Yesterday, Bruegel published Memos to the new Commission, a collection of essays by Bruegel scholars on the key policy challenges and priorities the European Commission will face over the next five years. I contributed the memo on Financial Services Policy, and coauthored the one on Enterprise and Industrial Policy together with André Sapir.
Click here in case the above link is broken.
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.
The US Securities and Exchange Commission has conducted a public consultation on the roadmap it proposed last year (under then-Chairman Chris Cox) to adopt International Financial Reporting Standards in America. Yesterday I responded with a few suggestions about how the SEC should both support IFRS, and push for reforms of standard-setting and global enforcement.
Click here to download my letter, as subsequently published by Bruegel in its Policy Contribution series.
Bruegel just published this briefing paper which I prepared a few weeks ago at the request of the European Parliament's ECON (Economic and Monetary Affairs) committee. In it, I argue that the information and reference privileges currently enjoyed by credit rating agencies should be dismantled to establish a fairer competition with other financial risk assessment services providers. This is far more important than regulating the agencies themselves.
Download BruegelPolicyContribution_Feb09_Ratings in case the above link does not work.
Bruegel today released 'Safe and Sound: An EU Approach to Sovereign Investment', a new policy brief I co-authored with Lars-Hendrik Röller. In this piece, we take a broad look at the debate over economic nationalism, sovereign wealth funds and the security risks that may arise from foreign acquisitions.
We conclude that it is time for the EU to envisage what the US did with the Exon-Florio amendement twenty years ago, i.e. building a common legislative framework for the review of foreign investment from a national security viewpoint - even if the security assessments and corresponding decisions on individual foreign acquisition cases should for the time being remain in the hands of member states.
Download BruegelPolicyBrief_071108.pdf if you cannot access the document with the above link.
Bruegel just published The Demographics of Global Corporate Champions, a new working paper and public dataset in which I look more closely at the birth dates of the world's 500 largest companies (based on the FT Global 500 ranking by market capitalisation, September 2007).
Among other things, this novel database shows strinking differences between corporate demographics in Europe and Japan, where large companies tend to be old, and the US, which retains a significant ability to give birth to a steady flow of "new giants". I had already mentioned these results, especially in a Policy Brief in January and a column in March. But this is the first comprehensive presentation of the underlying data.
Download BruegelWorkingPaper_Jul08.pdf to read the working paper from this website.
In French: Download OpinionEuropeenne_2008.pdf to read an abridged version which was published in April 2008 in L'Opinion Européenne en 2008, a volume edited by Dominique Reynié and published by Lignes de Repères and the Robert Schuman Foundation.
Bruegel just published my comments on the International Accounting Standards Committee (IASC) Foundation's proposal to reform its governance arrangements, following a consultation meeting in which I participated in London on 19 June.
In my contribution I recommend more recognition of investors and other capital-markets users of financial information in the future governance framework, as well as a more meaningful public consultation process -- this governance reform may sound arcane but it will probably have a large impact on the future shape of international accounting standard-setting.
Download BruegelPolicyContribution_Jul08.pdf to read this piece.
This piece was published this week by Bruegel in its Policy Contributions series. I detail the arguments in the current policy debate about fair value accounting and again conclude that the problem lies with prudential regulations, such as Basel II, rather than accounting standards.
Download BruegelPolicyContribution_May08.pdf to read the paper. A French version is forthcoming in June in a joint issue of the Revue d'Economie Financière and Risques.
Today, Bruegel published this new Policy Brief, which I co-authored with Thomas Philippon of NYU Stern School of Business. We argue that Europe's financial system, which now serves the needs of large established companies very well, could do a better job at providing adequate financing solutions for newer, emerging companies, especially those with a fast growth potential.
In the last section on policy recommendations, we outline the possible content of a public policy action plan. In our view, orienting Europe's financial system towards emerging-company growth could be a policy objective of the same level of priority as existing EU objectives of financial integration and financial stability.
Download BruegelPolicyBrief_310108.pdf if the above link is not functioning.
I realize I forgot to publish this in July: it is my second contribution to the UK Financial Reporting Council's project on Choice in the UK Audit Market.
Download FRC_Response_July07.pdf to read the piece, which was published by Bruegel in its Policy Contributions series. It refines the points of my 2006 contribution and focuses more clearly on the large audit networks' financial transparency.
