http://www.VoxEU.org Recent Charles Wyplosz articles on VoxEU.org en http://www.VoxEU.org/index.php?q=node/9099 Charles Wyplosz, 18 March 2013

The Cyprus bailout package contains a tax on bank deposits. This column argues that the tax is a deeply dangerous policy that creates a new situation, more perilous than ever. It is a radical change that potentially undermines a perfectly reasonable deposit guarantee and the euro itself. Historians will one day explore the dark political motives behind this move. Meanwhile, we can only hope that the bad equilibrium that has just been created will not be chosen by anguished depositors in Spain and Italy.

Full Article: Cyprus: The next blunder]]> Mon, 18 Mar 2013 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/9099 http://www.VoxEU.org/index.php?q=node/8862 Charles Wyplosz, 4 January 2013

Financial market quiescence has removed pressure for immediate policy action on the Eurozone crisis. This column argues that while important repairs were made in 2012, the most difficult ones still lie ahead. Much remains to be done by unwilling politicians. Things will have to get worse before they get better. The best hope is that this happens in 2013 rather than in 2014.

Full Article: Happy 2013?]]> Fri, 04 Jan 2013 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/8862 http://www.VoxEU.org/index.php?q=node/8848 Barry Eichengreen, Charles Wyplosz, 21 December 2012

One of the world’s most influential international economists, Peter Kenen, passed this week. This column highlights the key role his insights played in the construction of the Eurozone and the problems that arose when his insights were ignored.

Full Article: Kenen on the euro]]> Fri, 21 Dec 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/8848 http://www.VoxEU.org/index.php?q=node/8754 Charles Wyplosz, 26 November 2012

For the euro to survive, the recession must be halted without piling on more debt. This column argues that the unpalatable conclusion is that public debts must be written down. The massive moral hazard problem this will cause must be dealt with by making sure that public debts will never again be allowed to grow to unsustainable levels. To this end, decentralised US-style fiscal discipline is needed.

Full Article: Fiscal discipline in the monetary union]]> Mon, 26 Nov 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/8754 http://www.VoxEU.org/index.php?q=node/8609 Charles Wyplosz, 16 October 2012

Countries have various mechanisms that provide lending when a bank fails. But when bank problems far exceed available resources, central banks must be lenders of last resort, even when their role is clouded to mitigate moral hazard. This column explains the ECB is ill-equipped to act as such a lender; it doesn’t have enough control due to coordination problems across countries. The column argues this must change. The ECB must be the lender of last resort and this involves a Eurozone banking union.

Full Article: Banking union as a crisis-management tool]]> Tue, 16 Oct 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/8609 http://www.VoxEU.org/index.php?q=node/8484 Charles Wyplosz, 17 September 2012

The European Commission presented their plan for a single EZ bank supervisor this weekend. While it is a good start, this column argues that it avoids the hard truth driving the process: the Eurozone needs a lender of last resort and the ECB is the only one that can play the role. Admitting this truth makes it clear that the Eurozone also needs an arrangement with member governments on bank-bailouts cost sharing and institutions to minimise the ultimate costs.

Full Article: On banking union, speak the truth]]> Mon, 17 Sep 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/8484 http://www.VoxEU.org/index.php?q=node/8345 Charles Wyplosz, 15 August 2012

Some maintain that Italy and Spain risk losing market access for their sovereign bonds despite drops in yields. A recent Vox column by Francesco Giavazzi suggested that Italy could and should avoid a bailout. This column argues that in spite of all its admirable human and economic assets, Italy has moved to a bad equilibrium from which it is most unlikely to escape.

Full Article: Italy’s 'this time it’s different' moment: With rejoinder by Giavazzi]]> Wed, 15 Aug 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/8345 http://www.VoxEU.org/index.php?q=node/8296 Charles Wyplosz, 30 July 2012

Financial markets once again pushed Eurozone leaders to act. European Central Bank President Draghi recently promised to “do whatever it takes”. This column argues that Draghi made an implicit commitment to act as lender of last resort to Eurozone governments. This means optimism may be justified – if only because it suggests that the Eurozone has a great central banker who is both a serious economist and an astute politician.

