“Debt and Credit, Growth and Crises” Bank of Spain and the World Bank Madrid, Spain 19 June, 2012 1.

Slides:



Advertisements
Similar presentations
The Euro in Crisis Uri Dadush Carnegie Endowment for International Peace Chicago, June 14, 2010.
Advertisements

The euro crisis Lars Calmfors Fores 14 January 2014.
Global Shift: Implications of a Post-Western World Panel One: Competing Economic Models Jacob F. Kirkegaard, Peterson Institute.
Thomas D. Willett Claremont Colleges and Chair Professor of Graduate Institute of National Policy and Public Affairs, National Chung-Hsing University The.
1 The Current Economic Situation in the Euro Area Presentation by Amy Medearis and Valerie Rouxel-Laxton, Delegation of the European.
The European Sovereign Debt Crisis
SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Bank of Finland Bulletin 4/2012 Monetary policy and the global economy Governor Erkki Liikanen 12 September.
Vulnerabilities from the Sovereign Debt Crisis In Southeast Europe and Eurasia May 18, 2011 Partners for Financial Stability 2010 – 2013.
THE EURO TODAY: IS THERE A TOMORROW? Benjamin J. Cohen University of California, Santa Barbara Remarks prepared for presentation at Cirano, Montreal, 17.
EMU and the euro... (for dummies?) Presentation by Nigel Nagarajan Student Orientation – 2009 Euro Challenge Miami-Florida European Union Center of Excellence.
The Polish economy in 2002 Frigyes Ferdinand Heinz Research Office (London) Bank of Tokyo-Mitsubishi Ltd.
Is there a future for the EU after the crisis? Olaf Cramme Director, Policy Network & Visiting Fellow, LSE
Euro Challenge 2013 Delegation of the European Union to the United States The euro crisis: an update.
1 The European sovereign debt crisis and the future of the euro Peter Bekx European Commission Reykjavik, 19 February 2013.
Economic Experience and Crisis in the Euro Zone Carlos Hurtado* The Restructuring and Resolution of External Sovereign Debt World Bank. Annual Law, Justice.
Portugal: From financialization to crisis “Alternative solutions to the Debt Crisis”, Brussels, 07/03/2014 Portugal in the EMU: From financialization to.
THE DEBT CRISIS AND ITS IMPLICATIONS Dai Bingran Centre for European Studies Fudan University.
1 The Systemic Character of the Sovereign Debt Crisis: Policy Implications and Governance Issues Argentino Pessoa CEF.UP, Faculdade de Economia do Porto,
The Euro Ups and Downs Will it survive? Keith Pilbeam, City University, London.
Macroeconomic Policy in the Eurozone: Are There Alternatives to Slow Growth and High Unemployment? Mark Weisbrot, Co-Director Center for Economic and Policy.
Searching for Tranquility Amidst Troubled Waters Presentation Prepared for the FMRS 2015 John E. Charalambakis.
Macroeconomic Policy in the Eurozone: Are There Alternatives to Slow Growth and High Unemployment? Mark Weisbrot, Co-Director Center for Economic and Policy.
Multi-Speed Europe Future of Eurozone. The term European Commission’s Glossary: "Multi-speed" Europe is the term used to describe the idea of a method.
Is the Euro Crisis Over? Klaus Regling, Managing Director, ESM International Center for Monetary and Banking Studies, Geneva 25 March 2014.
Salvatore Cantale Tulane University. The Euro: Largest Planned Dollarization  January 1, 1999, the currencies of 11 countries were fixed against a new.
Convergence Criteria and European financial crisis ECONOMIC AND MONETARY UNION (EMU)
16. December 2010 Perspectives on Financial Crises Perspectives on Financial Crises Discussion of Prof. Peter Diamond Gernot Doppelhofer.
Restructuring the economic and monetary union Zsolt Darvas Bruegel, Corvinus University, IE HAS IKV Events on the Euro Crisis 24 February 2012, Istanbul.
© 2011 wheresjenny.com Unemployment. © 2011 wheresjenny.com Unemployment NEWS Euro zone unemployment reaches all-time high.  The eurozone’s stagnant.
Andrew Baker. What is wrong with the Euro Zone and what to do about it? Break up messy and potentially catastrophic – need a better designed Euro zone.
Much Ado about EMU Andrew K. Rose Berkeley, Haas 1Andrew Rose, EMU.
Implications of the crisis for stability and growth in the eurozone Martin Wolf, Chief Economics Commentator, Financial Times World Bank Workshop on “Inclusive.
Forum of Federations, Ottawa, June 2010 Prof. Dr. Lars P. Feld Ruprecht-Karls-University Heidelberg ZEW Mannheim German Academy of Sciences Leopoldina.
CAN THE EURO BECOME A MAJOR CURRENCY DESPITE WEAK INTERNAL GOVERNANCE? Presentation by Niels Thygesen* At IV ASTANA Economic Forum 3 May 2011 *Professor.
© RAINER MAURER, Pforzheim Prof. Dr. Rainer Maure Digression: The European Debt Crisis 2010.
The Global Economy European Monetary Union. European Union Emerged from post-WWII Europe –ECSC meant to end wars between France and Germany Evolved into.
The European Union and the Euro Crisis Layna Mosley Dept. of Political Science UNC Chapel Hill
Macroeconomics Prof. Juan Gabriel Rodríguez The Sovereign Debt Crisis.
The euro as solution and problem THE POLITICS OF EUROPEAN MONETARY INTEGRATION ZOLTÁN ÁDÁM, KOPINT-TÁRKI INSTITUTE FOR ECONOMIC RESEARCH
HOW STABLE IS THE EURO? A.G. Malliaris Loyola University Chicago Society for Policy Modeling at the ASSA Annual Meetings Chicago, Illinois, January 6 -
Party of the European Left –transform! europe “Together we can put an end to the problems of debt and austerity in Europe !” “Connecting the debt crisis.
New Narrative for Europe (and for the monetary union after the crisis) Lamfalussy Lecture series Budapest, 2 February 2015 Reform and Prosperity in the.
School of Business and Economics Studium Generale The euro area sovereign debt crisis: causes and consequences Prof. Dr. Olaf Sleijpen Maastricht, 3 November.
Freddy Van den Spiegel Chief Economist Economic outlook. Are we getting out of the mess? Brussels, February
ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY The euro crisis: ways out for the euro zone and its member states Vesa.
Finance Dr Katarzyna Sum Chair of International Finance Warsaw School of Economics THE PUBLIC DEBT AS A GLOBAL PROBLEM.
The systemic crisis of the euro-zone: A result of internal contradictions Robert Guttmann (Hofstra; UP13-CEPN) Joint Seminar–EPOG (04/11/2015)
Prof. Angel Saz-Carranza Director, ESADEgeo The European Union and The Interlocking Economic Crises 1.
Crises in currency unions: Spain Laurent K. Frey E809: International Monetary and Financial Systems.
The Eurozone after Stress Testing Charles Wyplosz The Graduate Institute, Geneva The Israeli Association for the Study of European Integration Annual Conference.
Economic and monetary union (EMU). EMU involves … Policy harmonisation to remove obstacles to factor mobility A more marked and wider range of common.
Much Ado about EMU Andrew K. Rose Berkeley, Haas 1Andrew Rose, EMU.
After the Fiesta – The Spanish Economy in Trouble Tutor2u Economics – February 2009.
European Investment Bank What Contributions to the Solution of the Crisis from the EIB Group? Debora Revoltella Director Economics Department European.
EU Debt Crisis Group 1 Day3 Pavlina Rucki, Tony Chen.
Euro area policy options to combat the debt crisis Christian Dreger, DIW Berlin.
Greek bailout agreements
The European Economic Crisis: Origins and Prospect for the Future
GROWTH AND CRISIS IN THE European Policy Response: The Euro
The Economic and Monetary Union (EMU) Name:Mohammed AlQahtani
A financial union By 2019 Beyond 2019
Economic and Monetary Union
What is Germany’s role in EU?
Economic and Monetary Union
European Economic and Monetary Union
Measures taken By the ECB, EC, FMI to tackle the crisis
Macedonia and the Euro-zone Debt Crisis
Is the Eurozone Recovering?
European Debt Crisis Arturo Peguero Pei-ling Liu Nilar Thein.
Economic Crossroads: From Recovery to Sustainable Growth in the Baltics and EU Jürgen Ligi Minister
Presentation transcript:

