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  • Author: Daniel Gros
  • Publication Date: 12-2013
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: There are three aggregate numbers that describe the problem the Single Supervisory Mechanism (SSM) is inheriting: the 130 banks under its direct supervision hold assets worth 250% of the euro area's GDP, their capital is equivalent to only 4% of their assets' value and they have made zero profits, in the aggregate, over the last four years.
  • Topic: Debt, Economics, Markets, Financial Crisis, Reform
  • Political Geography: Europe
  • Author: Rym Ayadi, Willem Pieter De Groen
  • Publication Date: 12-2013
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The 2007-09 global financial crisis led to a virtual collapse in economic activity and increased financial volatility worldwide. For the developing countries, the main channel of transmission has been a drop in external transactions, such as trade, financial and capital flows, and remittances. The southern and eastern Mediterranean countries (SEMC) have also faced declining economic activity, although there seems to be considerable variation in the relative magnitudes and timing of the decline. Most of the economies in the Mediterranean basin have had delayed but longer-lasting consequences as a result of the crisis, driven mostly by their endemic trade and investment ties with the EU and the Gulf Cooperation Council (GCC) countries.
  • Topic: Debt, Economics, Markets, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Jacques Pelkmans, Ineke Gubbels-van Hal, Lorna Schrefler
  • Publication Date: 12-2013
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Right from the start of the REACH debate, following the Commission proposal of October 2003, one of the more serious concerns was whether and how SMEs could cope with REACH. Indeed, there were doubts whether one of the main objectives of REACH – competitiveness of chemical and downstream companies – is consistent with the design and detailed implementation of REACH. Already in 2005, the European Parliament adopted a resolution on this aspect, insisting e.g. on lower fees for SMEs as one remedy to reduce the expected regulatory burden for smaller companies. The fear of REACH being unduly heavy and costly for SMEs has never gone away (see e.g. Gubbels Pelkmans, 2009) but merely receded in the background when the Commission and the European Chemical Agency (ECHA) were in the process of building and elaborating the REACH machinery in operational terms. This year, the problem is rearing its head again in a magnified fashion and it will not go away so easily this time.
  • Topic: Economics, International Trade and Finance, Markets, Monetary Policy
  • Political Geography: Europe
  • Author: Stefano Micossi, Jacopo Carmassi, Ginevra Bruzzone
  • Publication Date: 11-2013
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The European Commission proposal for a Regulation establishing a European Single Resolution Mechanism (SRM) for banks is now under consideration before the European Parliament and the Council. The main principles and tools applicable for resolving a failing bank are contained in the June 2012 Commission proposal for a Directive on bank recovery and resolution (BRR), aimed at harmonising crisis management and resolution tools in EU member states, which is also under consideration by the European legislators. Any discussion of the new system must therefore be based on both proposals.
  • Topic: Debt, Economics, International Trade and Finance, Markets, Monetary Policy, Reform
  • Political Geography: Europe
  • Author: Karel Lannoo
  • Publication Date: 11-2013
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: It is still an unresolved question whether a process for financial services regulatory cooperation and convergence will be included in the Transatlantic Trade and Investment Partnership (TTIP).From a n end-user's perspective, it could be argued that its inclusion could be an opportunity not only as regards product choice, but also to improve the consumer or investor protection regulatory environment on both sides of the Atlantic. The inclusion would also be in line with the assessments made by both the EU and the US that the G-20 agenda has been incorporated in local legislation and that both regimes are thus 'equivalent'.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: United States, Europe
  • Author: Daniel Gros, Matthias Busse
  • Publication Date: 11-2013
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The Macroeconomic Imbalance Procedure (MIP) was designed to prevent the emergence of imbalances like the large and persistent current account deficits that occurred in Spain and Ireland. But within this mechanism, a current account surplus is also viewed as a source of concern. Indeed, last year's Alert Mechanism Report (AMR), issued by the European Commission signalled an excessive current account surplus for the Netherlands and Luxembourg, while Germany just barely scraped by with a 5.9% surplus, marginally evading the 6% threshold (over a 3-year average). With the most recent report, however, Germany's status has changed. Along with the Netherlands and Luxembourg, it too has now been singled out as a euro-area country with a surplus above the upper threshold.
