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In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.
The late Mike Mussa of the Peterson Institute, a former Chief Economist of the International Monetary Fund (IMF), noted about some episodes of the late-1990s Asian financial turmoil that “there are three types of financial crises: crises of liquidity, crises of solvency, and crises of stupidity.” This quip comes to mind when considering the developments [...]
On February 14, European Commissioner Michel Barnier and Federal Reserve Governor Daniel Tarullo both indicated their agreement to quickly give the Basel III accord binding force over, respectively, European and American banks. This is welcome. But even more important than the speed of adoption is that implementation should stay true to what the accord stipulates. [...]
The political agreement reached early on December 13 by Europe’s finance ministers makes it highly likely that legislation establishing a Single Supervisory Mechanism (SSM) with the European Central Bank (ECB) at its center will be enacted in March 2013. This is a big European success, high up on what was the range of possible outcomes. [...]
Mary Schapiro, the chair of the US Securities and Exchange Commission (SEC), has announced that she will step down from her position next month after four years in office. President Barack Obama appointed one of the four other SEC Commissioners, Elisse Walter, to replace her until a more permanent successor is chosen next year. The [...]
Note: This post is based on the author’s paper “Asia’s Changing Position in Global Financial Reform” presented at the joint conference “Asian Capital Market Development and Integration: Challenges and Opportunities” co-organized by the Asian Development Bank, Korea Capital Markets Institute, and the Peterson Institute, in Seoul on October 24, 2012. Before 2007–08, most global financial [...]
The leaders of euro area countries made an unprecedented commitment when they issued a statement on June 29 starting with the words, “We affirm that it is imperative to break the vicious circle between banks and sovereigns.” This statement officially acknowledged their intention to break the “doom loop” of mutually reinforcing deterioration of credit conditions [...]
Olivier Ferrand, the founder of French think tank Terra Nova, died an untimely death on June 30, 2012 in the South of France, where he had just been elected deputy for the district of Marseilles North-East. He was 42. Olivier founded Terra Nova in 2008 as a nonprofit organization that publishes recommendations on topical economic, [...]
In their summit statement [pdf] of June 29, 2012, the heads of state and government of the euro area issued a declaration widely interpreted by investors as the founding act of a European banking union, about which European policymakers have been talking increasingly vocally in the past two months or so. Their commitment remains little [...]
Systemic fragility in the European banking sector predates the Greek fiscal crisis. It was revealed by the subprime/Lehman shock of 2007–08, and has never been properly addressed since then in spite of successive stress tests. In recent weeks, several senior policymakers have become more explicit on the need for a banking union—in other words, a [...]
On the face of it, the financial crisis of 2007-08 has helped rebalance the governance of global financial authorities, partially correcting the prior underrepresentation of emerging economies and of Asia in particular. From November 2008 to April 2009, when the G-7/G-8 was superseded by the G-20, the Financial Stability Board (FSB) was empowered and enlarged [...]