Alexandra Zeitz (Global Economic Governance Programme, University of Oxford)
The corporation, as an institution, is in crisis. So argued Colin Mayer, Peter Moores Professor of Management and the Saïd Business School, in his October 20 presentation at the PEFM seminar.
Mayer attributed the crisis of the corporation to its governance structure. He argued against the prevailing view that the greatest concern with respect to corporate governance is the ‘agency problem,’ i.e. the fact that shareholders exercise insufficient control over corporations.
Instead, argued Mayer, the problem of the corporation lies precisely in the fact that short-term shareholders are able to hijack the corporation, distracting from the commitments the corporation might have to other stakeholders, including consumers and employees. Shareholders might even reward the corporation for infractions where these seem to provide short-term benefits that outweigh reputational costs or fines; Mayer cited the case of Barclay's share price increasing by 60% during the six months after the LIBOR scandal broke.
Monday, 27 October 2014
Wednesday, 25 June 2014
Banking Union: Will the ECB’s assessment do the trick?
Jack Seddon (St John's College, Oxford)
It is often noted that Europe's banking union is incomplete, involving a single supervisor but without an adequate single resolution mechanism or central deposit insurance arrangement. However, what, exactly, that “half union” is and how, precisely, the union is taking shape is usually described only in the vaguest terms. This was not the case in Nicolas Veron's (Senior Fellow at Bruegel; Visiting Fellow at the Peterson Institute, Washington DC) exploration of the question Max Watson invited him to PEFM to explore: namely, "Banking Union: Will the ECB's Assessment do the trick?" It is difficult in this short blog to give expression to the mastery with which Veron talked through the complex details of the banking union, its strengths and weaknesses, its present scope and the likely developments downstream. However, it would be an abdication of responsibility not to attempt to give some sense of the fundamental and fascinating trends Veron observed.
It is often noted that Europe's banking union is incomplete, involving a single supervisor but without an adequate single resolution mechanism or central deposit insurance arrangement. However, what, exactly, that “half union” is and how, precisely, the union is taking shape is usually described only in the vaguest terms. This was not the case in Nicolas Veron's (Senior Fellow at Bruegel; Visiting Fellow at the Peterson Institute, Washington DC) exploration of the question Max Watson invited him to PEFM to explore: namely, "Banking Union: Will the ECB's Assessment do the trick?" It is difficult in this short blog to give expression to the mastery with which Veron talked through the complex details of the banking union, its strengths and weaknesses, its present scope and the likely developments downstream. However, it would be an abdication of responsibility not to attempt to give some sense of the fundamental and fascinating trends Veron observed.
Monday, 19 May 2014
Governing global risks: The evolution of policy capacity in the financial sector
Jack Seddon (St John's College, Oxford)
Professor Louis Pauly gave a presentation to PEFM based on a paper entitled, “Governing Global Risks: The Evolution of Policy Capacity the Financial Sector.” He challenged his audience to think about the emergence of a "transnational prevention state" (transnational prevention arrangements across borders that translate into effective policy capacity). The paper is part of a work in progress for a book with Edgar Grande.
Professor Pauly argued that this policy capacity is already emerging and developing to deal with global risks and uncertainties. It involves three sets of objectives and three arenas of risk politics. The first arena is the technocratic one focused on risk measurement, assessment, and monitoring. The locus of action here may be seen as shifting from formal international organizations to "clubs", like those now engaged in the so-called Basel Process (Basel Committee, IOSCO, IAIS, and FSB). The second arena involves compensation and crisis prevention, where inter-state collaboration and public-private partnerships are most evident. The third arena involves emergency management and resolution, where ad hoc collaboration (at most) among key finance ministries and central banks is at the moment the dominant trend.
Professor Louis Pauly gave a presentation to PEFM based on a paper entitled, “Governing Global Risks: The Evolution of Policy Capacity the Financial Sector.” He challenged his audience to think about the emergence of a "transnational prevention state" (transnational prevention arrangements across borders that translate into effective policy capacity). The paper is part of a work in progress for a book with Edgar Grande.
Professor Pauly argued that this policy capacity is already emerging and developing to deal with global risks and uncertainties. It involves three sets of objectives and three arenas of risk politics. The first arena is the technocratic one focused on risk measurement, assessment, and monitoring. The locus of action here may be seen as shifting from formal international organizations to "clubs", like those now engaged in the so-called Basel Process (Basel Committee, IOSCO, IAIS, and FSB). The second arena involves compensation and crisis prevention, where inter-state collaboration and public-private partnerships are most evident. The third arena involves emergency management and resolution, where ad hoc collaboration (at most) among key finance ministries and central banks is at the moment the dominant trend.
Monday, 12 May 2014
IMF and bank creditors: Who's in charge when a country can't pay?" and "Stabilising an unstable world: Is there a better future for international finance?
Jack Seddon (St John's College, Oxford)
Dr. James Boughton, the former official historian of the International Monetary Fund and current CIGI Senior Fellow, shared his experience with PEFM through two presentations addressing the following topics: first, "IMF and bank creditors: Who's in charge when a country can't pay?"; and, second, "Stabilising an unstable world: Is there a better future for international finance?"
Addressing the question of who's in charge, Dr. Boughton provided a fascinating account of an "un-holy" trinity – to paraphrase Cohen's apt portrayal of the Mundell-Flemming trilemma – that have competed to shape the international community's responses to countries facing payments problems. The trinity comprises the IMF, the US Treasury and other bilateral official bodies and international banks and bond holders. While these players share a common interest in wanting to see the country in trouble recover and repay its debts, Dr. Boughton eruditely showed how their particular preferences will differ. In particular, he showed how bilateral creditors must respond to strategic and political considerations that will not concern the private sector, while the IMF is beholden to its mission and various stakeholders in sometimes unobvious ways.
