Culture as the basis for trust: Rebuilding trust in banks

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

Speaker: Peter Montagnon, Associate Director, Institute of Business Ethics

Chair:  Adam Bennett, St. Antony’s College, University of Oxford

Scandals continue to wrack the finance industry. On May 20, six banks were fined $5.6 billion over rigging of the foreign exchange markets. The need to address corporate culture in the finance sector seems clear.

The PEFM series has tackled culture and finance repeatedly over the past year. And the industry itself hasn’t been silent on the question of culture. Barclays, for instance, launched the ‘Transform’ programme to restore trust in the bank and place its values at the centre of its operations. 

But are attempts to reform culture genuine? And can they have an impact? In early May, PEFM hosted Peter Montagnon, Associate Director of the Institute for Business Ethics to discuss rebuilding trust in banks on the basis of cultural change. 

Montagnon’s core point was a simple but important one: culture must be understood as belonging at the heart of business, not a peripheral PR gloss. Culture, in the Institute for Business Ethics framework, is made up of core values, the ethics they imply, and the conduct that follows from those ethics. The values of a company set the tone for the behavior of all employees.

Innovations in monetary policy measures: The view from Slovenia

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

On Tuesday May 5, PEFM was treated to a rare and candid insight into non-standard monetary policy measures, as Governor Boštjan Jazbec of the Bank of Slovenia discussed the effectiveness of these policies both at the European and national level.

How to evaluate European experiments with unconventional monetary policy measures? On the one hand, some analysts claim that the European Central Bank’s (ECB) experimentation was too little too late, lagging behind the quantitative easing (QE) programmes of the US Federal Reserve and the Bank of England. And yet, the most far-reaching of these policy measures, the expanded asset purchase program was launched just under four months ago, too little time to evaluate its effectiveness.

Jazbec has been governor of Slovenia’s central bank since July 2013. He insisted that non-standard policy measures in the Eurozone must be understood as a whole package, encompassing a range of temporary measures aimed at shoring up the effectiveness of monetary policy in a context of financial system distress: refinancing operations, currency swap arrangements, collateral requirements, securities purchase programmes, and negative deposit rates and forward guidance.

Too big to jail? Prosecuting financial misconduct in the US

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


Speaker: Brandon L. Garrett, Professor of Law, University of Virginia
Chair: Stewart Fleming, Senior Member, St. Antony’s College, University of Oxford

There are several tools for improving conduct in the financial industry: addressing culture and ethics, improving supervisory oversight, tightening regulation. But when a pattern of misconduct has occurred, it becomes time for law enforcement to step in.

Over the last years there have been high profiles cases of investigations and prosecutions into criminal misconduct by banks. This has been most frequent in the US, leading the Financial Times to dub the American Department of Justice “the harshest prosecutor of corporate offences in the world”.

Yet all is often not as it seems with these high-profile cases and penalties, as Brandon Garrett, Professor of Law at the University of Virginia, explained at a PEFM seminar in early June. Garrett recently published a book on the matter, Too Big to Jail: How Prosecutors Compromise with Corporations.

Jump-starting infrastructure investment in Germany: what role for public private partnerships?

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

Speaker: Jeromin Zettelmeyer, Director-General, Economic Policy, Ministry of Economic Affairs and Energy, Germany

Chair: David Vines, Department of Economics, University of Oxford

Germany is considering restructuring how it finances domestic infrastructure. This is of interest to non-Germans too, since infrastructure spending could eat into some of Germany’s 8% current account surplus, helping to correct the macroeconomic imbalances currently plaguing Europe.

But while that might be a pleasant side effect, that’s not the German motivation for this investigation. Instead, Germany wants to rejuvenate its domestic infrastructure, some of which is languishing after municipalities’ spending on construction and maintenance dropped to an all-time low.

In May, Jeromin Zettelmeyer, currently Director-General of the Economic Policy unit at the Ministry of Economic Affairs and Energy in Germany, delivered an excellent PEFM seminar on strategies for fuelling infrastructure investment in Germany.

In the World Economic Forum’s 2014-2015 competitiveness rankings, Germany’s infrastructure ranks 7^th globally, ahead of France (8), the UK (10), the USA (12) and Canada (15). But a gap has accumulated between the desired and actual infrastructure stocks: the German infrastructure is in some cases not meeting the public or the economy’s needs.

Lessons from Ireland’s financial crisis

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

What lessons can be learned from the Irish financial crisis? The question is particularly pressing as negotiations continue over the terms of the Greek bailout. Speaking at PEFM in early March, Ajai Chopra offered an insider’s perspective on the crisis and rescue, and shared words of caution about treating the Irish experience as a model that can be replicated elsewhere. Chopra, now with the Peterson Institute for International Economics, was head of the IMF’s mission in Ireland and had a front seat to the crisis and negotiations over policies for recovery.

Linking corporate governance to financial crisis?

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

Popular accounts of the 2008-2009 financial crisis have squarely blamed the crisis on shoddy corporate governance; newspaper headlines targeted greedy bankers and sloppy executives. Academic analysts have sought to investigatethe relationship between management and financial stability in a more nuanced fashion, studying how corporate governance structures might affect risk-taking, short-sightedness, and other behaviours contributory to crisis. In Kevin James and Dimitrios Tsomocos’ February 26 PEFM presentation and the subsequent discussion, it became clear that economists have yet to settle on an empirical account of exactly how governance matters. While most in the room agreed that corporate governance matters for financial stability and growth, the challenge appears to be how to measure and encourage good corporate governance.

Has financial globalization changed the context for US international policy?

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

That financial globalization presents constraints as well as opportunities has been frequently
demonstrated with regard to smaller states. Consider, for example, Greece’s current predicament. But what about consequences of financial integration for the most powerful state in the international system, the United States? On Thursday, February 12, Caroline Atkinson, Deputy Assistant to President Obama and Deputy National Security Advisor for International Economics, presented the view from United States of the globalized financial system. The lecture was dedicated to the memory of former PEFM Director Max Watson, a long-time colleague of Atkinson’s during their time at the IMF, who sadly passed away in December 2014.

What does financial globalization mean for US foreign policy? It means, in large part, that US policy has itself become global. Or, in former Fed Chairman Alan Greenspan’s words, that the US can no longer be ‘an oasis of prosperity’. Drawing on her lengthy previous experience at the IMF, Atkinson offered many historical examples to illustrate the effect of close international financial links on American policy.