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31. International in Life, National in Death? Banking Nationalism on the Road to Banking Union

Author:
Martin Rhodes and Rachel A. Epstein
Publication Date:
12-2014
Content Type:
Working Paper
Institution:
The Kolleg-Forschergruppe (KFG)
Abstract:
European states have a long history of banking sector nationalism. Control over credit allocation is believed to contribute to economic development and competitiveness goals, insulation from external economic shocks, and control over monetary policy. This paper explains the potentially dramatic loss in domestic control over banks created by the European Banking Union (EBU). First, we argue that ongoing liberalization in the global and European economies has made banking sector protectionism both more costly and conflictual. Second, we contend that because many of the biggest banks have internationalized their operations, they now prefer centralized European regulation and supervision. Third, supporting a modified neofunctionalist argument, we find that behind the sometimes frenetic intergovernmental bargaining in 2012-14, it is primarily the European Commission and the European Central Bank that have pushed Banking Union ahead. Supranational institutions have argued, with some success, that they have unique capacity to solve collective action and prisoners' dilemma problems. Contrary to accepted wisdom, Germany has not set or limited the Banking Union agenda to a great extent, in part because of its own internal divisions. Moreover, the Commission and the ECB have managed at critical junctures to isolate Germany to secure the country's assent to controversial measures.
Topic:
Economics, Government, and Monetary Policy
Political Geography:
Europe and Germany

32. A Eurozone Subcommittee in the European Parliament: high hopes, low results?

Author:
Stijn Verhelst
Publication Date:
07-2014
Content Type:
Policy Brief
Institution:
EGMONT - The Royal Institute for International Relations
Abstract:
The task of ensuring the democratic legitimacy of the euro has been placed high on the agenda. A eurozone subcommittee in the European Parliament is one of the rare concrete proposals to secure this, creating high hopes. Due to legal and political hurdles the idea might nonetheless have minimal results, which might result in suboptimal parliamentary scrutiny of the eurozone. This Policy Brief argues that if a eurozone subcommittee is to be both meaningful and politically feasible, it should combine substantial competences with innovative decision-making.
Topic:
Economics, Regional Cooperation, and Monetary Policy
Political Geography:
Europe

33. Versailles Redux? Eurozone Competitiveness in a Dynamic Balassa-Samuelson-Penn Framework

Author:
Arvind Subramanian and Kevin Stahler
Publication Date:
11-2014
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Prima facie, competitiveness adjustments in the eurozone, based on unit labor cost developments, appear sensible and in line with what the economic analyst might have predicted and the economic doctor might have ordered. But a broader and arguably better—Balassa-Samuelson-Penn (BSP)—framework for analyzing these adjustments paints a very different picture. Taking advantage of the newly released PPP-based estimates of the International Comparison Program (2011), we identify a causal BSP relationship. We apply this framework to computing more appropriate measures of real competitiveness changes in Europe and other advanced economies in the aftermath of the recent global crises. There has been a deterioration, not improvement, in competitiveness in the periphery countries between 2007 and 2013. Second, the pattern of adjustment within the eurozone has been dramatically perverse, with Germany having improved competitiveness by 9 percent and with Greece's having deteriorated by 9 percent. Third, real competitiveness changes are strongly correlated with nominal exchange rate changes, which suggests the importance of having a flexible (and preferably independent) currency for effecting external adjustments. Fourth, internal devaluation—defined as real competitiveness improvements in excess of nominal exchange rate changes—is possible but seems limited in scope and magnitude. Our results are robust to adjusting the BSP framework to take account of the special circumstances of countries experiencing unemployment. Even if we ignore the BSP effect, the broad pattern of limited and lopsided adjustment in the eurozone remains.
Topic:
Economics, Industrial Policy, International Trade and Finance, Monetary Policy, and Financial Crisis
Political Geography:
Europe

34. The Weightless Marketplace: Coming to Terms with Innovative Payment Systems, Digital Currencies and Online Labor Markets

Author:
David Bollier
Publication Date:
04-2014
Content Type:
Working Paper
Institution:
Aspen Institute
Abstract:
The structure and character of commerce has changed dramatically since the arrival of the World Wide Web and various digital technologies, particularly mobile phones and large, interconnected databases. Consumers now have much greater market power and choice. Markets can more easily scale, often globally. Co-production and fluid producer/consumer interactions are routine. Transactions themselves have become far cheaper and more easily consummated.
Topic:
Foreign Exchange, International Trade and Finance, Markets, Science and Technology, Communications, and Monetary Policy
Political Geography:
United States and Europe

35. What if the Next Financial Crisis Hits the Banking Union? A Call for an "If All Else Fails" Clause

Author:
Stijn Verhelst
Publication Date:
09-2013
Content Type:
Policy Brief
Institution:
EGMONT - The Royal Institute for International Relations
Abstract:
This Policy Brief argues that the envisaged design of the Banking Union risks not being sufficient to deal with the next large-scale financial crisis. Therefore, an "if all else fails" clause should be approved, stating that the Banking Union members can provide joint last resort financing to deal with a future crisis. An agreement on the clause should be feasible because it is beneficial to all Member States.
Topic:
Economics, International Trade and Finance, Markets, Monetary Policy, and Financial Crisis
Political Geography:
Europe