Dr. James Boughton, the former official historian of the International Monetary Fund and current CIGI Senior Fellow, shared his experience with PEFM through two presentations addressing the following topics: first, "IMF and bank creditors: Who's in charge when a country can't pay?"; and, second, "Stabilising an unstable world: Is there a better future for international finance?"
Addressing the question of who's in charge, Dr. Boughton provided a fascinating account of an "un-holy" trinity – to paraphrase Cohen's apt portrayal of the Mundell-Flemming trilemma – that have competed to shape the international community's responses to countries facing payments problems. The trinity comprises the IMF, the US Treasury and other bilateral official bodies and international banks and bond holders. While these players share a common interest in wanting to see the country in trouble recover and repay its debts, Dr. Boughton eruditely showed how their particular preferences will differ. In particular, he showed how bilateral creditors must respond to strategic and political considerations that will not concern the private sector, while the IMF is beholden to its mission and various stakeholders in sometimes unobvious ways.
Sunday, 23 March 2014
EMU Governance: An interdisciplinary perspective
Jack Seddon (St John's College, Oxford)
The EMU project may still be riddled with uncertainty, but some of the fog is lifting. Today, only the most uncritical Europhiles would dare to think that enough has been done to ensure prosperity and economic security going-forward, while only those rhetorically trapped by prior-grave-predictions continue to write-off the prospect that this aspiration may yet become reality. The increasingly open space in between means there is work to be done. On 11th and 12th March 2014, the Political Economy of Financial Markets (PEFM) programme, in collaboration with the Santander Fellowship at the European Studies Centre, rolled up its sleeves in response to this emergent space for debate and sponsored a unique seminar on the future of EMU governance. The seminar was entitled: 'The Governance of EMU: Recasting Political, Fiscal and Financial Integration'. The broad aim was to graft scholarly content into the on-going EMU governance debates and to add new systematic analysis that might better explain the emergent trajectories. This academic seminar, conducted as a roundtable under the Chatham House Rule, brought together economists, economic historians, political scientists and international relations experts - as well as some officials and market participants - from several European countries and the United States.
The EMU project may still be riddled with uncertainty, but some of the fog is lifting. Today, only the most uncritical Europhiles would dare to think that enough has been done to ensure prosperity and economic security going-forward, while only those rhetorically trapped by prior-grave-predictions continue to write-off the prospect that this aspiration may yet become reality. The increasingly open space in between means there is work to be done. On 11th and 12th March 2014, the Political Economy of Financial Markets (PEFM) programme, in collaboration with the Santander Fellowship at the European Studies Centre, rolled up its sleeves in response to this emergent space for debate and sponsored a unique seminar on the future of EMU governance. The seminar was entitled: 'The Governance of EMU: Recasting Political, Fiscal and Financial Integration'. The broad aim was to graft scholarly content into the on-going EMU governance debates and to add new systematic analysis that might better explain the emergent trajectories. This academic seminar, conducted as a roundtable under the Chatham House Rule, brought together economists, economic historians, political scientists and international relations experts - as well as some officials and market participants - from several European countries and the United States.
Sunday, 2 March 2014
Global Monetary and Regulatory Spillovers
Heraclitus writes:
Since the onset of the global and euro area crises, advanced economy governments have introduced new policy approaches that have changed the monetary and regulatory landscape – including unconventional monetary policies in major economies and the agreement by bank regulators on Basel III. In today’s interdependent economy, such policies spill across borders: these changes have indeed had a substantial effect on emerging and developing countries in all regions. On 12th February, 2012, the Global Economic Governance (GEG) Programme and the Blavatnik School of Government, in association with the Political Economy of Financial Markets (PEFM) programme, hosted a high-level international roundtable on how monetary and regulatory spillovers are affecting emerging and developing countries, and what policy responses are called for.
Since the onset of the global and euro area crises, advanced economy governments have introduced new policy approaches that have changed the monetary and regulatory landscape – including unconventional monetary policies in major economies and the agreement by bank regulators on Basel III. In today’s interdependent economy, such policies spill across borders: these changes have indeed had a substantial effect on emerging and developing countries in all regions. On 12th February, 2012, the Global Economic Governance (GEG) Programme and the Blavatnik School of Government, in association with the Political Economy of Financial Markets (PEFM) programme, hosted a high-level international roundtable on how monetary and regulatory spillovers are affecting emerging and developing countries, and what policy responses are called for.
Saturday, 8 February 2014
The Eurozone crisis: An insider’s view from Cyprus
Androulla Kaminara (Academic Visitor, St Antony's College, Oxford)
On the 27th of January Dr Michael Sarris[1] gave a very lucid account into the functioning of the Eurogroup, as was experienced by the Cypriot delegation during the two meetings of March 2013. The first meeting resulted in a decision for a bail-in of Cypriot banks by all depositors and the second decision of bail-in from depositors with deposits of over 100,000 euro.
He highlighted that the current narrative is based on looking only at some of the symptoms of what is wrong with the European construction and not at the underlying problems. He believes that many Member States took seriously the benefits of the Eurozone and less seriously the obligations emanating from being a member. However the Eurozone architectural construction had shortcomings that were not addressed, as for example, the lack of a mechanism to control imbalances, in both surplus and deficit countries. “When we realised that they were a lot of fires burning – we concentrated on rules to avoid new fires from developing, rather than to put out existing fires.” Crisis mismanagement and a faulty decision making process are at the heart of the Eurozone’s continuing troubles.
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