The ECB should keep a lid on dissent
The expression of a dissenting opinion, especially when the opinion coincides with the view of a large part of the population of the respective country, generates the impression that discussions within...
View ArticleThe ECB acts – but still needs help
This year, the critical question in Europe has changed from whether policymakers could find the required policy instincts – they have – to whether they are moving fast enough to get ahead of the...
View ArticleWhere the eurozone crisis may go from here
Regaining the confidence of the markets, once it has been lost, is extremely demanding. Regaining the confidence of the people is nearly impossible. Continue reading »
View ArticleA five-step guide to European banking union
Eurozone leaders have decided to create a banking union to help break the vicious circle between banking fragility and state insolvency. This is a bold response to the growing financial fragmentation...
View ArticleFed joins ECB in a high-risk move
The US central bank has now embarked on a very dangerous strategy, buying $40bn of mortgage-backed securities each month for an indefinite number of years. That could lead to high inflation, to...
View ArticleEurozone states should coordinate budgets to weather downturn
Economic hardship pushes public opinion to become more inward looking and focused on domestic problems. As a result, solidarity among eurozone countries may weaken. In response strong co-ordination of...
View ArticleDo not trust politicians to supervise Europe’s banks
Bank supervisory authorities that are not sufficiently independent, and are too closely associated with the political authorities, are generally under pressure to delay the identification of insolvent...
View ArticleEra of independent central banks is over
Whether they like it or not, central bankers are being dragged into the political fray. It is not so much an issue of whether independence is good or bad. Rather, monetary policy itself is no longer a...
View ArticleCyprus falls victim to Europe’s bailout fatigue
Has Cyprus reignited the regional debt crisis, pushing the eurozone to the brink of collapse and risking a potentially destabilising change in the geopolitical order? Or is the country, with only a...
View ArticleEurope’s banks need to be recapitalised – now
Structural weaknesses are part of the explanation for the eurozone's predicament. But Europe also made two mistakes in responding to the crisis. First, it failed to recognise the true extent of its...
View ArticleBlame bond markets, not politicians, for austerity
Criticism of austerity has reached ferocious levels in Europe. Increasingly, it carries a moral tone, portraying the stronger north, especially Germany, as forcing harsh policies on to weaker nations....
View ArticleA response to Martin Wolf
I have enormous respect for Martin Wolf, as he knows, and never miss a single one of his brilliant and indispensable columns. Indeed, I appreciate his responding, as did Paul Krugman and Joe...
View ArticleBank capital is Europe’s big problem
The transmission mechanism of the euro area monetary policy is not working properly, as interest rates charged by the banking system vary widely across countries. This hurts small businesses in...
View ArticlePolicy makers have not tackled the causes of the crisis
In this week’s Wednesday column, Martin Wolf argued that the collapse of Lehman Brothers five years ago was merely a symptom of deep-rooted problems in the global economy. He suggests – rightly, in my...
View ArticleAmerica’s debt crisis may drag the eurozone down
US politicians are playing a game of chicken similar to the one European policy makers played during the eurozone debt crisis, bringing the single currency very close to collapse. Continue reading »
View ArticleWhat to do with the eurozone banking system?
The ECB’s recent announcement that it will start a comprehensive assessment of the eurozone banking system is good news. It will provide a uniform evaluation of 130 credit institutions, which should...
View ArticleItaly’s fragile government should learn from the Germans
Significant reforms are needed to fix the country's problems. The coalition should take the opportunity of recent splits in several parties to force an agreement on a detailed series of measures that...
View ArticleThe ECB’s reserve currency dilemma
As economist Robert Triffin explained more than 50 years ago, the development of an international reserve currency requires that the issuing country or area records a current account deficit. This...
View ArticleThe European banking union is a disappointment
As on past occasions, the agreement reached by eurozone finance ministers on the single resolution mechanism will officially be saluted as a big step towards a fully-fledged banking union. But many...
View ArticleTo survive, the eurozone must embrace an “all for one, one for all” mindset
Can monetary policy alone really solve the eurozone’s deep-rooted problems? Certainly, Mario Draghi appears to have the magic touch, whether he’s promising to do whatever it takes or, last week,...
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