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32. Preparing for uncertainty
- Author:
- Gregory Claeys
- Publication Date:
- 07-2019
- Content Type:
- Special Report
- Institution:
- Bruegel
- Abstract:
- Memo to the president of the European Central Bank. Grégory Claeys, Maria Demertzis and Francesco Papadia present the challenges that the next ECB president will face during the upcoming mandate, reinventing monetary policy in a system riddled with uncertainties.
- Topic:
- International Relations and International Political Economy
- Political Geography:
- Europe
33. A strategic agenda for the new EU leadership
- Author:
- Maria Demertzis
- Publication Date:
- 06-2019
- Content Type:
- Special Report
- Institution:
- Bruegel
- Abstract:
- Memo to the presidents of the European Commission, Council and Parliament. 'A strategic agenda for the new EU leadership' by Maria Demertzis, André Sapir and Guntram Wolff is the first of our 2019 Bruegel memos to the new presidents of the European Commission, Council and Parliament. Focusing on the most important economic questions at EU level, these Bruegel memos are intended to be a strategic to-do list, outlining the state of affairs that will greet the new Commission
- Topic:
- International Relations and International Affairs
- Political Geography:
- Europe
34. Europe – the global centre for excellent research
- Author:
- Michael Balternsperger
- Publication Date:
- 05-2019
- Content Type:
- Special Report
- Institution:
- Bruegel
- Abstract:
- This report, requested by the European Parliament's Committee on Industry, Research and Energy, analyses the EU’s potential to be a global centre of excellence for research as a driver of its future growth in a complex global S&T landscape, and how EU public resources can contribute to this
- Topic:
- International Political Economy and International Affairs
- Political Geography:
- Europe
35. State contingent debt as insurance for euro-area sovereigns
- Author:
- Maria Demertzis and Stavros Zenios
- Publication Date:
- 04-2018
- Content Type:
- Working Paper
- Institution:
- Bruegel
- Abstract:
- Since the financial crisis, EU countries' economies have recovered to the point that they are exiting their adjustment programmes. Institutional stability mechanisms have been improved at the European level, with the promotion of the banking union and the establishment of a European Monetary Fund, for instance. However, the authors argue that such crisis contingencies should include markets in their risk-sharing, which would require better coordination with institutions.
- Topic:
- International Political Economy
- Political Geography:
- Europe
36. Institutional investors and home bias in Europe’s Capital Markets Union
- Author:
- Zsolt Darvas and Dirk Schoenmaker
- Publication Date:
- 03-2017
- Content Type:
- Working Paper
- Institution:
- Bruegel
- Abstract:
- Integrated capital markets facilitate risk sharing across countries. Lower home bias in financial investments is an indicator of risk sharing. We highlight that existing indicators of equity home bias in the literature suffer from incomplete coverage because they consider only listed equities. We also consider unlisted equites and show that equity home bias is much higher than previous studies perceived. We also analyse home bias in debt securities holdings, and euro-area bias. We conclude that European Union membership may foster financial integration and reduce information barriers, which sometimes limit cross-country diversification. We calculate home bias indicators for the aggregate of the euro area as if the euro area was a single country and report remarkable similarity between the euro area and the United States in terms of equity home bias, while there is a higher level of debt home bias in the United States than in the euro area as a whole. We develop a new pension fund foreign investment restrictions index to control for the impact of prudential regulations on the ability of institutional investors to diversify geographically across borders. Our panel regression estimates for 25 advanced and emerging countries in 2001-14 provide strong support for the hypothesis that the larger the assets managed by institutional investors (defined as pension funds, insurance companies and investment funds), the smaller the home bias and thereby the greater the scope for risk sharing.