Full Article: Thanks to the ECB]]> Mon, 30 Jul 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/8296 http://www.VoxEU.org/index.php?q=node/8282 Charles Wyplosz, 25 July 2012

The EZ crisis is once again on the march; Spain and Italy are under pressure. This column argues that policymakers are likely to fall back once again on a failed approach to avoid admitting past errors. Ultimately, however, EZ leaders will come around to the only way forward – the ECB underwriting both banks and sovereigns while additional controls on bad banking and bad fiscal governance are put in place.

Full Article: End of game? Don’t bet on it]]> Wed, 25 Jul 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/8282 http://www.VoxEU.org/index.php?q=node/8188 Charles Wyplosz, 30 June 2012

The EU summit produced a vaguely worded agreement that can and has been read in different ways in different nations. This column provides a quick reaction to what was and was not decided. It concludes that useful progress was made, but this was far from the decisive turn-around that many had hoped for. The crisis will continue to unfold in the months ahead.

Full Article: One more summit: The crisis rolls on]]> Sat, 30 Jun 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/8188 http://www.VoxEU.org/index.php?q=node/8117 Charles Wyplosz, 20 June 2012

The EZ rescue strategy adopted in May 2010 failed to restore debt sustainability, avoid contagion, or reduce moral hazard. This column argues that a volte face is needed. The debt of Greece, Portugal and Italy – and perhaps Ireland, Spain and France as well – must be restructured to restore growth and end the crisis. All EZ nations should pay since their leaders’ decision to violate the Maastricht Treaty’s no-bail out clause is what brought us here.

Full Article: The Eurozone’s May 2010 strategy is a disaster: Time to pay up and end this crisis]]> Wed, 20 Jun 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/8117 http://www.VoxEU.org/index.php?q=node/7988 Charles Wyplosz, 14 May 2012

With French and Greek voters rejecting austerity, politicians are once again taking the government spending debate seriously. This column argues that the voters are right – it is a bad idea to tighten fiscal policy when growth is so feeble. But the column adds that, wherever one looks, the road away from austerity looks desperately blocked.

Full Article: The impossible hope of an end to austerity]]> Mon, 14 May 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/7988 http://www.VoxEU.org/index.php?q=node/7933 Charles Wyplosz, 2 May 2012

Mindless austerity is losing policy credibility in some Eurozone nations. This column suggests governments shouldn’t mix long-term growth and fiscal discipline nor produce another Lisbon strategy. Instead, they should adopt a framework for fiscal policy cooperation, restructure debts, and remember that fiscal discipline is for the long run.

Full Article: The coming revolt against austerity]]> Wed, 02 May 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/7933 http://www.VoxEU.org/index.php?q=node/7617 Charles Wyplosz, 13 February 2012

Spreads on public debts in the Eurozone – with the exception of Greece – are falling hard and fast. This column argues that this is in large part because the ECB is now effectively guaranteeing Eurozone government debts. But it cautions that in doing so, the central bank is taking enormous risks.

Full Article: The ECB’s trillion euro bet]]> Mon, 13 Feb 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/7617 http://www.VoxEU.org/index.php?q=node/7487 Charles Wyplosz, 3 January 2012

Another year, and the Eurozone crisis lingers on. This column asks why, and discusses what can be done. It proposes a solution that can be achieved without the pain of a new EU treaty.

Full Article: Happy 2012?]]> Tue, 03 Jan 2012 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/7487 http://www.VoxEU.org/index.php?q=node/7411 Charles Wyplosz, 9 December 2011

The night of Thursday 8 December saw a meeting to save the euro. Judging by reactions Friday morning, there is some way yet to go, but this column argues that Europe is getting there, slowly. A significant step has been made in the right direction; the principle is right but the details are missing.