  • Topic: Economics, International Trade and Finance, Markets, Monetary Policy, Financial Crisis
  • Political Geography: Europe, Germany
  • Author: Stefano Micossi
  • Publication Date: 03-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The eurozone is in recession and will show negative growth in 2012; GDP will fall sharply in Greece and Portugal, and there is substantial risk that Spain and Italy will follow suit (the Commission's recent forecasts seem overly optimistic and complacent; the IMF is more downbeat). But fiscal policies are uniformly restrictive throughout the eurozone and much of the Union, and the hopes that fiscal consolidation could spur growth by improving household and business confidence are not materialising. In reality, domestic demand has been hit too hard by fiscal consolidation, and investment throughout the Union remains well below pre- crisis levels. Credit is tight due to the deteriorating quality of borrowers and the ongoing deleveraging in banking.
  • Topic: Economics, Foreign Exchange, International Trade and Finance, Markets, Financial Crisis
  • Political Geography: Europe, Greece
  • Author: Jonas Teusch
  • Publication Date: 03-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: This Policy Brief argues that pursuing the renewables objective could contribute to the completion of the internal electricity market, help to overcome opposition to transmission projects and decrease the market power of incumbents. Conversely, an integrated internal electricity market means less price volatility in specific regional markets, which allows for more efficient deployment and grid integration of renewables.
  • Topic: Economics, Energy Policy, Markets
  • Political Geography: Europe
  • Author: Paul De Grauwe
  • Publication Date: 05-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: One of the major problems of the eurozone is the divergence of the competitive positions that have built up since the early 2000s. This divergence has led to major imbalances in the eurozone where the countries that have seen their competitive positions deteriorate (mainly the so - called ' PIIGS ' – Portugal, Ireland, Italy, Greece and Spain ) have accumulated large current account deficits and thus external indebtedness, matched by current account surpluses of the countries that have improved their competitive positions (mainly Germany).
  • Topic: Economics, Markets, Regional Cooperation, Global Recession, Financial Crisis
  • Political Geography: Europe, Greece, Germany, Spain, Italy, Portugal, Ireland
  • Author: Daniel Gros
  • Publication Date: 04-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Lax financial conditions can foster credit booms. The global credit boom of the last decade led to large capital flows across the world, including large movements of resources from the Northern countries of the euro area towards the Southern part. Since the start of the crisis and more markedly after 2009, these flows have suddenly stopped, creating severe adjustment pressures. This paper argues that, at this point, the common monetary policy can only try to mitigate the unavoidable adjustment by maintaining overall financial stability. The challenge is to strike a delicate balance between providing liquidity for solvent institutions while keeping the overall pressure on for a rapid correction of the imbalances.
  • Topic: Economics, Markets, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Daniel Gros, Cinzia Alcidi
  • Publication Date: 04-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Spain faces high unemployment and slow growth. This paper focuses on an important source of those problems, namely its housing market. While some adjustment has occurred since Spain's housing bubble burst in 2008, the authors find that house prices and construction need to decrease more to slow Spain's unsustainable accumulation of foreign debt.
  • Topic: Debt, Economics, Markets, Financial Crisis
  • Political Geography: Europe, Spain
  • Author: Rym Ayadi, Emrah Arbak, Willem Pieter De Groen
  • Publication Date: 06-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Adopted by the European Commission in July 2011, the proposed Capital Requirements Directive and Regulation (CRD IV-CRR) translate into EU law the Basel III standards adopted by the Basel Committee for Banking Supervision (BCBS). Among other things, the proposal increases the quality and quantity of the minimum capital; introduces new rules on liquidity, leverage ratios, counter-cyclical buffers and systemically important financial institutions; and amends the definitions of counterparty credit risk and rules for the banking book. The rules complement the earlier amendments that strengthened the capital and disclosure requirements for the trading book and resecuritization instruments as well as requirements to ensure that remuneration policies do not lead to excessive risk-taking.