- Topic:
- International Political Economy, International Trade and Finance, Economic structure, and Europe Union
- Political Geography:
- Europe
37. Brexit and the European financial system
- Author:
- Uuriintuya Batsaikhan, Robert Kalcik, and Dirk Schoenmaker
- Publication Date:
- 02-2017
- Content Type:
- Policy Brief
- Institution:
- Bruegel
- Abstract:
- London is an international financial centre, serving European and global clients. A hard Brexit would lead to a partial migration of financial firms from London to the EU27 (EU minus UK) to ensure they can continue to serve their EU27 clients. Four major cities will host most of the new EU27 wholesale markets: Frankfurt, Paris, Dublin and Amsterdam. These cities have far fewer people employed in finance than London. Moreover, they host the European headquarters of fewer large companies. The partial migra- tion of financial firms will thus have a major impact on these cities and their infrastructures. Banks are the key players in wholesale markets. United States and Swiss investment banks, together with one large German and three large French banks, will make up the core of the new EU27 wholesale markets. Some Dutch, Italian and Spanish banks are in the second tier. The forex, securities and derivatives trading markets are now in London. We map the current, limited market share of the four major cities that might host the EU27 client business. The expected migration of financial trading will lead to a large increase in trading capacity (eg bank trading floors). Clearing is the backbone of modern financial markets. A comparative overview of clearing facilities in the EU27 shows that Germany and France have some clearing capacity, but this will need to be expanded. The ownership of clearing is often intertwined with stock exchanges. Were the planned LSE-Deutsche Börse merger to go ahead, LSE would sell the Paris subsidiary of its clearinghouse. In terms of legal systems, there is an expectation that trading activities will be able to continue under English contract law, also in the EU27. A particular challenge is to develop FinTech (financial technology) in the EU27, as this innovative part of the market is currently based in London. We estimate that some 30,000 jobs might move from London to the EU27. This will put pressure on the facilities (infrastructure, offices, residential housing) in the recipient cities. The more the European Union market for financial services is integrated, the less need there will be for financial firms to move to one location, reducing the pressure for all facilities to be in one city (see Sapir et al, 2017, which is a companion piece to this paper).
- Topic:
- International Political Economy, International Trade and Finance, and Brexit
- Political Geography:
- Britain and Europe
38. Fundamental uncertainty and unconventional monetary policy: an info-gap approach
- Author:
- Yakov Ben-Haim, Maria Demertzis, and Jan Willem Van Den End
- Publication Date:
- 02-2017
- Content Type:
- Working Paper
- Institution:
- Bruegel
- Abstract:
- This paper applies the info-gap approach to the unconventional monetary policy of the Eurosystem and so takes into account the fundamental uncertainty on inflation shocks and the transmission mechanism. The outcomes show that a more demanding monetary strategy, in terms of lower tolerance for output and inflation gaps, entails less robustness against uncertainty, particularly if financial variables are taken into account. Augmenting the Taylor rule with a financial variable leads to a smaller loss of robustness than taking into account the effect of financial imbalances on the economy. However, in some situations, the augmented model is more robust than the baseline model. A conclusion from our framework is that including financial imbalances in the monetary policy objective does not necessarily increase policy robustness, and may even decrease it
- Topic:
- Economics, International Political Economy, and International Trade and Finance
- Political Geography:
- Europe
39. Europe in a new world order
- Author:
- Maria Demertzis, André Sapir, and Guntram Wolff
- Publication Date:
- 02-2017
- Content Type:
- Policy Brief
- Institution:
- Bruegel
- Abstract:
- The United States is the European Union’s most important trade and bilateral investment partner, which has, until now, supported a multilateral trade system and European integration and has provided a security guarantee to the countries of the EU. But like other advanced economies, the US’s relative weight in the global economy has declined. The new US administration seems intent on replacing multilateralism with bilateral deals. In trade, it aims to secure new trade deals in order to reduce bilateral trade deficits and to protect, in particular, the US manufacturing sector. In climate policy, the US commitment to the Paris Agreement is being questioned. In defence, the security umbrella appears less certain than previously. The overall promise behind this change of direction is to put ‘America first’ and deliver better results for US citizens.
- Topic:
- International Political Economy, International Trade and Finance, Bilateral Relations, Multilateral Relatons, and Political stability
- Political Geography:
- Europe and United States of America
40. Making the best of Brexit for the EU27 financial system
- Author:
- Andre Sapir, Dirk Schoenmaker, and Nicolas Veron
- Publication Date:
- 02-2017
- Content Type:
- Policy Brief
- Institution:
- Bruegel
- Abstract:
- The United Kingdom’s exit from the European Union creates an opportunity for the remaining EU27 to accelerate the development of its financial markets and to increase its resilience against shocks. Equally, Brexit involves risks for market integrity and stability, because the EU including the UK has been crucially dependent on the Bank of England and the UK Financial Conduct Authority for oversight of its wholesale markets. Without the UK, the EU27 must swiftly upgrade its capacity to ensure market integrity and financial stability. Furthermore, losing even partial access to the efficient London financial centre could entail a loss of efficiency for the EU27 economy, especially if financial developments inside the EU27 remain limited and uneven.
- Topic:
- Economics, International Political Economy, International Trade and Finance, Political stability, and Brexit
- Political Geography:
- Britain and Europe