CentrAl BAnKinG At A CrossroAds: euroPe And Beyond

This conference takes on two of the most central questions in the post-crisis debate on howto restore stability in financial systems.On a macro level, the conference examines the changing role of central banking. The globalfinancial crisis made apparent that the models central banks had relied on could no longermeaningfully capture the changing nature of financial intermediation.Furthermore, in dealing with the crisis, central banks have had to abandon their standardtool-kit and adopt unconventional approaches such as Quantitative Easing or Outright Mon-etary Transactions in the Eurozone. These, however, have undermined the traditional bound-aries of central banking activity: neutrality from both markets and governments. For the pastfive years, central banks have intervened in both public and private debt markets, taking onfunctions of market makers or dealers of last resort.On a micro level, the potential role of special bank resolution regimes in handling this andfuture crises has come to the fore of attention. A number of countries have already imple-mented new laws seeking to enable a more effective resolution of financial institutions incrisis. In the EU, a European resolution regime is likely to play a central role in any future‘banking union’. Is a more dynamic and proactive approach to resolving ailing financial institu-tions enough to avoid resolutions that spill-over to the rest of the national and internationalfinancial system? What are the national experiences so far, and what do they tell us about thepotential of special bank resolution regimes?The two workshops of the conference will explore these developments, and then set themin the context of the European crisis:Workshop 1: Bank resolution in comparative perspective. What lessons for Europe?Workshop 2: Central banking in the age of collateral-based finance. Where next for the ECB?

DIIS CONFERENCE29 January

WorKshoP i : BAnK resolution in ComPArAtive PersPeCtive.

WhAt lessons for euroPe?

The financial crisis clearly demonstrated the need to build an effective regime for resolvingailing banks. Too often authorities lacked the necessary tools to intervene effectively andquickly enough, resulting in resolutions that were both messy and costly – and where taxpayers were often left to foot the bill for resolution. Since then – following internationalinitiatives taken by the G20 – academics and policy-makers alike have discussed how best tobuild resolution regimes that can answer to these deficiencies of pre-crisis financial regula-tion. Some nations have moved fast and have already implemented new resolution models,notably the United Kingdom, Germany, the Netherlands, Denmark, the United States, amongothers. Moreover, in a European context the debate on special bank resolution regimes isas topical as ever following the European Commission’s announcement that an effective andefficient bank resolution regime will play an important part in the future ‘banking union’.Structured around a mix of paper presentations and panel debates, the conference aims tobring together policymakers and academics to learn about and compare different nationalapproaches to bank resolution, share experiences with the new models and discuss the pos-sibilities for building international resolution regimes.SESSIONS08.00 - 09.0009.00 - 10.00

registration and Coffee

Welcome

Nils Bernstein, Director of the Danish Central BankNanna Hvidt, Director, Danish Institute for International Studies

Keynote

Charles Goodhart, London School of Economics and Political Science

Coffee break

session 1: national experiences

Jens Lundager, on DenmarkDag Detter, on SwedenRichard Herring, on USEiji Maeda, on Japan

lunch

session 2: Comparative and international perspectives

Barbara J. Attinger, European Central BankMartin Cihak, World Bank and IMFEva Hüpkes, Swiss FSA and Bank of International SettlementsDavid G. Mayes, University of Auckland, New Zealand

Coffee break

Panel: What role for special resolution regimes in post-crisis

financial regulation?

Barbara J. Attinger; Charles Goodhart; Eva Hüpkes; Fabian Valencia.

Keynote

Anat Admati, Stanford University

30 January

WorKshoP ii: CentrAl BAnKinG in the AGe of CollAterAl-BAsed

finAnCe. Where next for the eCB?

A particularly salient challenge to present-day central banking is the increasing importanceof collateral-based finance. The two sessions of this workshop will develop two interconnect-ed themes. The first focuses on re-thinking the role of central banks in relationship to collater-al-based financial innovation, both in terms of stabilization during crisis and broader principlesof macroeconomic governance during periods of stability. Should collateral managers/dealersbe identified as a distinct and systemically important actor for central banks? How do practicesof collateral management affect financial stability and systemic risk? Are these practices differ-ent across jurisdictions, and how relevant are these differences for central banks?The second session invites reflections on the relationship between central banks and govern-ments in light of the importance that government bond markets have as sources of collateral.Can the traditional principles of central bank independence survive such functional changes?And if not, what form should the relationship take? Can these changes be addressed withoutdeparting from the pre-crisis wisdom that monetary and fiscal policy should not be coordi-nated? Is ‘exit’ from unconventional measures possible or indeed desirable?SESSIONS09.00-10.15

Welcome

Daniela Gabor, University of West England

Keynotes: the Challenges of Central Banking

Perry Mehrling, Barnard College, Columbia UniversityManmohan Singh, IMF10.15-10.4510.45-12.00

Coffee break

session 1: Central Banks and Collateral-based financial innovation

Daniela Gabor, University of West EnglandRichard Comotto, ICMA Centre ,University of ReadingAnnelise Riles, Cornell University

lunch

session 2: Central Banks and Governments: A new relationship?