Full Article: Reaction to the Eurozone crisis talks: Getting there, but slowly]]> Fri, 09 Dec 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/7411 http://www.VoxEU.org/index.php?q=node/7405 Charles Wyplosz, 8 December 2011

Charles Wyplosz talks to Viv Davies about the Eurozone crisis and the current summit. Wyplosz suggests that the political leaders should agree a decentralised fiscal discipline for the Eurozone countries, allow the ECB to play a more effective role and that there should be a moratorium on EU summits. He also dismisses the recent suggestion that the crisis is about balance-of-payments issues. The interview was recorded in London on 8 December 2011. [Also read the transcript]

Full Article: We need smart fiscal discipline – not saints and sinners]]> Thu, 08 Dec 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/7405 http://www.VoxEU.org/index.php?q=node/7387 Charles Wyplosz, 5 December 2011

This week’s announcements by German Chancellor Angela Merkel and ECB President Mario Draghi that the Eurozone is taking steps towards a closer fiscal union seem to be calming markets and restoring confidence in the decision-making of Eurozone leaders. This column argues, however, that the devil is still in the detail.

Full Article: Do Eurozone leaders finally ‘get it’? Almost]]> Mon, 05 Dec 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/7387 http://www.VoxEU.org/index.php?q=node/7296 Charles Wyplosz, 18 November 2011

The EZ crisis is approaching a tipping point beyond which market panic and slow government reaction threaten to create a generation-defining loss of jobs, savings, and pensions. This open letter to the president of the German central bank presents arguments that counter German objections to using the Eurozone’s last remaining defence against economic calamity – the ECB.

Full Article: An open letter to Dr Jens Weidmann]]> Fri, 18 Nov 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/7296 http://www.VoxEU.org/index.php?q=node/7222 Charles Wyplosz, 4 November 2011

Greek Prime Minister Papandreou made a stand this week. Even though he was backed down, this column argues that he did the EZ a favour by providing an opportunity to change course. One way or another, a disorderly Greek default is in the cards with its attendant contagion. At that point a real solution is inevitable – one that requires EZ leaders and the ECB to play on the same side with credible rules for all.

Full Article: The Greek revolt: Good news for Europe]]> Fri, 04 Nov 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/7222 http://www.VoxEU.org/index.php?q=node/6845 Charles Wyplosz, 25 October 2011

UPDATED: EZ leaders are working on a plan to save the euro. This column updates the column posted on 22 August 2011 by evaluating the steps EZ leaders took this weekend. Things don’t look good. By rejecting any major role for the ECB, leaders have guaranteed that any package will be too little too late. After all, imagine what the US crisis package in 2008 would have looked like if the Fed had refused to use its massive firepower to stabilise markets.

Full Article: Eurozone leaders still don’t get it]]> Tue, 25 Oct 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/6845 http://www.VoxEU.org/index.php?q=node/7127 Charles Wyplosz, 25 October 2011

A series of policy mistakes have put Europe on the wrong path. This column says that the current plan to enlarge the EFSF and recapitalise banks through markets will fail. The twin crises linking sovereign debts and banking turmoil need to be addressed simultaneously for Europe to avoid economic disaster.

Full Article: Resolving the current European mess]]> Tue, 25 Oct 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/7127 http://www.VoxEU.org/index.php?q=node/7031 Charles Wyplosz, 26 September 2011

Last weekend, Eurozone policymakers were shaken into admitting that something more needs to be done to save the Eurozone and avoid a major crisis that would reverberate around the world. This column proposes a three-step solution to finally end the crisis.

Full Article: A failsafe way to end the Eurozone crisis]]> Mon, 26 Sep 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/7031 http://www.VoxEU.org/index.php?q=node/6982 Barry Eichengreen, Robert Feldman, Jeffrey Liebman, Jürgen von Hagen, Charles Wyplosz, 16 September 2011

The 13th CEPR/ICMB Geneva Report on the World Economy takes a long-term perspective on debt sustainability, arguing that fiscal stabilisation is easier the faster the economy is growing.

