with the fragmentation of capital markets along national borders and the resulting lack of funding for SMEs in the countries of the periphery has been a central issue for the ECB for some time already. But the prospect of a prolonged double-dip has rendered it even more urgent. In this review, I document the extent to which the transmission mechanism of monetary policy within the eurozone is broken and discuss several proposals – such as a negative lending deposit rate and the creation of a new program targeted to SMEs – designed to increase the flow of credit in the periphery. Read more
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Towards further liberalisation of the capital account in China
22nd February 2013
In China, discussions on capital account liberalisation have recently intensified. The Chinese government plans to gradually liberalise certain capital account items in the areas in which there is sufficient demand from the real economy and areas with relatively low investment risk, while maintaining tight regulation/supervision over the other items of the capital account and the financial sector. In response, Korean financial institutions need to establish strategies that will enable them to take part in this change, especially in the areas expected to undergo capital account liberalisation in the early stage. Read more
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SNS Reaal expropriation: Should Senior bondholders carry the burden on future bank resolutions?
6th February 2013
Last week the Dutch government announced the full expropriation of SNS Reaal, the 4th largest Dutch bank and decided to write-off shareholders and junior bondholders while senior bondholders where left untouched. Read more
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Blogs review: A bird’s eye view on Bruegel’s research in the crisis
25th January 2013
What’s at stake: On 22 January 2003, the idea of setting up what would become Bruegel had been given a strong impetus by the Chirac-Schröder declaration issued on the occasion of the 40th anniversary of the Elysée Treaty. Ten years after that first impulse, Bruegel has been ranked as 1st think-tank in Western Europe, 2nd outside the US, and 1st worldwide in International Economic Policy in the 2012 Global Go To Think Tanks Report. In the spirit of the Stability and Growth Pact, we decided to grant an exception the rules governing our blogs review and survey some of our very own publications for those of you (especially in the blogosphere since we were pretty late at joining the dance) who may have missed these. Read more
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Cooperation between home and host countries on the supervision of multinational banking groups
10th December 2012
With regard to oversight of multinational banks, supervisory authorities in home countries used to play a greater role than those in host countries. However, the recent global financial crises underlined the need for more intervention by host countries. As a host to many multinational banking groups, the Korean government needs to inspect whether there are regulatory loopholes in financial supervision, and to make greater efforts to strengthen global-level cooperation. Read more
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Why France will have no budget rule
14th August 2012
Like in other countries, the French Constitutional Council was asked to decide on the compatibility of the European fiscal treaty with the Constitution. The decision was actually requested by president François Hollande because of a legal uncertainty: would the provision of Art 3(2) according to which the rule limiting the structural budget deficit to 0.5 percent of GDP has to “take effect in the national law [..] through provisions of binding force and permanent character, preferably constitutional, or otherwise guaranteed to be fully respected and adhered to throughout the national budget process” require changing the French Constitution? Read more
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Eurocrisis lessons from banking regulation: create collateral in return for support
14th August 2012
The similarities between banks and countries in a monetary union are striking. First, like banks, countries in a monetary union can face a self-fulfilling run resulting in sudden stops. Second, just as one banks’ risk taking increases other banks’ probability of default because of contagion, as the current crisis in the eurozone shows, contagion is especially strong within a monetary union due to cross-border trade, impact on domestic banks, or investor beliefs on correlated risk (see e.g. the review in Pericoli and Sbracia, 2003). Third, just like banks considered to be sound turned to be insolvent in the 2007-2008 financial crisis, we are rediscovering that also in advanced economies debt levels can become unsustainable. And while a country with debt denominated in its own currency can not be forced into default by markets, this is not the case in a monetary union. Read more
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Deconstructing Mitt Romney’s economic plan
13th August 2012
What’s at stake: Last week was dominated in the blogosphere by an analysis of the Tax Policy Center – a joint venture of the Urban Institute and Brookings Institution –, which showed that Romney’s fiscal plan did not add up. The Romney campaign reacted by publishing its own White Paper co-authored by renown economists Greg Mankiw, Glenn Hubbard and John Taylor. But rather than calming the blogosphere, this report brought the controversy to an all different level as the document was found citing the work of other economists, claiming that it supports the position of Mitt Romney, when it does no such thing. Read more
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Europe’s Banking Union: Possible Next Steps on a Bumpy Path
3rd July 2012
In their summit statement of June 29, the heads of state and government of the euro zone issued a declaration widely interpreted by investors as the founding act of a European banking union, about which European policymakers have been talking increasingly vocally [http://www.piie.com/blogs/realtime/?p=2887] in the past two months or so. Their commitment remains little more than a promise, with multiple caveats. But Europe’s leaders will now renege on this promise at their peril. The general perception is that an irreversible step has been made, with vast consequences that will unfold only gradually. “We affirm that it is imperative to break the vicious circle between banks and sovereigns,” the heads of state and government declared. “The [European] Commission will present proposals… Read more