Journal of Banking and Finance Special Section “Financial Globalization and Its Spillovers” published

On 16 and 17 February, 2017 the EU Erasmus+ sponsored Jean-Monnet workshop on “Financial Globalization and Its Spillovers” took place at the Technische Hochschule Köln and Maastricht University, jointly organized by Joscha Beckmann, Ansgar Belke, Stefanie Kleimeier and Harald Sander. This special section of the Journal of Banking and Finance presents five papers from the workshop. 

My editorial (jointly written with Joscha Beckmann and Stefanie Kleimeier) presents the papers in a broader context, highlighting “the importance of bringing the finance and macroeconomic literature closer together in order to gain deeper insights into to effects of financial spillovers.”

You can open access the editorial until April 28, 2020 using this LINK.

Posted in financial globalization, financial stability, global banking | Tagged ,

Open Access to “The Travels of a Deposit in Turbulent Times”

My paper “The Travels of a Deposit in Turbulent Times: The Importance of Deposit Insurance Design for Cross-Border Deposits” , jointly written with Shusen Qi and Stefanie  Kleimeier and published by Economic Inquiry is now available “open access“.

In this paper “we examine the impact of the existence on an explicit deposit insurance (DI) scheme and its design features on bilateral cross‐border deposits (CBD) in a gravity model setting. We find that both the absolute quality of a country’s DI and its relative quality vis‐à‐vis other countries’ DI generally affect depositor behavior. However, during systemic banking crises, cross‐border depositors primarily seek countries with the best DI schemes. Similarly, during the 2008–2009 great financial crisis, the emergency actions taken by the governments, which supply and maintain these safe havens, have led to substantial relocations of CBD.”

Posted in deposit insurance, global banking, retail banking, Uncategorized | Tagged ,

New Policy Paper on Cross-Border Effects of National Deposit Insurance Systems

Deposit insurance systems are a common feature of the financial systems of most countries. Their rationale is twofold: to protect bank depositors in case of a bankruptcy and, even more importantly, to avoid widespread bankruptcies as a consequence of bank runs in the first place. However, in times of globally mobile capital, customers might look for safe(r) havens for their deposits abroad, especially when countries are experiencing a financial crisis. This can lead to a global competition for providing the best safety and, hence, destabilize the financial system of a crisis country even further. In a new policy paper, published in Ifo’s DICE Report, written jointly with Stefanie Kleimeier, Shusen Qi and myself review our recent research (forthcoming in Economic Inquiry) and argue that there is a strong case for global and regional coordination. Our research therefore also lends support for establishing a common European Deposit Insurance System (EDIS) to make the Euro area more resilient to future crises.

Posted in deposit insurance, financial stability, global banking, Uncategorized | Tagged , ,

Debate Café: The Future of Global Trade

On 18 February 2019 I participated in a panel discussion on “The Future of Global Trade“, organized by  SCOPE and Studium General of Maastricht University. It was insightful for me to debate controversial current trade (policy) issues with a panel of experts from different areas of expertise. Moreover, it was good to see so many young people in the audience, participating actively.

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Posted in trade, trade agreements | Tagged ,

New survey on “Banking Market Competition and Interest Rate Pass-Through”

Banking Competition and Interest Rate Pass-Through (with S. Kleimeier), in: Bikker, J.A. and L. Spierdijk (eds), Handbook of Competition in Banking and Finance, Cheltenham (Edgar Elgar), 2017: 305-322.

Posted in banking market competition, retail banking | Tagged

Keynote Lecture on Retail Banking Market Integration and Financial Stability in the Eurozone

In my Jean Monnet keynote lecture on the International Conference on Banking and Finance at the University of Warsaw on 10 July 2017, entitled “Whatever it takes: Retail Banking Market Integration and Financial Stability in the Eurozone”, I have highlighted the role of retail banking market integration for turning a still incomplete European Monetary Union into a more stable currency union.

