Managing financial crises: where do we stand?

Welcome address

Jan Smets, Governor, NBB

Introductory remarks

Herman Van Rompuy, Former President, European Council

Keynote speech

Luis de Guindos, Vice-President, ECB

The ECB and Financial Stability

Panel 1 Risk-sharing in European Monetary Union: how can we achieve more risk-sharing through financial markets?

The first panel aims to draw lessons from the past on issues relating to private sector risk-sharing in the specific context of European Monetary Union. The financial system should generally provide for such risk-sharing mechanisms, but the crisis has shown that excessive risk-taking in the private sector eventually resulted in financial fragmentation and had to be dealt with by the public sector. What can be done to promote a more resilient financial system that shares risks across the euro area? How effective will banking union and capital markets union be? What is still missing and how important is a public backstop in this context?

Chair: Guntram Wolff, Director, Bruegel

Speakers:
Emmanuel Farhi, Professor, Harvard University
Mahmood Pradhan, Deputy Director, European Department, IMF
Beatrice Weder di Mauro, President, CEPR

Discussants:
Laurence Boone, Chief Economist, OECD
Paul De Grauwe, Professor, LSE

Panel 2 Euro area governance: is it fit to address the next crisis?

An appropriate balance between private and public sector risk-sharing is crucial to the design of a resilient institutional set-up for crisis management. In this context, the second panel will examine the respective roles of the central bank, the European Stability Mechanism, the fiscal authorities, the resolution authority and the competition authority. Are their respective roles clear? Is there sufficient coordination among the various authorities? How can governance be improved and is there a need for a euro area finance ministry?

Chair: Margarita Delgado, Deputy Governor, Banco de España

Speakers:
Jeromin Zettelmeyer, Senior Fellow, Petersson Institute for International Economics
André Sapir, Professor, Solvay Brussels School
Guido Tabellini, Professor, Bocconi University

Discussants:
Vítor Constancio, Former Vice-President, ECB
Olivier Guersent, Director-General, European Commission

Day ends

Panel 3 Lender of last resort: who should do what?

The third panel will examine the issue of market liquidity and how to deal with bank runs in a complex and integrated post-crisis financial system. The occurrence of sudden liquidity shortages in specific market segments will be compared with the phenomenon of liquidity dry-outs in the balance sheets of financial intermediaries, in particular banks. Against this backdrop, sovereign debt financing in crisis times will be discussed, with reference to the bank-sovereign “doom loop”. Finally, panellists will share their conclusions on the so-called Bagehot doctrine and its implications for central banks, in particular their independence, their role in the provision of liquidity to markets, and their status in the debate on the centralisation of the lender of last resort function.

Chair: Peter Praet, Member of the Executive Board, ECB

Speakers:
Martin Hellwig, Director, Max Planck Institute for Research on Collective Goods
Hyun Song Shin, Head of Research, BIS
Jean Tirole, President, Toulouse School of Economics

Discussants:
Elena Carletti, Professor, Bocconi University
Charles Goodhart, Professor, LSE

Panel 4 Dealing with solvency issues through bail-ins and bail-outs: how should we view the “too big to fail” problem and moral hazard issues after the crisis?

The fourth panel will debate solvency issues and consider bail-in and bail-out mechanisms. The “too big to fail” problem and moral hazard issues will be revisited with the benefit of hindsight.

Chair: Pierre Wunsch, Vice-Governor, NBB

Speakers:
Mathias Dewatripont, Professor, Solvay Brussels School
Elke König, Chair, Single Resolution Board
Jean-Charles Rochet, Professor, Geneva University

Discussants:
Thorsten Beck, Professor, Cass Business School
Alberto Franco Pozzolo, Professor, Università degli Studi del Molise

Panel 5 Financial crisis management in the current international monetary system

To close the conference, the fifth panel will look at cooperative crisis management in the context of the multilateral system and its current strengths and weaknesses. It will assess the progress made and set-backs encountered in improving the international financial architecture. Panellists will take a closer look at macroprudential measures such as the standards on total loss-absorbing capacity. The international role of currencies will also be discussed against the backdrop of heightened financial interconnectedness.

Chair: Benoît Coeuré, Member of the Executive Board, ECB

Speakers:
Patrick Bolton, Professor, Columbia University
Barry Eichengreen, Professor, University of California-Berkeley
Paul Tucker, Senior Fellow, Harvard University

Discussants:
Pier Carlo Padoan, Member of the Italian Parliament
Isabelle Mateos y Lago, Managing Director, Blackrock

Closing and light buffet lunch