36. A case for adjusting fiscal consolidation in the eurozone

Author:
Xavier Vanden Bosch
Publication Date:
01-2013
Content Type:
Policy Brief
Institution:
EGMONT - The Royal Institute for International Relations
Abstract:
Fiscal consolidation is essential to ensure the sustainability of euro zone countries' public debt. However, as a principle, consolidation should not be pursued at a pace unnecessarily undermining growth in the short term. Repeated downward revisions of growth call for the use of the flexibility foreseen in the EU fiscal framework. The Commission should adapt the deadlines for fiscal correction to prevent excessive, pro-cyclical adjustment in 2013. In turn, adequate surveillance and coordination must ensure structural adjustments constitute the core of fiscal consolidation plans.
Topic:
Debt, International Trade and Finance, Monetary Policy, and Reform
Political Geography:
Europe

37. Updating The EMU: Differentiated economic integration in the European Union

Author:
Samu Kurri
Publication Date:
11-2013
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
The financial and economic crisis has reinforced the two-layer economic integration structure in the EU. Many of the new rules and structures created during the crisis have focused on a solution to the euro crisis and are thus euro area-specific. There is little evidence, however, that the situation would have dramatically changed compared to the Maastricht EMU. All of the changes are still in line with the basic idea that all EU countries will join the euro when they are ready to do so. One of the key questions in the near future is likely to centre on the contours of the euro area specific decision-making, its relationship to the EU as a whole, and its institutions and procedures. Even if the Euro group remains 'formally informal', it has managed to transform itself into a de facto institution within the EU, and its role and weight is likely to increase rather than decrease.
Topic:
Debt, Economics, Monetary Policy, Financial Crisis, and Reform
Political Geography:
Europe

38. Net Neutrality and Mandatory Network-Sharing: How to disconnect the continent

Author:
Andrea Renda
Publication Date:
12-2013
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
A lively debate emerged on the proposed "Connected Continent" legislative package presented by the European Commission in September 2013. The package contains a proposed rule on the 'open Internet', which was heavily discussed in European Parliament hearings in early December. This commentary argues that while the proposed rule is in principle balanced and appealing, it is utterly impractical due to the enormous uncertainty that its application would entail. At the same time, the rule is very far from what neutrality proponents have argued for almost a decade: rather than the place for internet freedom, it would transform the Web into a place requiring constant micro-management and tutoring of user behavior. Both arguments lead to the conclusion that the current proposal should be at once reformed and analysed under a more holistic lens. On the one hand, Europe should launch an ambitious project for the future, converged infrastructure by mobilising resources and reforming rules to encourage investment into ubiquitous, converged, 'always on' connectivity. On the other hand, enhanced legal certainty for broadband investment could justify a more neutrality-oriented approach to traffic management practices on the Internet. The author proposes a new approach to Internet regulation which, altogether, will lead to a more balanced and sustainable model for the future, without jeopardising user freedom.
Topic:
Debt, Economics, Monetary Policy, Infrastructure, and Financial Crisis
Political Geography:
Europe

39. Policy Lessons for Macroeconomic and Financial Crisis Management in the Southern and Eastern Mediterranean

Author:
Rym Ayadi and Willem Pieter De Groen
Publication Date:
12-2013
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The 2007-09 global financial crisis led to a virtual collapse in economic activity and increased financial volatility worldwide. For the developing countries, the main channel of transmission has been a drop in external transactions, such as trade, financial and capital flows, and remittances. The southern and eastern Mediterranean countries (SEMC) have also faced declining economic activity, although there seems to be considerable variation in the relative magnitudes and timing of the decline. Most of the economies in the Mediterranean basin have had delayed but longer-lasting consequences as a result of the crisis, driven mostly by their endemic trade and investment ties with the EU and the Gulf Cooperation Council (GCC) countries.
Topic:
Debt, Economics, Markets, Monetary Policy, and Financial Crisis
Political Geography:
Europe

40. REACH: A killer whale for SMEs?

Author:
Jacques Pelkmans, Ineke Gubbels-van Hal, and Lorna Schrefler
Publication Date:
12-2013
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
Right from the start of the REACH debate, following the Commission proposal of October 2003, one of the more serious concerns was whether and how SMEs could cope with REACH. Indeed, there were doubts whether one of the main objectives of REACH – competitiveness of chemical and downstream companies – is consistent with the design and detailed implementation of REACH. Already in 2005, the European Parliament adopted a resolution on this aspect, insisting e.g. on lower fees for SMEs as one remedy to reduce the expected regulatory burden for smaller companies. The fear of REACH being unduly heavy and costly for SMEs has never gone away (see e.g. Gubbels Pelkmans, 2009) but merely receded in the background when the Commission and the European Chemical Agency (ECHA) were in the process of building and elaborating the REACH machinery in operational terms. This year, the problem is rearing its head again in a magnified fashion and it will not go away so easily this time.
Topic:
Economics, International Trade and Finance, Markets, and Monetary Policy
Political Geography:
Europe