Is the euro area strong enough to make it through another crisis? What reforms are still needed. Klaus Regling will join us for this roundtable event in Washington DC to discuss these questions.
On 11 April Bruegel will hold a high-level roundtable debate with Klaus Regling, Managing Director of the European Stability Mechanism (ESM) in Washington DC. In his initial remarks, Klaus Regling will answer the question if the euro area is now robust enough to weather the next crisis. Klaus Regling will describe the euro area reforms as agreed by the Euro Summit in December, and will put a focus on the strengthened role of the ESM. Bruegel’s Director, Guntram Wolff, will chair the following roundtable discussion, which will be kicked-off by Maria Demertzis, Bruegel’s deputy director.
The event will take place at the offices of the Center for Global Development and Masood Ahmed, CGD’s president, will welcome guests.
The event will be held at 12:30-14:00 at the Center for Global Development, 2055 L Street NW, Washington DC 20036, at 12:30-14:00. A sandwich lunch will be served.
This event is only open to Bruegel’s Members and a small number of selected invitees. For more information write to email@example.com
President of Center for Global Development (CDG)
Managing Director of the European Stability Mechanism (ESM)
Who tends to get the blame for the Euro crisis in national media? What do national politicians think about the EU and EMU?
The authors map how much fiscal debt is in the hands of domestic and foreign holders in the euro area. While the market for debt was much more international prior to the crisis, this trend has since been reversed. At the same time, central banks have become important holders of fiscal debt.
With the end of the Greece support programme, authorities now have scope to focus on the legacy of NPLs and excess private-sector debt. Two wide-ranging schemes are under discussion. They should be assessed in terms of required state support, likely investor appetite for problematic bank assets, and institutional capacity to manage a complex new organisation tasked with debt restructuring.
Is a more important international role for the euro worth pursuing? What measures would achieve this result, if it is worth pursuing?
The deal reached on euro-zone reform at the December 4th Eurogroup is not ground-breaking. However, it contains a number of incremental but potentially key technical reforms – in particular regarding the ESM toolkit. Some constitute an improvement, but there are also clear flaws that should be corrected at the Euro Summit.
Banks deemed to be failing or likely to fail in the banking union are either put into insolvency/liquidation or enter a resolution scheme to protect the public interest. After resolution but before full market confidence is restored, the liquidity needs of resolved banks might exceed what can be met through regular monetary policy operations or emergency liquidity assistance. All liquidity needs that emerge must be met for resolution to be a success. In the euro area, this can only be done credibly for systemically important banks by the central bank.
This Policy Contribution looks at the evolution of public debt in Belgium and Italy since 1990 and uses the debt dynamics equation to explain the contrasting evolution in the two countries in the run-up to the introduction of the euro, during the early years of the euro and since the beginning of the crisis, arguing that the euro could have been used also by Italy to undertake sufficiently large fiscal adjustment.
The ECB should refine its collateral framework in order to continue protecting its balance sheet without putting at risk the safe-asset status of sovereign bonds of the euro area.
This event featured a presentation by Ashoka Mody of his new book, which argues that the Euro is at the root of the problems the European Union faces today.
Strengthening the ESM can help to prevent crises and enhance deeper financial integration in the euro area. Yet, mislabelling the ESM as “European Monetary Fund” will not do the trick. Instead, a revamp of its precautionary credit line could create a meaningful instrument, built on the existing policy framework, by incentivising strong economic policies and guarding against financial market turbulence. However, the devil is in the details. The design of such a facility has to be well thought through, to navigate difficult trade-offs.
In their recent Policy Insight, the team of French and German authors suggest introducing sovereign bond-backed securities to play the role of safe asset in the euro area. This column, part of the VoxEU debate on euro-area reform, argues that an improved euro-area architecture would, in the long run, make all euro-area sovereign bonds safer, and thus make the provision of safe assets through untested and potentially disruptive sovereign bond-backed securities unnecessary.
The European Commission’s proposal for a new stabilisation instrument inside the EU budget for the countries of the economic and monetary union is disappointing. This analysis highlights the proposed instrument’s main limitations, as well as the restrictive factors that will persist without a deeper EU budget reform.