The main message of the lecture is that retail banking market integration goes some way to provide more urgently needed risk sharing in the Eurozone, yet this might not be enough for two major reasons. First, the Banking Union is still incomplete. In particular, a single European fiscal backstop for the single resolution mechanism and the still lacking European deposit insurance is required. Secondly, given the empirical evidence on the reluctance of retail banking markets to integrate, additional public risk sharing is needed. Ultimately some fiscal solidarity in the Eurozone is necessary to make the monetary union sustainable.

Posted in deposit insurance, Euro crisis, financial stability, fiscal policy, retail banking | Tagged , ,

Deposit Insurance in Times of Crises: Safe Haven or Regulatory Arbitrage?

 

An updated version of this paper has been presented on the 2017 Biennial IADI Research Conference: Designing an Optimal Deposit Insurance System – Theory and Practice, on 1-2 June 2017 at the Bank for International Settlements in Basel. See also here…

Posted in deposit insurance, financial crisis, global banking, retail banking, Uncategorized | Tagged , ,

Will a president Macron be able to reform the eurozone?

European financial markets are already betting on the victory of centrist French presidential candidate Emmanuel Macron in the country’s May 7 second-round election.

Are investors right to believe that the eurozone – the monetary union of countries that have incorporated the euro as their national currency – will gain new momentum with Macron in the Élysée Palace?

In this piece, written for The Conversation, I argue that Macron will have better chances to reform the Eurozone by pushing for a rebalancing of Eurozone governance rather than advocating “to set up a common eurozone treasury with a single finance minister”.

Instead, while in some areas centralization is needed to ensure stability, in particular with respect to a central bank that can effectively backstop financial crises and a full banking union, it might be advisable to renationalize fiscal policy.

The reasons are twofold: First, the political chances to install a European finance minister are minimal. Therefore, there is a high risk that Mr. Macron might achieve little or no progress in his term, eventually increasing the chances for populist in the next presidential election. Second, giving back full control over the budget to the national authorities also means transferring back the responsibility for solid finances and replacing the various fiscal pacts, which never have really worked.

Of course, this may require to reduce the debt overhang of the past. But by doing it, this would give more room for a sustained Eurozone recovery and – eventually – even more widespread support for new Eurozone-wide fiscal mechanism for burden sharing. Read more… 

Posted in Euro crisis, Europe, fiscal policy | Tagged , , ,

Finally, some good economic news from the Eurozone – but will it last?

Finally, good news from the Eurozone. Unemployment rates fell to 9.5% in February 2017. According to Eurostat, this is the lowest rate since May 2009. The 19 countries that have adopted the common currency are thus returning back to the unemployment level they experienced before the outbreak of the Eurozone crisis. In the last 12 months, the Eurozone recovery has lifted 1.25 million people out of unemployment.

This long-awaited decrease in unemployment is highly welcome; every person back in work is good news, even though it took nine years to recover. Yes, many economists believe that the recovery could have been faster with much less pain if there had been less initial emphasis on austerity and less reluctance “to do what it takes” at the ECB before Mario Draghi made that move in 2012. But that said, the Eurozone must now look forward.

So, is the worst over? Is wealth and prosperity – the ultimate promise of the EU to its citizens – finally coming back to the Eurozone? And is the fragility of the Eurozone that brought the crisis and the dramatic rise in unemployment a thing of the past?

In this piece, written for LSE EUROPP, I will argue that much more needs to done to return to the pre-crisis level and to make the European Monetary Union waterproof against future shocks. Read more…

Posted in Euro crisis, Europe, financial crisis, financial stability | Tagged , , ,

Impressions from the Jean Monnet Workshop “Financial Globalization and its Spillovers”

Copyright:Heike Fischer /TH Köln” 

Links to the videos of the keynote speeches by Benoît Cœuré and Barry Eichengreen and the subsequent panel discussions can be found here. Moreover, links to the workshop website, the speeches and some foto impressions can also be found here. The event has been listed by Reuters as Top Economic Event.

Posted in Euro crisis, Europe, financial globalization, financial stability, Uncategorized | Tagged , , ,