Enhancing European Cooperation in Financial Supervision and Crisis Management. ACES Working Papers, August 2009

To overcome the regulatory pitfalls, regulatory capacity and resources in financial markets governance need to be enhanced, not only at national but also at global levels. In order to shed light on policy issues and agendas in international financial policy cooperation, this paper focuses on the case of European financial integration and regulations. The analysis of policy developments at the European level in coordinating differing national interests, supervisory systems, and practices among EU member states highlights fundamental elements of global financial regulatory cooperation.

Current challenges in EU politics. A perspective from North Rhine-Westphalia. ZEI Discussion Paper C216, 2013

I would like to briefly recapitulate where Europe stands today, and what has been achieved. Because I maintain that in the EU’s 27 Member States we have, despite the failings and shortcomings we all bemoan, reached a level of unity, prosperity and rule of law unheard of in the history of this continent, and possibly of the world. As far as territory is concerned: the European Economic Community started out with six members. The late Bronislaw Geremek, former Foreign Minister of Poland and an eminent historian, used to point out that this, at the time, corresponded in size and shape roughly to the empire of Charlemagne, one of the greatest unified territories the continent has ever known. And yet, a mere 55 years after the Treaty of Rome we have gone far beyond that. Today’s European Union encompasses 27 countries, more than 4 million square kilometers in territory and 500 million people. When it comes to Europe’s policies, at present, all eyes are on the Euro and the future of our common monetary and financial policy. But within our common space, we have achieved so much more than a common currency for a majority of Member States.

The New Financial Regulatory Paradigm: A transatlantic perspective. CEPS Policy Brief No. 287, 21 March 2013

This CEPS Policy Brief reviews key aspects of the new financial paradigm in a transatlantic perspective, focusing on the general approach in EU and US legislation in response to the financial crisis and the G-20 commitments and specifically as regards the extraterritorial implications. Following discussion of the institutional setting, conclusions are offered on what these changes mean in the context of the recently proposed Transatlantic Trade and Investment Partnership. In comparing the EU and the US efforts in re-engineering their regulatory regimes in response to the financial crisis, the paper finds, with the notable exception of the banking union, serious grounds for concern that the outcome may be an even more fragmented European financial market, access to which for third-country institutions is highly problematic.

The neglected side of banking union: reshaping Europe’s financial system. Bruegel Policy Contribution, 14 September 2013

This Policy Contribution...discusses how Europe's financial system could and should be reshaped. It starts from two basic points: First, the banking system needs to be credibly de-linked from the sovereigns and banks should operate across borders. Europe needs fewer national champions. Second, other forms of financial intermediation need to be developed. Both steps require a significant stepping up of the policy system, including a single resolution mechanism. Together, this will render Europe’s financial system more stable, more efficient and more conducive to growth.

Fiscal policy, banks and the financial crisis. National Bank of Belgium Working Paper No. 234, October 2012

This paper studies the effectiveness of Euro Area (EA) fiscal policy, during the recent financial crisis, using an estimated New Keynesian model with a bank. A key dimension of policy in the crisis was massive government support for banks—that dimension has so far received little attention in the macroeconomics literature. We use the estimated model to analyze the effects of bank asset losses, of government support for banks, and other fiscal stimulus measures, in the EA. Our results suggest that support for banks had a stabilizing effect on EA output, consumption and investment. Increased government purchases helped to stabilize output, but crowded out consumption. Higher transfers to households had a positive impact on private consumption, but a negligible effect on output and investment. Banking shocks and increased government spending explain half of the rise in the public debt/GDP ratio since the onset of the crisis.

Financial services and the Transatlantic Trade and Investment Partnership. CEPS Policy Brief No. 302, 20 November 2013

Given the size of the financial markets on both sides of the Atlantic and the symmetry in the follow-up of the G-20 standards, Karel Lannoo argues in this Policy Brief that the Transatlantic Trade and Investment Partnership (TTIP) provides a good opportunity to put in place a more institutionalised framework. He finds that both blocs have reacted in similar ways to the financial crisis in strengthening their regulatory and supervisory frameworks and incorporating the G-20 recommendations into federal law. He also notes that consumer protection has been reinforced, certainly in the US, with the creation of the Consumer Financial Protection Bureau. And on the EU side, the Single Supervisory Mechanism (SSM) will radically change banking supervision. In his view, inclusion of financial services could also be an opportunity to strengthen prudential rules and consumer protection provisions on both sides. Rather than leading to a reduction of consumer protection, as had been feared in the post-crisis environment, it could lead to an examination, exchange and recognition of best practices in regulation and enforcement. Finally, he concludes that inclusion of financial services would make it part of the permanent regulatory dialogue that will be established as a result of a successful TTIP.

Policy Lessons for Macroeconomic and Financial Crisis Management in the Southern and Eastern Mediterranean. CEPS Policy Brief No. 308, 13 December 2013

This Policy Brief attempts to draw lessons from the combination of the global financial crisis and the Arab uprisings focusing on the domains related to fiscal, monetary and financial policies. It does so by answering the following questions: What has been the impact of the crisis and the uprisings on the fiscal, monetary and financial policies of the SEMCs? What have been the crisis management actions? And what policy lessons can be drawn for crisis management in the future? And how can the EU contribute to this within the Euro-Med Partnership?

A Proper Yield Curve for Greece to Kick-Start Financial Intermediation. ECMI Policy Brief No. 21, 10 December 2013

At present, the market is severely mispricing Greece’s sovereign risk relative to the country’s fundamentals. As a result of the mispricing, financial intermediation in Greece has become dysfunctional and the privatisation of state-owned assets has stalled. This mispricing is partially due to an illiquid and fragmented government yield curve. A well-designed public liability management exercise can lead to a more efficient pricing of Greece’s government bonds and thereby help restore stable and affordable financing for the country’s private sector, which is imperative in order to overcome Greece’s deep recession. This paper proposes three measures to enhance the functioning of the Greek government debt market: i) Greece should issue a new five-year bond, ii) it should consolidate the 20 individual series of government bonds into four liquid securities and iii) it should offer investors a swap of these newly created bonds into dollar-denominated securities. Each of these measures would be beneficial to the Hellenic Republic, since the government would be able to reduce the face value and the net present value of its debt stock. Furthermore, this exercise would facilitate the resumption of market access, which is a necessary condition for continuous multilateral disbursements to Greece.