  • Topic: Debt, Economics, Markets, Financial Crisis
  • Political Geography: Europe
  • Author: Daniel Gros, Cinzia Alcidi, Alessandro Giovannini
  • Publication Date: 05-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: What would be the cost if Greece were to exit from the eurozone? This much-debated question cannot be answered with a single number. The consequences of Greece's exit would depend decisively on the exact circumstances of events in the country itself as well as the general state of financial markets in the eurozone.
  • Topic: Debt, Markets, Regional Cooperation, Monetary Policy, Financial Crisis
  • Political Geography: Europe, Greece
  • Author: Daniel Gros
  • Publication Date: 05-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: As the euro crisis continues and unemployment climbs to new heights, the clamour calling for Europe to 'do something' is getting louder. But the real question is: can Europe, or rather the EU, do 'something' that would actually have a real impact on unemployment? In other words, does a European plan or employment strategy make sense?
  • Topic: Economics, Markets, Labor Issues, Financial Crisis
  • Political Geography: Europe
  • Author: H. Onno Ruding
  • Publication Date: 05-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The so-called 'euro crisis' is of the utmost economic, financial and political importance for all member countries of the euro area and for the future of the Economic and Monetary Union (EMU). In my view, however, it is not primarily a euro crisis in the strict sense. The euro itself is of course involved, but, as a currency with a rather stable exchange rate vis-à-vis other currencies and with a major role in global financial markets, it is not at the heart of the crisis. Rather the crisis is a matter of the serious imbalances in the economies of several euro-area countries, particularly their budget deficits and sovereign debts and as well as their lack of competitiveness and balance-of-payments deficits.
  • Topic: Economics, Markets, Monetary Policy
  • Political Geography: Europe
  • Author: Daniel Gros, Thomas Mayer
  • Publication Date: 08-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: For most of the time since the early 1950s, national savings in Germany have tended to exceed national investment, resulting in a current account surplus. Most of these excess savings have been intermediated by the domestic banking system, which has had difficulties investing these German surpluses abroad given that it is prohibited by law from taking any exchange rate risk. This tended to keep the surplus within limits most of the time (less than 1- 2% of GDP). With the advent of the euro, however, German surpluses could become much larger and seem now to have become structurally engrained at 6% of GDP, or over one-quarter of savings. Since the start of the euro crisis, German private savers have repatriated their investments – effectively unloading their exposure onto the public sector as German banks have deposited hundreds of billions of euro at the Bundesbank. These funds are being lent by the ECB to banks in the euro area periphery (at 75 bps) – ensuring effectively a negative real return.
  • Topic: Economics, International Trade and Finance, Markets, Sovereign Wealth Funds
  • Political Geography: Europe, Germany
  • Author: Daniel Gros
  • Publication Date: 07-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The sentiment that the euro is now in real danger is based in large part on the widespread conviction that interest rates of 6-7% are simply unsustainable for both Italy and Spain., After taking a closer look at the fundamentals, however, Daniel Gros concludes in this new Policy Brief that both countries should be able to live with this level of interest rates for quite some time, but only if they mobilize domestic savings, which remain strong in both countries. For Spain, some debt/equity swaps are also needed.
  • Topic: Debt, Economics, Markets, Financial Crisis
  • Political Geography: Europe, Spain, Italy
  • Author: Stefano Micossi
  • Publication Date: 07-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Two years after the first Greek rescue in May 2010, crisis management in the eurozone has still failed to restore confidence. A vivid picture of the situation can be found in Figure 1: the constellation of spreads on ten-year sovereign debts over the Bund in the eurozone is wider than it was before monetary union, as though financial markets had already discounted its breakdown. Temporary respites, notably in the early part of 2012, have not interrupted the trend of increasing divergence that risks undermining the credibility of adjustment efforts under way.
  • Topic: Debt, Economics, Markets, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Jacques Pelkmans, Anabela Correia de Brito
  • Publication Date: 07-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Effective enforcement and compliance with EU law is not just a legal necessity, it is also of economic interest since the potential of the Single Market will be fully exploited. Enforcement barriers generate unjustified costs and hindrances or uncertainty for cross-border business and might deprive consumers from receiving the full benefit of greater choice and/or cheaper offers.