Full Article: Public Debts: Nuts, Bolts and Worries]]> Fri, 16 Sep 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/6982 http://www.VoxEU.org/index.php?q=node/6985 Charles Wyplosz, 16 September 2011

Europe’s debt crisis is unfolding while Japanese and US debt problems are on hold. The problem of public debt in advanced economies will be with us for decades. This column introduces a new Geneva Report on the World Economy that addresses the nuts, bolts, and worries surrounding the issue.

Full Article: Public debt in the Eurozone, Japan, and the US]]> Fri, 16 Sep 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/6985 http://www.VoxEU.org/index.php?q=node/8198 Barry Eichengreen, Robert Feldman, Jeffrey Liebman, Jürgen von Hagen, Charles Wyplosz, 16 September 2011

The 13th CEPR/ICMB Geneva Report on the World Economy takes a long-term perspective on debt sustainability, arguing that fiscal stabilisation is easier the faster the economy is growing.

Full Article: Public Debts: Nuts, Bolts and Worries]]> Fri, 16 Sep 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/8198 http://www.VoxEU.org/index.php?q=node/6888 Charles Wyplosz, 19 August 2011

Charles Wyplosz of the Graduate Institute, Geneva, talks to Viv Davies about the Eurozone crisis. He explains why it was a mistake to have bailed out Greece in 2010; they discuss the European Financial Stability Facility, Eurobonds and the possibility of further contagion. Wyplosz presents his views of what must now be done to get ahead of the markets, establish long-term fiscal discipline and resolve the crisis. The interview was recorded on 16 August 2011. [Also read the transcript.]

Full Article: The Eurozone crisis: how to get ahead of the markets and resolve the crisis]]> Fri, 19 Aug 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/6888 http://www.VoxEU.org/index.php?q=node/6631 Charles Wyplosz, 11 June 2011

The outgoing president of the European Central Bank has floated the idea of a finance minister for Europe. This column argues that such a statement from someone who has been in charge through the worst financial crisis in living memory is significant. It asks what the academic literature has to say on the matter.

Full Article: A finance minister for Europe?]]> Sat, 11 Jun 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/6631 http://www.VoxEU.org/index.php?q=node/6439 Charles Wyplosz, 29 April 2011

Restructuring is a taboo word in Brussels. This column argues that debt restructuring may be a viable option for some of the countries on Europe’s highly indebted periphery.

Full Article: The R word]]> Fri, 29 Apr 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/6439 http://www.VoxEU.org/index.php?q=node/5986 Charles Wyplosz, 5 January 2011

Is the worst of Europe’s crisis behind us? Or yet to come? This column looks at 2011 and argues that the Eurozone crisis offers a unique chance to correct the “dreadful mismanagement” of the past year.

Full Article: Happy 2011?]]> Wed, 05 Jan 2011 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/5986 http://www.VoxEU.org/index.php?q=node/5946 Charles Wyplosz, 19 December 2010

Lorenzo Bini-Smaghi – Member of the ECB's Executive Board – has produced a brilliant defence of the no-default strategy currently pursued by the Eurozone authorities. This column argues that instead of ruling out highly plausible outcomes, the ECB should explain how it will react if defaults happen. By not making adequate preparations, it may be raising the odds of a very bad scenario.

Full Article: The European debt crisis: Worrisome delusions]]> Sun, 19 Dec 2010 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/5946 http://www.VoxEU.org/index.php?q=node/5886 Charles Wyplosz, 3 December 2010

The Eurozone crisis is not over. This column argues that the bailout of Greece and the €750 billion Special Purpose Vehicle set up in May 2010 was the first step down the slippery slope. The first and only possible remedy is to reconstruct the no-bailout clause and let markets discipline governments; the EU has proven that it cannot.

