Research Center Events
Salomon Center and the Center for Global Economy and Business Discuss the Future of the Euro
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Matthew Richardson, director of the Salomon Center and professor of finance, welcomed the audience, provided background on the Eurozone crisis, and moderated the discussion among Professors Thomas Cooley, Thomas Philippon and Richard Sylla, who addressed the outcome of the recent summit of European leaders and implications for the Euro area and global finance.
Thomas Cooley, Paganelli-Bull Professor of Business and International Trade:
“The eurozone needed to have a kind of fiscal compact embedded in their individual constitutions and that by itself will provide a little bit more commitment. But putting a balanced budget or the structural deficit requirements into their constitutions doesn't do anything about enforcing that. Nor does it set up any time consistent mechanisms to make sure that it is enforced.”
“In my view, given the decisions that have been made over the past two decades [in Europe], especially in the periphery, the question is, how is this going to play out in the future?”
Thomas Philippon, associate professor of finance:
“If the only problem were a bank run, then (the agreements) would be a solution... but of course the bank run is a consequence, not the cause, of everything in Europe.”
“The IMF is going to have more influence going forward, and that is going to be good news.”
Richard Sylla, Henry Kaufman Professor of the History of Financial Institutions and Markets:
“I'm really skeptical of these countries being able to live by the new rules.”
“The lender of last resort is supposed to respond to liquidity crises, but not necessarily bail out banks that are insolvent. I think there are lots of precedents for the ECB becoming more active, and I think they're going to have to do it.”
“I think Europe can start growing again, but I don't see much going on right now to make that happen.”
Watch the full event video>>
“The eurozone needed to have a kind of fiscal compact embedded in their individual constitutions and that by itself will provide a little bit more commitment. But putting a balanced budget or the structural deficit requirements into their constitutions doesn't do anything about enforcing that. Nor does it set up any time consistent mechanisms to make sure that it is enforced.”
“In my view, given the decisions that have been made over the past two decades [in Europe], especially in the periphery, the question is, how is this going to play out in the future?”
Thomas Philippon, associate professor of finance:
“If the only problem were a bank run, then (the agreements) would be a solution... but of course the bank run is a consequence, not the cause, of everything in Europe.”
“The IMF is going to have more influence going forward, and that is going to be good news.”
Richard Sylla, Henry Kaufman Professor of the History of Financial Institutions and Markets:
“I'm really skeptical of these countries being able to live by the new rules.”
“The lender of last resort is supposed to respond to liquidity crises, but not necessarily bail out banks that are insolvent. I think there are lots of precedents for the ECB becoming more active, and I think they're going to have to do it.”
“I think Europe can start growing again, but I don't see much going on right now to make that happen.”
Watch the full event video>>