  • Topic: Economics, Markets, Monetary Policy, Law
  • Political Geography: Europe
  • Author: Daniel Gros, Cinzia Alcidi, Alessandro Giovannini
  • Publication Date: 07-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Different economic and financial structures require different crisis responses. Different crises also require different tools and resources. The first 'stage' of the financial crisis (2007-09) was similar on both sides of the Atlantic, and the response was also quite similar. The second stage of the crisis is unique to the euro area. Increasing financial disintegration within the region has forced the ECB to become the central counterparty for the entire cross-border banking market and to intervene in the sovereign bond market of some stressed countries. The actions undertaken by the European Central Bank (ECB), however, have not always represented the best response, in terms of effectiveness, consistency and transparency. This is especially true for the Securities Markets Programme (SMP): by de facto imposing its absolute seniority during the Greek PSI (private sector involvement), the ECB has probably killed its future effectiveness.
  • Topic: Debt, Economics, International Trade and Finance, Markets, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Henk L.M. Kox
  • Publication Date: 09-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: In most EU member states, the business services industry has booked no productivity growth during the last two decades. The industry's performance in the other member states was weaker than that of its US counterparts. Exploring what may be causing this productivity stagnation, this policy brief reports that weak competition has contributed to the continuing malaise in European business services. The study analyzed the persistence (over time) of firm-level inefficiencies. The evidence further suggests that competition between small firms and large firms in business services is weak. Markets for business services work best in countries with flexible regulation on employment change and with low regulatory costs for firms that start up or close down a business. Countries that are more open to foreign competition perform better in terms of competitive selection and productivity.
  • Topic: Economics, International Trade and Finance, Markets, Regional Cooperation
  • Political Geography: United States, Europe
  • Author: Stefano Micossi, Jacopo Carmassi, Carmine Di Noia
  • Publication Date: 09-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The European Commission has published its proposals for the transfer of supervisory responsibilities to the European Central Bank (ECB), under Article 127(6) of the TFEU, providing a comprehensive and courageous 'first step' towards a European banking Union, the other steps being European deposit insurance and resolution procedures. However, on a number of issues the Commission's chosen path raises questions that should be brought out in the open and fully recognized before final deliberation by the Council.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: Europe
  • Author: Daniel Gros, Dirk Schoenmaker
  • Publication Date: 09-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Cross-border banking is currently not stable in Europe. Cross-border banks need a European safety net. Moreover, a truly integrated European level banking system may help to break the diabolical loop between the solvency of the domestic banking system and the fiscal standing of the national sovereign.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: Europe
  • Author: Alan Riley
  • Publication Date: 10-2012
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: It may well be that the Gazprom antitrust case launched by DG Competition on September 4th will turn out to be the landmark antitrust case of this decade, as Microsoft was of the last decade. The argument of this paper is that, for a host of political and economic reasons, this case is likely to be hard fought by both sides to a final prohibition decision and then onwards into the EU courts. In the process, the European gas market and the powers of DG Competition in the energy field are likely to be transformed.
  • Topic: Economics, Markets, Natural Resources, Law
  • Political Geography: Europe
  • Author: Michael Emerson
  • Publication Date: 08-2011
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: For the present UK government, full accession to the Schengen area, a passport- free travel area covering most of Europe, is a red line that it will not cross. Ireland shares a common travel area and land border with the UK and is also bound by this decision. However, it is becoming increasingly clear that the UK, along with Ireland, is suffering serious economic and reputational costs as a result of its separate visa and border management policies.
  • Topic: Economics, International Trade and Finance, Markets, Regional Cooperation
  • Political Geography: Britain, United Kingdom, Europe, Ireland
  • Author: Hans-Joachim Dübel
  • Publication Date: 08-2011
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: 'Blue' or Eurobonds guaranteed via joint and several liability by the eurozone member states have been proposed as an important tool to stabilise and structure the eurozone sovereign bond markets. But in this new Policy Brief, Hans-Joachim Dübel argues the case for a partial insurance of sovereign bonds by the European Stability Mechanism. Hans-Joachim Dübel is an independent financial sector consultant based in Berlin and founder of Finpolconsult.
