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Friday, 30 October 2015

Learning from Confucius? Lessons from Chinese law for rebuilding trust in the global economy

Alexandra Zeitz (Global Economic Governance Programme, University of Oxford)

Presentation: Nicholas Morris, Balliol College
Blogpost: Alexandra Zeitz, St. Antony’s College

What is the relationship between trust and law? And is it possible that some systems of law are better able to encourage trust than others? In a PEFM seminar in October, Nicholas Morris presented a research project investigating the role of Chinese legal traditions in cultivating trust, examining whether tenets of Chinese law can be adopted globally in order to rebuild trust in the economy, particularly in the financial sector.

Morris’ comparative work on Chinese legal traditions and trustworthy behavior is part of a larger research project, led by Morris together with David Vines, on rebuilding trust in the financial sector in the aftermath of the global financial crisis. Vines and Morris have presented their work at PEFM in the past (see discussions of their presentations in these two previous posts) and the circle of experts and academics linked to PEFM continue to engage with this promising interdisciplinary research endeavor.

In order to function equitably and effectively, financial markets require strong trust among participants. This was Morris’ starting point. Merely relying on individuals’ desire for approbation and maintaining their reputation is insufficient to ensure robust trust. Instead, he argued, moral and normative structures are necessary to set out accepted and approved patterns of behavior.

Friday, 23 October 2015

The Troika – Past and Future? A view from Washington

Alexandra Zeitz, St. Antony’s College, Oxford

Speaker: Russell Kincaid, PEFM Associate, Former senior IMF official
Chair: David Vines, Balliol College, Oxford

In late 2009, when the extent of Greece’s debt problems first became clear, there were no established rules for coordination between the IMF and the Eurozone institutions. While special mechanisms for surveillance of the Eurozone existed, there were no guidelines for lending to countries within the currency area, an event that was considered “extremely unlikely”.

And yet, over the course of the Eurozone crisis, four countries borrowed from the IMF (Cyprus, Greece, Ireland and Portugal). And with Greece’s future still uncertain, the Fund looks set to play a continued role in the Eurozone for the foreseeable future. In October 2015, Russell Kincaid, a former senior IMF official and current PEFM Associate, gave a rich and novel account of the cooperation and coordination among those three institutions that were at the forefront of stemming the crisis from 2009 onwards: the Troika.

Kincaid suggested that the groundwork for coordination among the IMF, the European Commission and the European Central Bank was laid during earlier programs in Hungary (2008), Latvia (2009) and Romania (2009). In these earlier programs, patterns appeared that would also characterize the later dynamics between the later institutions.

Sunday, 18 October 2015

Bringing trust (back) into finance: a research agenda on trustworthiness in the financial sector

Alexandra Zeitz (Global Economic Governance Programme, University of Oxford)

Presentation: Nicholas Morris and David Vines

Late last month a scandal was splashed across the pages of global newspapers: deliberate deception of consumers and regulators, with culpability running all the way up to senior management. For once, however, the scandal was not in the financial sector, but rather in the auto industry. The financial sector is not alone, clearly, in struggling with trustworthiness. And yet there are reasons that the financial sector should be singled out for concerns about trust: the string of scandals and revelations over the last decade speak to the potentials for abuse in opaque markets selling highly complex products.

In 2014, Nicholas Morris and David Vines published Capital Failure: Rebuilding Trust in Financial Services. The book brought together philosophers, economists, lawyers, historians, and financial practitioners to explain the massive violations of trust that had taken place in the financial industry and explore ways in which trust could be rebuilt. A year on, the next challenge has arisen: how to turn ideas about trustworthiness into plans for action? On October 12, Morris and Vines presented their current agenda for research, how they plan to build an evidence base for rebuilding trustworthiness.