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Tag Archives: Finance & Financial Regulation

Asset bubbles won’t help our post-pandemic recovery

An unintended consequence of the virus has been ‘one of the wildest bull markets in recent economic history’ but a worsening of income distribution will have a negative impact further down the line. Covid-19 will be remembered as the worst global economic shock in recent history but, compared to the most similar one, the Great Depression of 1929, its consequences on asset prices have been radically different. In fact, the Great Depression started with an implosion of equity prices while the...

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US separates climate concerns from financial oversight in contrast to EU activism

Different EU and US supervisory approaches to climate risk may hamper efforts to work together and risk fragmenting global markets. By: Rebecca Christie Date: February 18, 2021 Topic: Finance & Financial Regulation Climate change is a growing financial risk as well as an environmental threat. Increasingly, banks and asset managers are seeking ways to prevent future climate shocks from upending their businesses, while investors often seek ways to push their financial resources...

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Economic recovery after COVID-19 requires a clear vision for a healthy banking sector

The EU framework for crisis management and state aid in the banking sector urgently needs updating. The end of payment holidays and the winding-down of public support schemes in the post-COVID-19 recovery will expose large stocks of non-performing loans (NPLs). European Central Bank estimates, based on earlier stress tests, suggest that in a severe but plausible scenario, NPLs at euro-area banks could reach €1.4 trillion, well above the last peak of around €1 trillion, or 7.4% of loans, in...

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Can the gap in the Europe’s internal market for banking services be bridged?

The European Union has made significant progress to a more unified banking market but frictions remain between euro and non-euro countries. Without a coordinated approach to remaining issues in completing banking union, the gap could widen. Completing banking union remains one of the European Union’s policy priorities, notwithstanding the huge economic impact of COVID-19. The rise in non-performing exposures (NPEs) as support provided by EU governments peters out in the coming months will be...

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Europe’s banking union should learn the right lessons from the US

In revived discussions on European banking union, some have suggested a new regime to deal with failing banks, alongside existing ones, drawn from parts of the United States’ bank resolution framework. This fragmented approach could be counterproductive. Europe should adopt a unitary regime, like the US, that applies to all banks irrespective of size. In late September, the European Union reiterated its members’ commitment to press on with the ambitious banking reform discussion begun before...

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Common eurobonds should become Europe’s safe asset – but they don’t need to be green

The plan to fund the European Union’s recovery programme via debt issuance has raised hopes that a new type of euro-denominated safe asset could emerge. As a priority, the European Commission needs a strategy to create a liquid and transparent market in EU bonds. For now, funding through EU green bonds would complicate that effort. By: Alexander Lehmann Date: September 28, 2020 Topic: Finance & Financial Regulation To fund its future programmes, SURE (employment support, €100...

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Europe’s recovery gamble

Next Generation EU, was rightly hailed as a major breakthrough: never before had the EU borrowed to finance expenditures, let alone transfers to member states. But the programme and its Recovery and Resilience Facility amount to a high-risk gamble. By: Jean Pisani-Ferry Date: September 25, 2020 Topic: Finance & Financial Regulation This opinion post was originally published in Project Syndicate. To help their pandemic-hit economies recover, European Union leaders agreed in...

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Emerging Europe and the capital markets union

The European Union's capital market union needs a revamp because of Brexit and the deep recession, and to underpin the European Green Deal. In particular, equity capital in the countries of central and eastern Europe is underdeveloped. These countries should take measures to facilitate equity finance, accompanied by reform at EU level. By: Alexander Lehmann Date: September 17, 2020 Topic: Finance & Financial Regulation The European Union’s capital markets union (CMU) plan is...

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Private equity and Europe’s re-capitalisation challenge

Companies are struggling in the coronavirus crisis but solvency support provided by the European Union looks likely to be modest. This will make private equity more important in the recovery, and could create a springboard for longer-term reform to boost private equity. By: Alexander Lehmann Date: September 17, 2020 Topic: Finance & Financial Regulation The ongoing deep recession is certain to leave in its wake a significant number of corporate insolvencies, once current...

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For a better, more sovereign Europe

Keynote address by the German Federal Minister of Finance Olaf Scholz at Bruegel Annual Meetings, 3 September 2020 By: The Sound of Economics Date: September 9, 2020 Topic: European Macroeconomics & Governance Keynote address by the German Federal Minister of Finance Olaf Scholz at Bruegel Annual Meetings, 3 September 2020. This is part of a special feature of the Sound of Economics reporting highlights from Bruegel Annual Meetings, which happened between 1 and 3 September...

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