Full Article: The Eurozone slides into a vicious cycle]]> Fri, 03 Dec 2010 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/5886 http://www.VoxEU.org/index.php?q=node/5610 Charles Wyplosz, 4 October 2010

Can the Eurozone’s Stability and Growth Pact be made to work? This column argues that the European Commission’s reform proposals for the pact include some good ideas but many bad ones. If adopted, it says the pact will not significantly advance fiscal discipline in the Eurozone but it could turn out to be a transition to an effective framework.

Full Article: Eurozone reform: Not yet fiscal discipline, but a good start]]> Mon, 04 Oct 2010 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/5610 http://www.VoxEU.org/index.php?q=node/5178 Charles Wyplosz, 17 June 2010

Some see the Eurozone crisis as a harbinger of a more perfect union, others as the euro’s death knell. In contrast, this essay explains the current situation as something in-between; the Eurozone is levitating on the hope that an exit strategy can soon be found. The key is to establish fiscal discipline in every Eurozone member. As a real European government is politically impossible, this must be based on national institutions that can guarantee fiscal discipline.

Full Article: The Eurozone’s levitation]]> Thu, 17 Jun 2010 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/5178 http://www.VoxEU.org/index.php?q=node/5031 Charles Wyplosz, 12 May 2010

Markets liked the European Stabilisation Mechanism but a closer look shows that the money is announced but not available. When markets realise this, they may do to Portugal and Spain what they did to Greece. Worse still, crucial principles have been sacrificed for the sake of unconvincing announcements. The debt crisis is unlikely to go away and the monetary union will have to be reconstructed to re-establish the principle of collective fiscal discipline.

Full Article: European Stabilisation Mechanism: Promises, realities and principles]]> Wed, 12 May 2010 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/5031 http://www.VoxEU.org/index.php?q=node/4987 Charles Wyplosz, 3 May 2010

Eurozone members, the IMF, and the ECB have announced significant commitments to assist debt-laden Greece. This column outlines a dark scenario in which the plan fails and contagion spreads, necessitating further assistance to other indebted Eurozone governments. That could risk high inflation or debt problems for the entire Eurozone.

Full Article: The Greek package: Eurozone rescue or seeds of an unravelled monetary union?]]> Mon, 03 May 2010 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/4987 http://www.VoxEU.org/index.php?q=node/4866 Charles Wyplosz, 30 April 2010

The current debate in the US over Chinese exchange-rate policy can be viewed as a rerun of the 1970s and ‘80s, with China taking Japan’s role. This column, which first appeared in the Vox's latest eBook, argues that while there is a relationship between current-account deficits and surpluses, causality is difficult to establish. Politics aside, even if China does not choose to appreciate its currency, inflation will eventually finish the job.

Full Article: Is an undervalued renmimbi the source of global imbalances?]]> Fri, 30 Apr 2010 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/4866 http://www.VoxEU.org/index.php?q=node/4820 Charles Wyplosz, 31 March 2010

Should Germany increase its spending on other Eurozone exports to help ease the region’s imbalances? This column argues that telling Germany to reduce its current account surplus is unwarranted. With an ageing population, Germany would be well-advised to save for a couple of decades – as would the rest of Europe.

Full Article: Germany, current accounts, and competitiveness]]> Wed, 31 Mar 2010 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/4820 http://www.VoxEU.org/index.php?q=node/4785 Charles Wyplosz, 20 March 2010

As the debate over a European Monetary Fund continues, this column argues that Germany’s enthusiasm for the new fund lies in its desire to impose fiscal discipline on countries it didn’t want in the Eurozone in the first place. The EU is not Germany and despite its dysfunctional diversity, the avoidance of a currency crisis in Greece shows that it works.

