In the same week that Germany and France celebrated the 50th anniversary of the Elysee treaty marking a commitment to increased cooperation between the two long-standing adversaries, British PM Cameron announced that, if re-elected in the next general election, the Conservative government would hold a referendum on UK membership in the European Union. What does this signify in terms of the governance arrangements for Europe?
With Britain considering a referendum on European Union membership the focus shifts away, temporarily, from worries over the euro zone’s own myriad challenges (not to worry these will return in the spring when growth in the euro zone fails to return and we edge closer to a German federal election). The response on the part of EU politicians has been reasonably diplomatic, with no threats or counter-threats being made (so far, but it's early days).
The start of any new year is a time to review what is past and ponder what is yet to come. In this contemplative spirit, I recently found myself reflecting on the doctrinal disputes within the economics profession.
"If promoting international currency diversification remains a priority, then both sides ought to embrace their recent leadership changes as an opportunity to hit the reset button," writes Senior Fellow Gregory Chin, commenting on the impact the ongoing islands dispute is having on the currency pact between China and Japan.
When the history of monetary policy over the past five years is written, the observers that look back will ask whether 2013 marked the beginning of the end of central bank independence. For decades, rules were increasingly put into place to clarify the relationship between a central bank and government. Day to day decisions would be entirely left in the hands of central bankers. Longer term policy strategy was to be decided by the politicians, preferably in consultation with the policy experts.
Late in November the European Commission’s President, José Manuel Barroso, presented A blueprint for a deep and genuine economic and monetary union. The proposals for a renewed EMU — here meaning Economic and Monetary Union — barely attracted the attention of the media.
Driving the global economy out of its worst period since the Great Depression will require the same basic fundamentals as any safe car ride — proper application of the accelerator and brakes, with a firm hand on the wheel, ready to make the necessary adjustments. Olivier Blanchard, director of the International Monetary Fund’s Research Department, used this simple analogy in his public address, to a near-capacity crowd at the CIGI Auditorium, as a way of explaining where we are in the global crisis relative to past economic crises and, more importantly, where we might be headed.
In an op-ed to the Toronto Star, CIGI Distinguished Fellow Andrew Cooper looks the striking appointment of Mark Carney as the new governor of the Bank of England and how it can be interpreted in a wide number of ways. He says "from a transnational perspective, Carney’s appointment is another sign of the rise of free-agent technocracy in an age of crisis."
At the recently completed CIGI ’12 Conference, Five Years After the Fall, I had the pleasure of chairing a session on Global Financial Regulation and International Governance of Global Capital Flows. Part of the remit of that session was, “The … session will focus on attaining a suitable international regulatory framework for successful global financial integration. Such a framework would reduce the risk of future crises and ensure financing for the investment and innovation that will drive growth going forward.”
CIGI Fellows Bessma Momani and Gordon Smith join CIGI '12 panellists Michael Callaghan, Inge Kaul and Cyrus Rustomjee for a panel discussion on the legacies of the global financial crisis and the challenges going forward.