“Debt and Credit, Growth and Crises” Bank of Spain and the World Bank Madrid, Spain 19 June,

 Greece, Ireland and Portugal likely have “unsustainable” sovereign debt levels  But not themselves of systemic importance  Conversely, large peripheral countries (debtors) and core banking systems (creditors) are systemic  And the two are “joined at the hip”  Implying possible non linear outcomes  And even the breakup of the euro zone 2

 In spite of German rhetoric, fiscal excess in small peripherals only a small part of the problem  But general fiscal indiscipline has increased exposure elsewhere and hinders a policy response  Private sector excesses, in response to financial convergence across the zone, were of critical importance  Leading to real divergences in an already “sub optimal” currency area 3

 Strongly held economic beliefs, some likely wrong, but already hard wired into European institutions  Different visions of Europe  Many different countries with no effective mechanism for resolving disputes  No ex ante mechanisms for either bailouts or exit  A “democratic deficit” that hinders leadership and promotes division  Leaving the impression that policy is always “behind the curve” 4

 Short term challenges: meeting contagion  Ring fence large peripheral sovereigns and core banks  Avoid “triggering events” until ring fencing is adequate  Long term challenges: reducing contagion  Fiscal and financial oversight must move to the centre  Structural reforms affecting growth and “competitiveness” 5

 ECB could buy sovereign paper in required quantities, but conflicts with perceived mandate  EFSF and ESM could also buy sovereign paper and/or recapitalize banks, but too small  Initially many schemes for leveraging the EFSF, but non-starter  G 20 could help but many constraints 6

 Work with G20 to minimize global shocks  Having mismanaged Greece, need to convince markets that  Greece is unique among small peripheral countries  Debt restructuring does not imply leaving the euro zone  Measures to ring fence are adequate  But restoring confidence remains a “horse race” 7

 A permanent “transfer union” is not politically possible  Going back to the original framework is also not possible; fundamentally flawed  Must build stronger European institutions  To allow euro zone bond issues  To curb excesses which threaten banking systems  To better manage future crises But confront “should, could and would” problems 8

 All countries would benefit from structural reforms to promote growth and deal with assymetric shocks  Debtor countries must focus on tradables  Creditor countries must focus on non tradables  All members must embrace the full implications of being in a monetary union  But again confront “should, could and would problems” 9

 An orderly outcome as confidence comes back on the basis of measures announced end June  A disorderly outcome with a widening crisis eventually prompting required policy action  A very disorderly outcome as the crisis widens without an adequate policy response  With serious implications for the future of the euro zone and the broader global economy 10