Full Article: Europe’s macro mess: Dysfunctional diversity that gets the job done]]> Sat, 20 Mar 2010 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/4785 http://www.VoxEU.org/index.php?q=node/4665 Richard Baldwin, Charles Wyplosz, 22 February 2010

Martin Feldstein suggested last week that Greece take a “holiday” from the Eurozone, rejoining with a depreciated nominal exchange rate. This column argues that the idea is not just impractical, it’s dangerous for the Eurozone.

Full Article: How to destroy the Eurozone: Feldstein’s euro-holiday idea]]> Mon, 22 Feb 2010 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/4665 http://www.VoxEU.org/index.php?q=node/4583 Charles Wyplosz, 9 February 2010

The latest turn in the global financial crisis has ensnared the debt of some European nations. The fact that these nations are members of a monetary union has generated much confused comment. Here one the world’s leading experts on Eurozone monetary and financial matters sets the record straight, debunking 10 myths and setting forth 10 frequently overlooked facts.

Full Article: The Eurozone debt crisis: Facts and myths ]]> Tue, 09 Feb 2010 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/4583 http://www.VoxEU.org/index.php?q=node/4478 Charles Wyplosz, 12 January 2010

The Lisbon strategy for making the EU the world’s most competitive economy is a failure, yet an extension of the failed approach is in the works. This column argues that EU governments should let the strategy die a peaceful death. A new model is needed.

Full Article: The failure of the Lisbon strategy]]> Tue, 12 Jan 2010 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/4478 http://www.VoxEU.org/index.php?q=node/4370 Charles Wyplosz, 14 December 2009

Greece’s public debt is in turmoil. This column says that the country is nowhere near defaulting, but the Greek government should heed the financial markets’ warning and end three decades of fiscal profligacy. It suggests that Greece adopt immediate deep spending cuts and reform its budgetary process to credibly enforce discipline.

Full Article: Greece: The party is over]]> Mon, 14 Dec 2009 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/4370 http://www.VoxEU.org/index.php?q=node/3408 Charles Wyplosz, 3 April 2009

Did the Summit succeed? This column argues that, except for the promises of more resources for the IMF, the summit did not move the agenda forward. Doing more was probably impossible, but now national governments must do more at home, and very urgently. It would be a tragedy if the Summit outcome encouraged complacency.

Full Article: The outcome of the G20 Summit: A sceptic’s view]]> Fri, 03 Apr 2009 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/3408 http://www.VoxEU.org/index.php?q=node/3277 Charles Wyplosz, 17 March 2009

We should not expect much global fiscal policy coordination, this column warns. The G20 will not be able to paper over the deep transatlantic divergences in the way economic policies are prepared and understood. While the US, UK, Japan, and China want a significant fiscal response, European nations are fixated on overhauling financial regulation.

Full Article: Transatlantic divergence in tackling the crisis]]> Tue, 17 Mar 2009 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/3277 http://www.VoxEU.org/index.php?q=node/3110 Charles Wyplosz, 21 February 2009

Some European governments are contemplating bailouts of other European governments. This column argues that violating the Eurozone’s no-bailout clause this soon would be a mistake. Much as it was necessary to let Lehman Brothers go down before bailing out the remaining banks, it may be necessary to let a profligate government default and ask for IMF assistance.

Full Article: European government bailouts: Should we let one go broke?]]> Sat, 21 Feb 2009 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/3110 http://www.VoxEU.org/index.php?q=node/2891 Charles Wyplosz, 28 January 2009

A product of the confused reaction of politicians to the crisis, the G20 forum must prove its usefulness. Rather than striving to coordinate fiscal policy responses, leaders should use the G20 platform to strike common ground on long-term reforms to global financial regulation and supervision, starting by recapitalising the IMF and reforming its governance structures.

Full Article: Can the G20 reform the international economic system?]]> Wed, 28 Jan 2009 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/2891 http://www.VoxEU.org/index.php?q=node/2872 Charles Wyplosz, 27 January 2009

This column introduces the latest ICMB-CEPR Geneva Report – written this year by Markus Brunnermeier, Andrew Crockett, Charles Goodhart, Avinash Persaud, and Hyun Shin. The report discusses how world leaders should think about financial regulation reform, making a number of specific proposals.

