At the close of last year, European Union finance ministers gave the green light to a new supervisory architecture for the EU’s financial markets. Yet, by concentrating power at the European level, the new architecture violates the golden rule of any institutional design: decisions should be made by those who bear responsibility and who ultimately must pay.
PRAGUE – At the close of last year, European Union finance ministers gave the green light to a new supervisory architecture for the EU’s financial markets. Now it is up to the European Parliament to address this hypersensitive issue, the most controversial part of which is the powers and responsibilities to be given to the three new pan-European supervisory agencies for banking, securities, and insurance.
The parliament’s decision will be far-reaching, and will affect European finance for many years to come. Although some complain that December’s compromise on financial regulation does not go far enough, there is a case to be made that the opposite is true.
The springboard for this fundamental policy shift was the report issued in early 2009 by former French central banker and IMF chief Jacques de Larosière. But his report ignored many vital issues that were then largely overlooked in the subsequent debate on financial reform.
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With elevated global inflation likely to persist for some time, the prospect of competitive exchange-rate appreciations is looming larger. Instead of a race to the bottom in the currency market, there may be a scramble to the top – and poorer countries will likely suffer the most.
warns that a series of competitive exchange-rate appreciations would hurt poorer economies the most.
Neither the invasion of Ukraine nor the deepening cold war between the West and China came out of the blue. The world has been increasingly engaged over the past half-decade, or longer, in a struggle between two diametrically opposed systems of governance: open society and closed society.
frames the war in Ukraine as the latest battle for open-society ideals – one that implicates China as well.
Shlomo Ben-Ami
highlights the lessons countries like China and Iran are drawing from Vladimir Putin’s aggression, offers advice to Ukrainian peace negotiators, and considers the wisdom of Finland and Sweden's NATO membership.
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PRAGUE – At the close of last year, European Union finance ministers gave the green light to a new supervisory architecture for the EU’s financial markets. Now it is up to the European Parliament to address this hypersensitive issue, the most controversial part of which is the powers and responsibilities to be given to the three new pan-European supervisory agencies for banking, securities, and insurance.
The parliament’s decision will be far-reaching, and will affect European finance for many years to come. Although some complain that December’s compromise on financial regulation does not go far enough, there is a case to be made that the opposite is true.
The springboard for this fundamental policy shift was the report issued in early 2009 by former French central banker and IMF chief Jacques de Larosière. But his report ignored many vital issues that were then largely overlooked in the subsequent debate on financial reform.
To continue reading, register now.
As a registered user, you can enjoy more PS content every month – for free.
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