Sheila Dow, University of StirlingIsmail Ertürk, Manchester Business SchoolIain Hardie, University of Edinburgh

Coffee break

Panel: Where next for the european Central Bank?

Peter Bofinger; Per Callesen; Perry Mehrling; Manmohan Singh;Dominique Plihon

Keynote

Erkki Liikanen, Bank of Finland

Wine reception

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sPeAKers’ Bio notes

Anat r. Admati

George G.C. Parker Professor of Finance and Economics at the Graduate School of Business,Stanford University. She has written extensively on information dissemination in financialmarkets, trading mechanisms, portfolio management, financial contracting, and, most recently,on corporate governance and banking. Since 2010, she has been active in the policy debateon financial regulation, particularly capital regulation, writing research and policy papers andcommentary. She is a co-author of the book,The Bankers’ New Clothes:What’s Wrong withBanking and What to Do about It,forthcoming in early 2013.

Barbara Jeanne Attinger

PhD, Directorate General Financial Stability, European Central Bank. Author of the paper“Crisis Management and Bank Resolution: Quo Vadis, Europe?” ECB Legal Working PaperSeries no. 13, December 2011; and of a binational doctoral thesis (thèse en cotutelle) onthe European Insolvency Regulation.

nils Bernstein

Governor by Royal Appointment, Chairman of the Board of Governors of the Danish CentralBank. Governor for Denmark to the International Monetary Fund.

Peter Bofinger

Professor of Economics, Money and International Economic Relations at the University ofWürzburg, since August 1992. Since March 2004, he has also been a Member of the GermanGovernment’s Council of Economic Advisors. His main fields of research are monetary andexchange rate economics, financial markets and economic reforms in developed and emergingmarket economies.

Per Callesen

Governor of the Danish Central Bank since February 2011. Per Callesen has also served asHead of division and Deputy Permanent Secretary at the Danish Ministry of Finance and asExecutive director at the IMF in 2010-2011.

martin Cihak

PhD, Lead Economist for Financial and Private Sector Development in the World Bank Group.He was previously employed as a Deputy Division Chief at the International Monetary Fund.He is the lead author of the World Bank’s Global Financial Development Report 2013 on“Rethinking the Role of the State in Finance”. Cihak has written broadly on matters of finan-cial regulation, and specifically contributed to the debate on special bank resolution regimeswith the 2009 IMF Working Paper “The Need for Special Resolution Regimes for FinancialInstitutions – The Case of the European Union” published inHarvard Business Law Review,2012 (w/ Erlend Nier).

richard Comotto

Senior Visiting Fellow at the ICMA Centre, he specialises in short-term markets, in particular,the repo and securities lending markets. He is the Director of the ICMA’s semi-annual Euro-pean repo market survey, its annual Professional Repo Market course and its GMRA-GMSLAWorkshops. He is also closely involved in current regulatory discussions on repo markets. Heserved for 10 years in the Bank of England (1979-89), including the Bank’s International and

Foreign Exchange Divisions and on secondment to the UK Delegation to the InternationalMonetary Fund in Washington DC (1987-89).

dag detter

Co-founder of Whetstone Solutions. Previously the Director at the Swedish Ministry ofIndustry and the President of Stattum, the Swedish government holding company, and a keyinitiator of the OECD Guidelines on Corporate Governance of State-Owned Enterprises. Hecurrently acts as an advisor for governments, corporations, banks and National Wealth Fundsin Europe and Asia. Has written on the strengths of the Swedish model for bank resolution inFinancial Times.

sheila dow

Emeritus Professor of Economics, University of Stirling, co-Convener of the ScottishCentre for Economic Methodology and former special adviser on monetary policy to the UKTreasury Select Committee. Her latest publication on money and banking, co-authored withVictoria Chick, isFinancial Institutions and the State: A Re-examination.

ismail ertürk

Senior Lecturer, Manchester Business School. Co-author ofCentral bank-led Capitalism?Problematizing post-crisis central banks as holders of long position on no-growth capitalism(2012).

daniela Gabor

Senior Lecturer, University of West England. Daniela Gabor is interested in critical finance.Her research focuses on three connected themes−the rise and regulation of shadowbanking (new forms of money); new discourses and practices of central banking inmarket-based financial systems and the financialization of European sovereign bond markets−approached through various theoretical lenses, including financialization, varieties ofcapitalism and heterodox macroeconomics. She is the author ofThe political economy of exitingunconventional monetary policies: redrawing the Great Moderation boundaries for central banks(2012) andThe Power of Collateral: the ECB and Bank Funding Strategies in Crisis(2012).