Full Article: Financial regulation reform: The Goodhart Report]]> Tue, 27 Jan 2009 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/2872 http://www.VoxEU.org/index.php?q=node/2377 Charles Wyplosz, 9 October 2008

Various governments are moving to absorb toxic assets, recapitalise banks, restart the interbank market, and guarantee deposits. They should do all four in a comprehensive plan and coordinate internationally.

Full Article: Why government responses need to be comprehensive and coordinated]]> Thu, 09 Oct 2008 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/2377 http://www.VoxEU.org/index.php?q=node/1729 Alberto Alesina, Richard Baldwin, Tito Boeri, Willem Buiter, Francesco Giavazzi, Daniel Gros, Stefano Micossi, Guido Tabellini, Charles Wyplosz, Klaus F. Zimmermann, 1 October 2008

This is a once-in-a-lifetime crisis. Trust among financial institutions is disappearing; fear may spread. Last week’s US experience showed that saving one bank at a time won’t work. A systemic response is needed and in Europe this means an EU-led initiative to recapitalise the banking sector. Unless European leaders immediately unite to address this crisis before it spirals out of control, they may find themselves fighting over how best to salvage the aftermath.

Full Article: Open Letter to European leaders on Europe’s banking crisis: A call to action]]> Wed, 01 Oct 2008 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/1729 http://www.VoxEU.org/index.php?q=node/1671 Charles Wyplosz, 22 September 2008

The world’s bankers created a reckless mix of lending and securitisation that exploded in their faces last year; they’ve stonewalled since. It would be criminal to bail them out, but spilling blood for its own sake is foolish. Here one of the world’s leading macroeconomists explains how the ‘Paulson Package’, history’s largest bet, might work and might not cost taxpayers too much. It’s too early to know which label to apply: “bailout” or “shrewd cleansing operation”.

Full Article: Why Paulson is right (maybe): Saving the financial system from the bankers]]> Mon, 22 Sep 2008 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/1671 http://www.VoxEU.org/index.php?q=node/1632 Petra Geraats, Francesco Giavazzi, Charles Wyplosz, 9 September 2008

Recent data suggest that the ECB’s credibility is worryingly low on the inflation-fighting front. This column explains how improved ECB transparency and communication could help it to regain credibility with markets and investors.

Full Article: ECB’s low inflation credibility: How to fix the problem]]> Tue, 09 Sep 2008 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/1632 http://www.VoxEU.org/index.php?q=node/1431 Charles Wyplosz, 20 July 2008

Should taxpayers bail out the banking system? One of the world’s leading international macroeconomists contrasts the Larry Summers “don’t-scare-off-the-investors” pro-bailout view with the Willem Buiter “they-ran-into-a wall-with-eyes-wide-open” anti-bailout view. He concludes that either way, taxpayers are always the losers. The best policy makers can do is to be merciless with shareholders and gentle with bank customers.

Full Article: Wyplosz on the Summers vs Buiter bailout debate]]> Sun, 20 Jul 2008 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/1431 http://www.VoxEU.org/index.php?q=node/1294 Charles Wyplosz, 30 June 2008

Charles Wyplosz talks to Romesh Vaitilingam about the freezing of the interbank market as the commercial banks went from high-risk strategies to extreme caution, without taking any responsibility for their crucial role in the operations of the market and the wider economy.

Full Article: Commercial banks and the financial market crisis of 2007/2008]]> Mon, 30 Jun 2008 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/1294 http://www.VoxEU.org/index.php?q=node/921 Petra Geraats, Francesco Giavazzi, Charles Wyplosz, 7 February 2008

Central Banking works by guiding the expectations of savers, investors, consumers and markets – not an easy job. This column, based on the latest report in CEPR’s series ‘Monitoring the European Central Bank’, argues that the job would be easier if the ECB published its anticipated interest rate path and voting records.

