Thursday, 30 March 2017
Wednesday, 22 March 2017
Greece and the Euro Zone: The IMF Perspective
Speaker: Poul Thomsen (Director, European Department, IMF)
Chair: Adam Bennett (St Antony’s College)
In the midst of ongoing negotiations with Greece over a third IMF financial assistance program, PEFM had the pleasure of hosting Poul Thomsen, the Director of the European Department at the IMF. Drawing on his extensive experience as mission head for IMF teams in Greece, Mr. Thomsen presented the Fund’s perspective on the problems that continue to plague the Greek economy and the way forward.
Mr. Thomsen began by offering some comments on the prospects of the euro area as a while. Overall, the recovery is gaining momentum and cyclical unemployment is low. This is partly due to fiscal relaxation, but most of it is happening in precisely the countries with the least fiscal space, leaving them potentially vulnerable to renewed shocks. More worrying still, the euro area long-term potential is limited because of structural problems that predate the euro crisis, particularly low productivity growth that was contributing to stalled convergence. Therefore, while there are missing elements of EMU architecture that clearly needed to be added or completed, the main problems were really at the national level. In a currency union that is not a political union the ability to deal with shocks depends on policies at the national level.
Chair: Adam Bennett (St Antony’s College)
In the midst of ongoing negotiations with Greece over a third IMF financial assistance program, PEFM had the pleasure of hosting Poul Thomsen, the Director of the European Department at the IMF. Drawing on his extensive experience as mission head for IMF teams in Greece, Mr. Thomsen presented the Fund’s perspective on the problems that continue to plague the Greek economy and the way forward.
Mr. Thomsen began by offering some comments on the prospects of the euro area as a while. Overall, the recovery is gaining momentum and cyclical unemployment is low. This is partly due to fiscal relaxation, but most of it is happening in precisely the countries with the least fiscal space, leaving them potentially vulnerable to renewed shocks. More worrying still, the euro area long-term potential is limited because of structural problems that predate the euro crisis, particularly low productivity growth that was contributing to stalled convergence. Therefore, while there are missing elements of EMU architecture that clearly needed to be added or completed, the main problems were really at the national level. In a currency union that is not a political union the ability to deal with shocks depends on policies at the national level.
Monday, 6 March 2017
Ireland and Brexit
Speakers: Lord Jay of Ewelme (House of Lords), Kalypso Nicolaides (St Antony’s College), Cathryn Costello (St Antony’s College)
Chair: Graham Avery (St Antony’s College)
Chair: Graham Avery (St Antony’s College)
The ‘Irish question’ did not necessarily receive a lot of attention in the run-up to the Brexit vote, but has since then emerged as one of the hardest issues for Theresa May. It also resonates beyond the corridors of Whitehall as an overflowing crowd in attendance at the European Studies Centre made evident. In response, the three speakers sought to highlight some ways to manage the risks involved, but warned that the stakes are high.
Lord Jay, part of the House of Lords EU Select Committee, began the discussion by saying he fears the Irish dimension would be seen as a consequence of decisions taken on other grounds. He sees a risk that Brexit might bring into question the remarkable progress in the peace process in Northern Ireland. In particular, should the UK leave the Customs Union some kind of controls along the border become very hard to avoid. In turn, this is a serious issue for the nationalist communities along the border and is not impossible for some level of violence to re-emerge.
Monday, 27 February 2017
Aspects of the ECB’s monetary policy: State-of-play and future prospects
Speakers: Iannis Mourmouras (Deputy Governor, Bank of Greece)
Chair: Charles Enoch (St Antony’s College, Oxford)
As the debate over ECB’s monetary policy continues, it was a pleasure to host a renowned policymaker and academic such as Iannis Mourmouras, Deputy Governor of Bank of Greece, at this joint PEFM-SEESOX event. Prof. Mourmouras drew on his experience to analyze the current targets and instruments of the ECB and offered some thoughts over the thorny question of ‘exit strategies’.
Prof. Mourmouras began his talk by discussing the track record of inflation targeting regimes over the last 15 years. Whereas they have been exceptionally successful in bringing inflation down, policymakers in Europe today face the challenge of how to push inflation back up given a persistent negative output gap. Prof. Mourmouras argues that low inflation is the symptom, not the cause of low nominal demand. The ‘suspects’ for the effect include demographic changes that lead to increased household saving, the legacy of the sudden stop and sovereign debt crisis in Southern Europe, and expectations for future low rates. Mario Draghi, the ECB president, argues further that there is insufficient investment demand to absorb all savings in the global economy.
As the debate over ECB’s monetary policy continues, it was a pleasure to host a renowned policymaker and academic such as Iannis Mourmouras, Deputy Governor of Bank of Greece, at this joint PEFM-SEESOX event. Prof. Mourmouras drew on his experience to analyze the current targets and instruments of the ECB and offered some thoughts over the thorny question of ‘exit strategies’.
Prof. Mourmouras began his talk by discussing the track record of inflation targeting regimes over the last 15 years. Whereas they have been exceptionally successful in bringing inflation down, policymakers in Europe today face the challenge of how to push inflation back up given a persistent negative output gap. Prof. Mourmouras argues that low inflation is the symptom, not the cause of low nominal demand. The ‘suspects’ for the effect include demographic changes that lead to increased household saving, the legacy of the sudden stop and sovereign debt crisis in Southern Europe, and expectations for future low rates. Mario Draghi, the ECB president, argues further that there is insufficient investment demand to absorb all savings in the global economy.
