Policy Papers

Abstract:
This lecture describes how the current international monetary system work. The dollar is the hegemonic currency, the United States plays the role of a world banker and insurer, there are global financial cycles that affect domestic financial systems, even for countries who have floating exchange rate regimes. In such a world we should have macroprudential policies as sophisticated as inflation targeting policies. The international monetary system is not stable as we may be facing a new Triffin dilemma. I speculate that world powers could compete using increasingly sophisticated cross-border payment technologies to expand the network of countries under their monetary and financial influence. This could have profound geopolitical implications.

*ERC Advanced Grant INFIMOP

Abstract:
List of Authors:
Bénassy-Quéré, A, M Brunnermeier, H Enderlein, E Farhi, M Fratzscher, C Fuest, P-O Gourinchas, P Martin, J Pisani-Ferry, H Rey, I Schnabel, N Véron, B Weder di Mauro and J Zettelmeyer.

Voxeu summary: https://voxeu.org/article/how-reconcile-risk-sharing-and-market-discipline-euro-area

Abstract:
Financial cycles strongly determine real short-term interest rates. Wealth increases rapidly during financial booms, faster than consumption itself. As a consequence, the consumption to wealth ratio declines, as happened in the 'Roaring 20s' and the 'Exuberant 2000s'. In the
subsequent busts, savings increase and keep real interest rates low. The related global financial cycle constrains monetary policy independence, even for countries with flexible exchange rates, transforming the Mundellian trilemma into a dilemma. Tackling these issues calls for combinations of monetary and scal policy coordination, macro-prudential policies, and possibly capital controls. It also means considering the role of the US as a provider of safe assets, and asking whether a multipolar system would be advantageous.

Abstract:
The sovereign debt and refugee crises prove that Europe has failed to design institutions that are robust enough to weather difficult times. The stakes are high–when economic shocks and political crises coincide, the risk of disintegration rises to alarming levels. Coordinated actions are needed, but these are difficult to implement because of the political climate. In this second report in the Monitoring the Eurozone series, the authors propose a package of institutional changes that can help to restore growth and prosperity to the Eurozone, whilst at the same time being politically feasible.

Abstract:
We lay out a strategy to improve governance in the eurozone and deal with the legacy debt.

Abstract:
What do we know about the benefits of international capital flows?

Abstract:
A banking union is necessary for the survival of the euro area. It is a partial substitute for a fiscal union, which would nevertheless be desirable. The key issue is to design a fiscal union in a way that keeps moral hazard under control and if possible, uses the process of fiscal integration to improve existing institutions at the euro area level.

Abstract:
We lay out a framework for cross-border banking flows and for improved regulatory coordination.

Committee on International Economic Policy and Reform

Abstract:
Should the framework of inflation targeting be changed in light of the current crisis?

Committee on International Economic Policy and Reform

Abstract:
This report presents a set of concrete proposals of increasing ambition for the reform of the international monetary system.