Full Article: Transparency and governance in the Eurozone]]> Thu, 07 Feb 2008 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/921 http://www.VoxEU.org/index.php?q=node/1119 Petra Geraats, Francesco Giavazzi, Charles Wyplosz, 7 February 2008

The latest Monitoring the European Central Bank Report argues that the ECB has a serious credibility and communication problem: the way the Governing Council makes its interest rate decisions remains clouded.

Full Article: Transparency and Governance]]> Thu, 07 Feb 2008 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/1119 http://www.VoxEU.org/index.php?q=node/564 Charles Wyplosz, 20 September 2007

Public interventions are bad except when there is a well-identified market failure. Since early August, we have witnessed a massive market failure due to acute information asymmetry. Intervention should directly address the failure, but that’s not possible this time, so we have the second-best solution. Why is it that a second-best solution is better than none?

Full Article: Subprime crisis: Second best solutions]]> Thu, 20 Sep 2007 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/564 http://www.VoxEU.org/index.php?q=node/479 Charles Wyplosz, 17 August 2007

The Fed move, to cut the discount rate while keeping the Fed Funds rate unchanged, is both innovative and shrewd. It allows banks to liquefy discredited mortgage assets at low cost while leaving open the decision on monetary policy. It also leaves in the Fed’s hands the more powerful tool of cutting the Fed Funds rate if its action does not succeed in quieting market fears.

Full Article: Subprime crisis: Fed Discount Rate cut, how, why and what it means ]]> Fri, 17 Aug 2007 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/479 http://www.VoxEU.org/index.php?q=node/471 Charles Wyplosz, 16 August 2007

A basic principle of high uncertainty is to be careful. This principle also applies to analyses of the situation, even if decisiveness in the face of turmoil is at a premium. Better wait than make things worse. Here a few observations to sort through the emerging debate.

Full Article: Subprime 'crisis': observations on the emerging debate]]> Thu, 16 Aug 2007 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/471 http://www.VoxEU.org/index.php?q=node/403 Charles Wyplosz, 21 July 2007

The ECB’s opacity, lack of open debate and refusal to decide by voting bear at least some responsibility in the declining support for the euro. This makes the ECB an easy target for politicians looking for scapegoats. For the good of the Euro-area citizens, the ECB ought to change its ways.

Full Article: Wake-up call for the ECB]]> Sat, 21 Jul 2007 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/403 http://www.VoxEU.org/index.php?q=node/292 Charles Wyplosz, 20 June 2007

Sarkozy’s de-taxing of overtime work adds a distortion on top of an already bad law and fails to address the real problem – the 35-hour week legislation. However, the idea is much less bad than it looks at first glance.

Full Article: Tax-free overtime: Sarkozy’s experiment]]> Wed, 20 Jun 2007 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/292 http://www.VoxEU.org/index.php?q=node/182 Charles Wyplosz, 28 May 2007

National foreign-exchange reserves have grown massively over the past ten years. Is this growth unexpectedly large? And is it driven by insurance motives, or does it result from competitiveness-boosting currency manipulation?

Full Article: Forex reserves: weapons or insurance?]]> Mon, 28 May 2007 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/182 http://www.VoxEU.org/index.php?q=node/119 Charles Wyplosz, 10 June 2004

Written in June 2003: EU Commissioner Pedro Solbes announced that aspiring Eurozone members must keep their exchange rates within the old, narrow ERM band. If EU Finance Ministers agree, this is very bad news, raising the possibility of exchange rate crises. It is in the EU’s common interest to recognise that the new members are different; they should be given two options: early euro-isation or the Swedish-type oblivion of the wide-band ERM.

Full Article: Who's afraid of the Eurozone?]]> Thu, 10 Jun 2004 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/119