Charles Goodhart

Emeritus Professor of Banking and Finance, Director of the Financial Regulation ResearchProgramme, London School of Economics and Political Science. Besides having publishedwidely on monetary theory and history, Professor Goodhart is a prolific researcher and acentral figure in the post-crisis debate on crafting effective resolution regimes. See forexample Emilios Avgouleas, Charles Goodhart, and Dirk Schoenmaker (2011) “Bankresolution plans as a catalyst for global financial reform”,Journal of financial stability.

iain hardie

Lecturer in International Relations, University of Edinburgh. His research interests includeissues surrounding financial globalization, especially financialization and varieties of financialcapitalism, focusing on the implications for both developed and developing countries. He is theauthor ofHow much can governments borrow? Financialization and emerging markets governmentborrowing capacity(2011).

richard J. herring

PhD, Jacob Safra Professor of International Banking and Professor of Finance, the WhartonSchool, University of Pennsylvania. Professor Herring is the author of more than 100 articles,monographs and books on various topics in financial regulation and international finance.

Together with Stijn Claessens and Dirk Schoenmaker he has written “A Safer World FinancialSystem: Improving the Resolution of Systemic Institutions”, the 12th Geneva Report on theWorld Economy (2010).

nanna hvidt

Director of the Danish Institute for International Studies (DIIS). She has worked at the DanishMinistry of Foreign Affairs as Director of the Department for the UN and the World Bankand Director of the Department for East, West and Central Africa. Earlier, she served asEmbassy Counsellor at the Danish Permanent Representation in Brussels and at the Directo-rate General for Development of the European Commission.

eva hüpkes

Adviser on Regulatory Policy and Cooperation at the Financial Stability Board and Co-Chairof the Basel Committee Working Group on Cross-Border Bank Resolution, which developedrecommendations for the effective resolution of cross-border crises called for by the FSFand the G20. She is a recognized authority on legal and financial regulatory matters and isfrequently consulted on legislative reform relating to financial crisis management andresolution.

erkki liikanen

Governor of the Bank of Finland, chairman of the High-level Expert Group on reformingthe structure of the EU banking sector, member of the Governing Council of the EuropeanCentral Bank and Governor of the International Monetary Fund for Finland.

Jens lundager

Assistant Governor and Head of Financial Markets, the National Bank of Denmark. He isresponsible for monitoring financial stability and risk management of the central bank’sreserves, and managing central-government debt. Previously a chief financial officer atDenmark’s Ministry of Economic and Business Affairs and a central figure in the Danishresponse to the recent financial crisis.

eiji maeda

Director-General, Research and Statistics Department, Bank of Japan, author ofJapan’s openmarket operations under the quantitative easing policy(2005).

david mayes

PhD, BNZ Professor of Finance, University of Auckland. He has previously held positions aschief economist and Chief Manager at the Reserve Bank of New Zealand and advisor to theBoard of the Bank of Finland. He has conducted a number of comparative studies of nationalbank resolution regimes, notably “Banking Crisis Resolution Policy – Different CountryExperiences”, Norges Bank Staff Memo no. 10 (2009).

Perry mehrling

Senior Advisor, Institute for New Economic Thinking and Professor of economics atBarnard College in Columbia University. His research focuses on the foundations of monetaryeconomics and the history and applications of monetary economics and finance. ProfessorMehrling is currently a member of the Board of Directors of the Eastern EconomicsAssociation, and a member of the Economists Forum at the Financial Times. He is theauthor ofThree principles for market-based credit regulation(2012).

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dominique Plihon

Professor of Economics, Paris-Nord University. He manages the group specializing on Financeat the Centre of Economics. His research revolves around the topics of new forms offinancial intermediation, instability and financial regulation, financial capitalism in the contextof the knowledge economy, risk analysis and spreads in the financial markets, and morerecently, central banking. He is the co-author of a report (in French) on “Central Bankingand Financial Stability” (2011) for the Conseil d’Analyse Economique, a body close to theFrench Prime minister.

Annelise riles

Jack G. Clarke Professor of Law and Professor of Anthropology at Cornell University. Herwork focuses on the transnational dimensions of laws, markets and culture across the fieldsof comparative law, conflict of laws, the anthropology of law, public international law andinternational financial regulation. Her most recent book,Collateral Knowledge: Legal Reasoningin the Global Financial Markets(Chicago Press 2011), is based on ten years of fieldwork amongregulators and lawyers in the global derivatives markets.

manmohan singh

Senior Economist at the IMF in Washington DC. He writes extensively on topical issuesincluding deleveraging in financial markets, rehypothecation of collateral, money and collateral,and counterparty risk in OTC derivatives. He was the first to identify the role of cheapest-to-deliver bonds as a proxy for recovery value in CDS instruments. Manmohan has ledworkshops for the IMF on strategic asset allocation and regulatory proposals to official sectorpolicy makers.

fabian valencia

Economist, IMF Research Department. He has written extensively on financial intermediationand the real economy, in particular on the economic costs of banking crises, effectiveness offinancial sector interventions, and welfare gains from bank recapitalizations. He is co-editor ofthe bookFinancial Crises: Causes, Consequences, and Policy Responses(IMF press, forthcoming).