2011
June 16, 2011
Martin Wolf, Financial Times
"Lessons From the Eurozone's Crisis"
In his presentation on "Lessons From the Eurozone's Crisis" the Chief Economics Commentator of The Financial Times, Martin Wolf, discussed five questions: 1. How did the eurozone get where it is? 2. What is the challenge of adjustment? 3. How has the eurozone tackled its crisis? 4. How might the eurozone fix its problems? 5. What are German interests? His ample statements led to the conclusion, that the Eurozone now has a choice of which way to go or whether to break up. One possibility would be further moves to a fiscal union, with banks underpinned by a common treasury and substantial fiscal transfers to weak regions, which would surely require a single political process. Another – dreadful – possibility would be a move to full economic flexibility, with debt restructuring and national financial meltdowns.
May 18, 2011
Anders Borg, Minister of Finance, Sweden
"Ensuring Fiscal and Financial Stability in Europe - Lessons From Sweden"
At the Hessische Landesvertretung in Berlin Anders Borg, Minister of Finance, Sweden, gave a speech on "Ensuring Fiscal and Financial Stability in Europe - Lessons From Sweden". The Minister explained what he regarded as the essential parts of Sweden's fiscal policy framework, and what other countries can learn from Swedish experience. In the early 1990s, Sweden was in a position that has much in common with the situation in countries like Spain and Portugal today. Having public deficits of 11%, rise of unemployment from 3% to 10% and the risk premium against Germany was several percentage points. The interest rate even reached 500% for a while. The Swedish fiscal policy framework was among the weakest in the EU. The market lacked confidence both in the Swedish economy and in the ability of the political system to turn things around. So Sweden has previous experience of the situation that many EU countries find themselves in today.
Minister Borg pointed out the necessity, that Europe must make serious reforms to ensure fiscal and financial stability. This could be learned from Sweden by introducing a strong fiscal policy framework, ensure an effective budget procces, where the Ministry of Finance has a central role and by implementing necessary structural reforms.
A reception for all participants followed the lecture, a dinner with invited guests – and as a highlight the attendance of Staatssekretär Jörg Asmussen – marked the end of the event.
March 8, 2011
Masaaki Shirakawa, Governor, Bank of Japan
"150 Years of Innovation and Challenges in Monetary Control"
Masaaki Shirakawa, Governor of the Bank of Japan, focused his speech on the topic of "150 Years of Innovation and Challenges in Monetary Control." He pointed out four innovations, which have played an important role in monetary control and consequently in achieving economic stability: 1. The invention of central banks, 2. The invention of a "lender of last resort", 3. The invention of monetary policy, 4. The introduction of the concept of central bank independence. He pointed out that in the practical application of these innovations, constant adaptation to changes in the financial and economic environment is necessary. In terms of the existence of central banks, it is essential that central banks take policy actions in response to changes in the environment. International cooperation is necessary not only among central banks but also at various levels of government and in the private sector.
The lecture was embedded within the framework of "150 Jahre Freundschaft Deutschland – Japan", which was promoted by the Embassy of Japan in Germany. Welcome addresses to the Governor were given by Luise Hölscher, Staatssekretärin in the Hessian Ministery of Finances, Lutz Raettig, Stadtrat (City of Frankfurt), and Mr. Toyoei Shigeeda, Consul-General of Japan in Frankfurt. A reception marked the end of the evening.
February 21, 2011
Jürgen Stark, European Central Bank
“Central Banking After the Financial Crisis”
The global financial crisis has been the most severe financial and economic debacle since the Great Depression of the 1930s. Central banks, and governments played a key role in containing the impact of the crisis by preventing a global economic and financial meltdown. At the same time, the crisis – which, by the way, is not over yet – may have important implications for central banking. This is what Jürgen Stark, Member of the ECB's Executive Board, reflected in his lecture titled "Central Banking After the Financial Crisis".
Jürgen Stark emphasized that monetary policy should be focused on the goal of maintaining price stability over the medium term and central banks should be independent of governments. However, the crisis has revealed short-comings of the pre-crisis global monetary order. Insufficient medium-term orientation in the monetary policy frameworks led to too loose a monetary policy stance in many advanced economies and contributed in my view importantly to exacerbating pre-crisis financial excesses. Strengthening the medium-term orientation of monetary policy frameworks also requires a commensurate leaning-against-the-wind attitude in face of financial cycles, which can be achieved by giving money and credit aggregates a due place in the monetary policy strategy.
These insights need to be taken into account in the current considerations on the phasing out of non-standard measures. The risk of creating renewed financial imbalances and serious financial distortions by maintaining too loose a monetary stance for too long is considerable.
Finally, the fundamental achievement to establish credible price stability oriented monetary policy frameworks must not be put at risk. Central banks need to avoid the spreading of any doubt of their commitment to maintain price stability and their independence from political influence. In this respect, it is important to refrain from any kind of monetary financing. It is ultimately up to fiscal authorities to address the root causes of the current problems and take measures to credibly ensure fiscal sustainability.