  • Topic: Economics, International Trade and Finance, Markets, Regional Cooperation, Monetary Policy
  • Political Geography: Europe, Berlin
  • Author: Paul De Grauwe
  • Publication Date: 08-2011
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The biggest threat for the eurozone is the contagion of the Greek sovereign debt crisis to the rest of the system. If the Greek crisis could be isolated, it would barely matter for the eurozone as a whole. After countless crisis meetings of the European Council, however, it has to be admitted that the European leaders have failed to isolate the Greek crisis and to stop the forces of contagion. The latest meeting of the heads of state or government of the euro area on July 21st is no exception.
  • Topic: Debt, Markets, Regional Cooperation, Financial Crisis
  • Political Geography: Europe
  • Author: José M. Abad, Javier Hernández Galante
  • Publication Date: 09-2011
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: On September 7th, five weeks after the European Central Bank (ECB) started buying Spanish bonds as part of its Securities Market Programme, and four weeks since Merkel and Sarkozy announced their proposal of writing debt limits into national laws, the Spanish Parliament has approved a constitutional reform that, by constraining the general government's spending and borrowing capacity, aims to mitigate concerns over public finances. This reform, the second since the current Constitution was enacted by referendum in 1978, has been made possible by an agreement between the ruling socialists (PSOE) and the main opposition party (conservative PP).
  • Topic: Economics, Markets, Labor Issues
  • Political Geography: Europe, Spain
  • Author: Roderick Kefferpütz
  • Publication Date: 12-2011
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: At long last commodity prices have declined from their pre-summer highs. Many raw materials are now trading at significantly lower prices, giving temporary respite to industry. Red-hot copper, the bellwether of the metals sector, for example, has pulled back from its peak of $10,000 a tonne. Even the astronomical rise of the previously little-known rare earth elements has reversed.
  • Topic: Economics, Markets, Natural Resources
  • Political Geography: Europe
  • Author: Paul De Grauwe
  • Publication Date: 02-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The crisis that started in Greece culminated into a crisis of the Eurozone as a whole. How did we get into this mess? To answer this question it is useful to distinguish the three actors that have played a role in the development of the crisis: Greece, the financial markets (including the rating agencies) and the eurozone authorities. Let us analyse the role of these three actors in the drama.
  • Topic: Economics, Markets
  • Political Geography: Europe, Greece
  • Author: Daniel Gros, Cinzia Alcidi
  • Publication Date: 01-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: This crisis was caused by a combination of asset price bubbles, mainly in the real estate sector, and a credit bubble that led to excessive leverage. This is wellknown. What is less well-known is that on both accounts the euro area was affected by both 'bubble' symptoms as much as the US.
  • Topic: Economics, Markets, Financial Crisis
  • Political Geography: United States, Europe
  • Author: Karel Lannoo
  • Publication Date: 07-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Meeting Europe's 2020 objectives of smart, sustainable and inclusive growth is even more of a challenge for the financial sector than for the EU as a whole. Smart, sustainable and inclusive growth is just the opposite of what the financial sector stood for, and how it continues to be perceived by the public. The huge regulatory agenda that is on the table should tame the financial sector, but whether it will help it to meet the Europe 2020 objectives is an open question (see European Commission, 2010a).
  • Topic: International Trade and Finance, Markets, Regional Cooperation, Financial Crisis
  • Political Geography: Europe
  • Author: H. Onno Ruding
  • Publication Date: 05-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Financial reform is needed now in the EU not only to reduce the likelihood of another financial crisis in the coming years but also to reinforce the internal market. A primary financial as well as political goal should be to create a truly single market in Europe for financial services and institutions. The current state of affairs is, however, still too far removed from this goal.
  • Topic: Economics, Markets, Financial Crisis
  • Political Geography: Europe
  • Author: Karel Lannoo
  • Publication Date: 04-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The European asset management industry is feeling squeezed from all sides, as a result of growing prudential, product and conduct regulation. A new Directive, UCITS IV, has only just been enacted, and already new challenges are emerging in the regulation of hedge and venture capital funds, the review of the regulatory regime for depositaries (or financial custodians) and amendments to the MiFID Directive.2 In addition, a new European supervisory framework is in the making, which implies much stricter controls on enforcement. These changes are taking place in the context of one of the largest declines suffered by the industry in the last two decades, from which many fund managers have not yet recovered. The era of light regulation is thus definitely over.
