Financial-Transaction Tax: Small is Beautiful
Policy Contribution, 8 February 2010
Based on a paper they wrote for the European Parliament Economic and Monetary Affairs Committee, Resident Fellows Zsolt Darvas and Jakob von Weizsäcker discuss the merits of the much-discussed financial-transaction tax. They argue that the case for taxing financial transactions for the sake of not raising revenue is relatively weak, but a financial-transaction tax could be useful in limiting socially-undesirable transactions. On this basis, they say, a very small, coordinated tax on financial transactions could be implemented successfully. [download it]
IFRS Sustainability Requires Further Governance Reform
Policy Contribution, 9 December 2009
This Policy Contribution reproduces the text of a letter sent by Senior Fellow Nicolas Véron to Gerrit Zalm, the Chairman of the International Accounting Standards Committee Foundation (IASCF) in response to the Foundation's public consultation on Part 2 of its Constitution Review. Véron writes that a broader strategic readjustment on the part of the IASCF is necessary if the Foundation hopes to regain the support of the global investment community, its most crucial group of stakeholders. The Foundation must make itself more responsive and accountable to the investment community, a requirement that has become more urgent due to the crisis. [download it]
Banking Crisis Management in the EU: An Interim Assessment
Working Paper, 9 December 2009
Director Jean Pisani-Ferry and Senior Fellow André Sapir provide an in-depth examination of the the banking crisis in the European Union, starting with a discussion of the pre-crisis banking landscape and including an assessment of the management of the crisis and the lessons learned going forward. The authors argue that the EU was institutionally ill-prepared to manage the crisis, with the response characterised by ad hoc actions and a lack of transparency. They say, however, that coordination has remarkably not been impeded by a divide within the euro area and policy performance has been better than expected given the sub-optimal nature of EU financial institutional arrangements. [download it]
The Crisis: Policy Lessons and Policy Challenges
Working Paper, 2 December 2009
Bruegel Director Jean Pisani-Ferry, with Agnès Bénassy-Quéré (CEPII, University Paris-Ouest and Ecole Polytechnique, Paris), Benoît Coeuré (Ecole Polytechnique, Paris) and Pierre Jacquet (ENPC, Paris, and Agence Française de Développement) provide an in-depth analysis of the financial crisis. The authors review the main causes of the crisis, pointing to three different, non-mutually exclusive lines of explanation: wrong incentives in the financial sector, unsustainable macroeconomic outcomes, and misunderstood and mismanaged systemic complexity. They also discuss supervisory and regulatory reform going forward, including an examination of several macroeconomic and financial-sector issues. [download it]
Turbulence Ahead for the City of London
Op-ed, 19 November 2009
In his monthly column, Senior Resident Fellow Nicolas Véron examines the prospects of the financial industry in the UK. He explains that the financial crisis has shifted perceptions of the City of London financial centre so far that even UK officials are now open to EU-wide regulation over the financial industry. This, combined with the rampant Euroscepticism of the incoming Tory government, spells turbulence for the City going forward. The column was published in Forbes Russia (19 Nov), French daily La Tribune (24 Nov), the business newspaper Australian Financial Review (25 Nov), Turkish business newspaper Referans (26 Nov) and leading Dutch daily NRC Handelsblad (30 Nov). [download it]
Please click here to download it in French.
More Than One Step to Financial Stability
Policy Brief, 28 October 2009
Visiting Scholar Garry Schinasi examines the European proposals for the creation of both a European Systemic Risk Board (ESRB) to oversee macroprudential regulation and a European System of Financial Supervision (ESFS) to strengthen microprudential supervision. He argues that structural vulnerabilities of this regulatory framework need to be addressed to ensure that the early-warning systems will be adequate to avoid future crises. Specifically, Schinasi points to the fact that the ESRB lacks binding powers to enforce regulation as well as the lack of a legislative framework to resolve the insolvency of systemically important financial institutions (SIFIs). [download it]
Europe's Banks Still Need Restructuring
Op-ed, 19 October 2009
Building on a June Policy Brief he wrote with Bruegel Board Member Adam Posen (see right), Senior Resident Fellow Nicolas Véron warns in his monthly column that policymakers must address the vulnerabilities of banks that remain from the current crisis before moving on to figuring out how to prevent the next one. He argues that a system-wide ‘triage’ is necessary to determine the health of all banks under a single methodology and that Germany remains the most important player to ensure unified action. The column was published in newspapers in China, Germany, France, Ireland, Turkey and Spain. [download it]
Please click here to download it in French, German and Chinese.
Rules of the Game
Op-ed, 31 August 2009
Resident Scholar Nicolas Véron leads off the first of five articles in Financial World's series on the anticipated upheaval in regulation of the worldwide financial system. In his column, Véron argues that the EU missed its chance to seize leadership on the global stage when the United States was at its weakest at the height of the economic crisis. Europe has been unable to produce a model for financial reform, he says, because of political and financial divisions within the EU. [download it]
A Solution for Europe‘s Banking Problem
Policy brief, 11 June 2009
Europe has yet to convincingly address the current situation in which a number of banks, albeit under state guarantee, are insolvent or likely to become so. Authors Adam Posen and Nicolas Véron advocate the creation of a temporary fiduciary authority to steer triage, recapitalisations and the management of distressed assets in public ownership, whilst leaving the key financial decisions in the hands of national governments. [download it]