The Peterson Institute and Bruegel published this Working Paper, in which Morris Goldstein and I analyze historical and structural differences between the US and EU, which help explain the differences in policy debates and decisions on the "too-big-to-fail" problem which lies at the core of current prudential regulatory debates.
Click here for the PIIE version in PDF if the above link does not work, and click here for the Bruegel version as published in early February.
Update: Morris and I later published a summary of the argument for Vox and NRC Handelsblad.
Bruegel just published the text of a paper I presented at the Brookings Institution last week, as part of a discussion co-sponsored by the Heinrich-Böll Foundation on current financial policy challenges. In this piece, I analyze the differences in the timing of the regulatory response on both sides of the Atlantic, and briefly outline challenges ahead for the EU.
Click here to read the paper, or click here to upload it from Bruegel's website.
The paper was originally published by Brookings and also later by the Peterson Institute.
Bruegel today published a policy brief by Stéphane Rottier (Adviser at the National Bank of Belgium) and myself, in which we look at how the crisis has changed the conditions of the global financial regulatory debate.
We identify key new trends and make corresponding recommendations to global leaders, with an emphasis on the subsidiarity principle and on keeping capital markets globally integrated.
To support the analysis we simultaneously produced a policy contribution which was also published today by Bruegel.
Update: the paper was later published, with a few improvements, by the Peterson Institute.
In a new Bruegel Policy Brief co-authored with Adam Posen, we describe 'Europe's banking problem' as a high reliance of the European economy on a badly damaged banking system. History confirms the only way to solve it is 'triage', i.e. differentiation among banks on the basis of their actual capital position assessed through a consistent process and publicly disclosed, then restructuring of those banks which would not subsequently succeed to meet their capital needs.
But in continental Europe, advanced cross-border integration means that triage and restructuring cannot be effective if conducted only at national level. As no existing supranational institutions can realistically do the job, we advocate the creation of a temporary fiduciary agency or 'Bank Treuhand' by a critical mass of European countries. The Treuhand would assess major banks' balance sheets and publish triage results, catalyse restructurings by being a broker for negotiation among national governments, and manage distressed assets that would be brought into public ownership as the result. It would also buy time, and pave the way, for the longer-term task of reforming the EU's supervisory architecture in order to make cross-border banking sustainable.
Click here to download and read the Policy Brief as published by Bruegel (only in English).
Click here to read the piece as published by the Peterson Institute for International Economics on 16 June 2009.
