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Ivie
INSTITUTO VALENCIANO DE INVESTIGACIONES ECONÓMICAS
Seminar Ivie 2011
Ponzi finance, Public Debt and Financial Crisis: The European Case and how to prevent it from happening again

Fundación Universidad-Empresa, Adeit
Plaza Virgen de la Paz, 3
46001 Valencia
Valencia, 29-30 September 2011
Ford Foundation

Associazione Paolo Sylos Labini

Ivie
Objetives

Sponsored by the Ford Foundation, the Associazione Paolo Sylos Labini and the Ivie are organizing a seminar on the relationship between public finance and banking crisis. The current crisis has shown the importance of public finance in generating financial instability and banking crises but at the same time that bank bailouts have led to deterioration in public finance. As the title of the seminar summarizes “Ponzi finance, public debt and financial crisis: the European case and how to prevent it from happening again”, the seminar aims to discuss the current crisis, that started with the socalled subprime crisis in Summer 2007, and has entered now a new phase with the sovereign debt crisis, after the rescue of Greece in May 2010. Special emphasis will be given to studying the relationship between public finances and the financial system.

One of the lessons of the crisis is the close relationship between public finance and the soundness of the banking sector. The sovereign debt crisis, which originated in the deterioration of public finances, has struck at the solvency of the banking sector, both directly because of the exposure of the banks to the public debt of the rescued countries (especially Greece) and indirectly through the loss of value of other assets affected by the contagion effect. In addition to solvency, the sovereign debt crisis has also had an impact on the liquidity of banks due to the difficulties in the access to finance in the wholesale markets. Just taking a look at the last co-ordinate action of several central banks injecting liquidity into the system or the growing demand, by some banking sectors, for ECB liquidity reveals the current liquidity constraints.

But there is another direction of causality between the behavior of the banking sector and the public finance. The bank bailouts undertaken have shown that the risk appetite and the financial innovation have deteriorated the soundness of the banking firms. For this reason, governments have injected billions of capital in the banking sectors, which has caused an important increase in the public debt.

In this context, the seminar aims to analyze the recent experiences in Europe in order to learn how to prevent the impact of new crises in the future. Thus the seminar counts on the participation of a panel of recognized experts in macroeconomics, public finance and banking from 11 different institutions (research centers, universities, central banks, etc.). The participants will discuss issues as relevant today as the impact of the crisis on financial integration, the financial regulatory reform, the importance of external imbalances in the management of the crisis, etc., as well as the specific experiences of some countries such as Germany and Spain.

Programme

Thursday 29th September 2011 9:30 – 17:30

9:30 – 11:30 Session 1:

“The New Phase of the Crisis and its Meaning for Reforming Global Finance”
Leonardo Burlamaqui (State University of Rio de Janeiro and Ford Foundation)

“Public and Banking Finance: Evolution of Financial Integration and Indebtedness Tolerance”
Santiago Carbó (Universidad de Granada and Ivie)
Francisco Pérez (Universitat de València and Ivie)

11:30 – 12:00 Coffee break

12:00 – 14:00 Session 2:

“Debtors’ Crisis or Creditors’ Crisis? Who Pays for the European Sovereign and Sub-prime Mortgage Losses”
Jan Kregel (Levy Economics Institute of Bard College)

“Suggestions for an Alternative Approach to Financial Regulation”
Elisabetta Montanaro (Università di Siena)
Mario Tonveronachi (Università di Siena)

14:00 – 15:30 Break

15:30 – 17:30 Session 3:

“On the political Economy of the German Position in the European Debt Crisis”
Peter Wahl (WEED - World Economy, Ecology and Development)

“Financial regulations, asset bubbles and periphery countries”
Arturo O’Connell (Banco Central de la República Argentina)

Friday 30th September 2011 9:00 – 14:00

9:00 – 11:30 Session 4:

“Leverage and de-leverage of the Spanish Economy in the Euro”
Vicente Salas (Universidad de Zaragoza and Banco de España)

(To be announced)
Soledad Núñez (Dirección General del Tesoro y Política Financiera. Ministerio de Economía y Hacienda)

“Current account imbalances in the Eurozone”
Javier Andrés (Universitat de València)

11:30 – 12:00 Coffee break

12:00 – 14:00 Session 5:

“The impact of the crisis in the Spanish banking sector”
Joaquín Maudos (Universitat de València and Ivie)
Javier Quesada (Universitat de València and Ivie)

“Liberalization, bank governance, and risk taking”
Manuel Illueca (Universitat Jaume I and Ivie)

Participants

Javier Andrés (Universitat de València)
Leonardo Burlamaqui (State University of Rio de Janeiro and Ford Foundation)
Santiago Carbó (Universidad de Granada and Ivie)
Manuel Illueca (Universitat Jaume I and Ivie)
Jan Kregel (Levy Economics Institute of Bard College)
Joaquín Maudos (Universitat de València and Ivie)
Elisabetta Montanaro (Università di Siena)
Soledad Núñez (Dirección General del Tesoro y Política Financiera. Ministerio de Economía y Hacienda)
Arturo O’Connell (Banco Central de la República Argentina)
Francisco Pérez (Universitat de València and Ivie)
Javier Quesada (Universitat de València and Ivie)
Vicente Salas (Universidad de Zaragoza and Banco de España)
Mario Tonveronachi (Università di Siena)
Peter Wahl (WEED (World Economy, Ecology and Development))

Venue

Fundación Universidad – Empresa, Adeit
Plaza Virgen de la Paz, 3
46001 Valencia