  • Topic: Markets, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Stefano Micossi, Maria Teresa Salvemini, Alfonso Iozzo
  • Publication Date: 05-2008
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The present budget of the European Union has long ceased to represent European policy priorities; it is the result of decisions taken decades ago and subsequent incremental adjustments decided under the pressure of external events or for political expediency. Its increasing detachment from emerging needs and policy priorities undermines support for the Union among public opinion.
  • Topic: Democratization, Economics, Markets
  • Political Geography: Europe
  • Author: Arno Behrens, Henry Neufeldt, Gunnar Eskeland, Eberhard Jochem, Thure Traber, Nathan Rive
  • Publication Date: 07-2008
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The electricity sector plays a central role in the European Union's efforts to achieve greenhouse gas (GHG) reductions of at least 20% by 2020 compared to 1990 levels. While the electricity sector is currently responsible for about one-third of Europe's total energy-related GHG emissions, there are large potentials for reducing emissions. Mitigation strategies will need to focus on more efficient electricity use, but also on improved conversion rates and new technologies such as renewables and carbon capture and storage (CCS). Apart from mitigation of climate change, the sector will also have to adapt to climate change. Global warming will have a significant impact on the ability to generate electricity and to deliver it without interruption. This ADAM-CEPS Policy Brief focuses on four issues relevant to the nexus between climate change and the electricity sector.
  • Topic: Energy Policy, Markets
  • Political Geography: Europe
  • Author: Jørgen Mortensen, ain Begg, Juraj Draxler
  • Publication Date: 08-2008
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: This policy brief picks up the main observations and arguments included in a study undertaken by CEPS for the Directorate-General for Employment, Social Affairs and Equal Opportunities of the European Commission. It was presented by Iain Begg at a major Commission conference in Brussels on 16 April 2008, which had broad attendance by officials, media people and researchers, and was concluded by a keynote speech by José Manuel Barroso, President of the Commission. The conference took place at a time of emerging financial crisis and rising oil and food prices, aspects emphasised by some speakers as elements throwing new light on some of the arguments in the report. Hans-Gert Pöttering, President of the European Parliament, stressed that promotion of knowledge and innovation constitutes an important condition for enhancing the competitiveness of the European economy. Thus, the Union should take on a leadership role in combining globalisation with social policy, fighting climate change and fostering environmental stability. Mr. Barroso, in his conclusions underlined the necessity of a renewal of social policies based on equal opportunities, access and solidarity.
  • Topic: Economics, Globalization, International Political Economy, Markets, Labor Issues
  • Political Geography: Europe
  • Author: Paul De Grauwe
  • Publication Date: 09-2008
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The question of whether central banks should react to stock price developments has been hotly debated. This discussion has intensified since the eruption of the credit crisis. According to some analysts, including myself, the failure of the US Federal Reserve under Alan Greenspan to react to the bubbles in the stock and housing markets helps to explain the financial excesses and the subsequent crisis.
  • Topic: Economics, International Trade and Finance, Markets, Monetary Policy
  • Political Geography: United States
  • Author: Paul De Grauwe
  • Publication Date: 11-2008
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The paradigm that financial markets are efficient has provided the intellectual backbone for the deregulation of the banking sector since the 1980s, allowing universal banks to be fully involved in financial markets, and investment banks to become involved in traditional banking. There is now overwhelming evidence that financial markets are not efficient. Bubbles and crashes are an endemic feature of financial markets in capitalist countries. Thus, as a result of deregulation, the balance sheets of universal banks became fully exposed to these bubbles and crashes, undermining the stability of the banking system. The Basel approach to stabilise the banking system has as an implicit assumption that financial markets are efficient, allowing us to model the risks universal banks take and to compute the required capital ratios that will minimise this risk. I argue that this approach is unworkable because the risks that matter for universal banks are tail risks, associated with bubbles and crashes. These cannot be quantified. As a result, there is only one way out, and that is to return to narrow banking, a model that emerged after the previous large-scale banking crisis of the 1930s but that was discarded during the 1980s and 1990s under the influence of the efficient market paradigm.
  • Topic: Economics, Markets, Financial Crisis
  • Political Geography: Europe