2012
September 11, 2012
Jörg Asmussen, European Central Bank
"Stability Guardians and Crisis Managers: Central Banking in Times of Crisis and Beyond"
Due to the turbulent times that the euro area monetary policy was facing at the time, the Distinguished Lecture with Jörg Asmussen, Member of the ECB Board, originally planned for June 25, had to be rescheduled. Dramatic events preceded the new date in September: on September 6, the ECB presented its new bond purchasing program "Outright Monetary Transactions" (OMT) in which Jörg Asmussen had played a significant role. The German Constitutional Court had scheduled their decision on emergency petitions for the permanent "Euro rescue package" ESM for the day after the speech, and EU Commissioner Michel Barnier intended to present his plans for a European bank supervision authority.
It was thus not surprising that in his speech on "Stability Guardians and Crisis Managers: Central Banking in Times of Crisis and Beyond" Asmussen focused on the current events. As apparent in the title of the speech, he explicitly claimed for the ECB to have the role of the crisis manager and preserver of financial stability.
According to Asmussen, monetary policy is reaching its limits in terms of effectiveness and legitimacy. National governments should not mistake the ECB’s new OMT program for a substitution for structural reforms and fiscal consolidation. Asmussen emphasized the strict rules of the program. He explained that it was in accordance with the European law, especially with the ban on monetary government financing. Asmussen was convinced that the OMT program represented significant progress compared to the previous Securities Market Program.
Asmussen further emphasized the ECB’s willingness to play an active role in the European banking regulation. As a precondition he called for the separation of independent monetary policy and banking regulation controlled by parliaments or the judiciary. He also argued that the ECB should be given all required tools to play this new role effectively and efficiently.
Following the Q&A session with the audience, Asmussen answered questions from the media. He was asked how he would react to the upcoming decision of the German Constitutional Court and a potential ESM ban. Asmussen replied: “If that happens, I will be going on vacation.”
April 16, 2012
Chongsoo Kim, President, Bank of Korea
“Out of the Great Recession: An EME's Perspective”
The speech by Governor Chongsoo Kim, President of the Bank of Korea, was given in the grand environment of the Casino of Goethe University. A reception marked the beginning of the evening during which invited guests had the opportunity to try numerous Korean specialities and enjoy classical music performed by three Korean musicians.
After introductory remarks by Vice President Prof. Rainer Klump (Goethe University), Prof. Luise Hölscher (Ministry of Finance, State of Hessen), Dr. Lutz Raettig (City of Frankfurt), and Won-Jung Han (Consulate General of the Republic of Korea), Governor Kim gave an entertaining and interesting speech on "Out of the Great Recession: An EME's Perspective".
Governor Kim expressed concern about the alarming growth prospects in industrial countries and recalled the lessons from the international economic crisis in the 1930s. He blamed the high public debt of some European countries for the sluggish economic growth. He also warned against drastic austerity measures that could only exacerbate the recession in countries such as Spain and Italy. Instead, governments should find the courage to implement structural reforms, for example in labor markets. Monetary policy can only provide support to the extent that, through relevant policies, it may give the reforms time to be implemented.
Governor Kim harshly criticized the loose monetary policies of both the European Central Bank and the Federal Reserve. He contradicted ECB President Mario Draghi, who had denied negative effects of the ECB’s loose monetary policy on emerging markets. He emphasized, however, that current monetary policy leads to strong divergences of capital flows into emerging markets and thus exchange rate instabilities. In addition, he argued that the cheap money supplied by central banks was at least partly to blame for higher prices in commodity markets. Governor Kim called on the central banks of industrial countries to consider the effects of their policies on emerging countries. He advocated setting up an institution dedicated to the international coordination of monetary policies.
The Börsen-Zeitung summarized the event the next day stating, "Kim contradicts Draghi", arguing that Governor Kim had given his European colleagues a piece of his mind.