Wednesday, 15 February 2017
Does IMF conditionality lead to political illiberalism? A comparative South East European perspective
Speaker(s): Merih Angin (Blavatnik School of Government, Oxford), Saliha Metinsoy (Wadham College, Oxford), Alex Kentikelenis (Trinity College, Oxford)
Chair: Charles Enoch (St Antony’s College, Oxford)
Political illiberalism, in South East Europe as well as across the world, is a topic of rising concern. However, is it possible we have overlooked an important driver – economic conditionality imposed by the IMF in crisis-hit countries? This was the provocative question posed to the three scholars who have focused their research on the IMF at this joint PEFM-SEESOX seminar. The picture that emerges does not provide for easy and clear cut answers, but these scholars argue that under particular conditions the IMF might inadvertently strengthen illiberal currents.
Merih Angin tackled the topic by looking at the role of the IMF in the AKP’s rise. In 2001, Turkey was hit by a financial crisis, leading to an agreement with the IMF. Shortly thereafter, the conservative AKP won parliamentary elections. However, during this period Dr. Angin describes the AKP as “in government but not in power”. Therefore, it had strong incentives to implement IMF conditionality given its need to overcome suspicions of its Islamist image in the West, as well as to generate economic growth, which was crucial to its domestic legitimation. Therefore, it ardently pursued the IMF program as it allowed it to accumulate power, gain external support, and undertake an extensive process of state transformation. Indeed, the AKP itself signed a new deal with the IMF in 2005, promising the privatization of the four largest state enterprises.
Political illiberalism, in South East Europe as well as across the world, is a topic of rising concern. However, is it possible we have overlooked an important driver – economic conditionality imposed by the IMF in crisis-hit countries? This was the provocative question posed to the three scholars who have focused their research on the IMF at this joint PEFM-SEESOX seminar. The picture that emerges does not provide for easy and clear cut answers, but these scholars argue that under particular conditions the IMF might inadvertently strengthen illiberal currents.
Merih Angin tackled the topic by looking at the role of the IMF in the AKP’s rise. In 2001, Turkey was hit by a financial crisis, leading to an agreement with the IMF. Shortly thereafter, the conservative AKP won parliamentary elections. However, during this period Dr. Angin describes the AKP as “in government but not in power”. Therefore, it had strong incentives to implement IMF conditionality given its need to overcome suspicions of its Islamist image in the West, as well as to generate economic growth, which was crucial to its domestic legitimation. Therefore, it ardently pursued the IMF program as it allowed it to accumulate power, gain external support, and undertake an extensive process of state transformation. Indeed, the AKP itself signed a new deal with the IMF in 2005, promising the privatization of the four largest state enterprises.
Tuesday, 14 February 2017
Monday, 13 February 2017
Rebuilding trustworthiness in financial markets
Speaker: Mark Yallop (Chair of FICC Markets Standards Board)
One of the key questions in the aftermath of the global financial crisis is how to restore trust, especially in wholesale financial markets? A string of large-scale market manipulation scandals have made this discussion even more topical. Given its prominence, PEFM was delighted to host Mark Yallop, chair of the FICC Markets Standards Board, to share his analysis of the issue. In his talk Mr. Yallop identified some perennial problems with financial markets and advocated for a standards-led approach to rebuilding trustworthiness.
Mr. Yallop began his talk with two examples of market manipulation. In the later stages of the Napoleonic Wars, de Beringer and his associates sought to spread news of Napoleon’s demise in order to inflate gilt prices and sell their holdings at a profit. They were eventually discovered, and tried by the English courts in the first case of market manipulation in their history. Much more recently, Tom Hayes, an interest rate derivatives trader in Tokyo, was accused of using more modern means to the same goal. Through instant messaging, he was supposed to have communicated with the traders setting the daily Yen LIBOR rate, convincing them to slightly change their estimates in the direction that suited his portfolio. In 2015, Hayes was sentenced to prison in the most recent market manipulation case in front of British courts.
Chair: Adam Bennett (St Antony’s College)
One of the key questions in the aftermath of the global financial crisis is how to restore trust, especially in wholesale financial markets? A string of large-scale market manipulation scandals have made this discussion even more topical. Given its prominence, PEFM was delighted to host Mark Yallop, chair of the FICC Markets Standards Board, to share his analysis of the issue. In his talk Mr. Yallop identified some perennial problems with financial markets and advocated for a standards-led approach to rebuilding trustworthiness.
Mr. Yallop began his talk with two examples of market manipulation. In the later stages of the Napoleonic Wars, de Beringer and his associates sought to spread news of Napoleon’s demise in order to inflate gilt prices and sell their holdings at a profit. They were eventually discovered, and tried by the English courts in the first case of market manipulation in their history. Much more recently, Tom Hayes, an interest rate derivatives trader in Tokyo, was accused of using more modern means to the same goal. Through instant messaging, he was supposed to have communicated with the traders setting the daily Yen LIBOR rate, convincing them to slightly change their estimates in the direction that suited his portfolio. In 2015, Hayes was sentenced to prison in the most recent market manipulation case in front of British courts.
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