Scientific support to financial analysis: how can science contribute to financial stability? © EU, 2012
How can science contribute to financial stability?
Financial stability is a sine qua non to maximise the benefits of the internal market and generate growth and jobs. To restore confidence among depositors and investors, targeted reforms are necessary to create more transparent and better governed financial institutions.
In this context, the JRC has organised today a high level roundtable where high-ranking financial experts, representatives of the science community, academics, heads of industry associations and policy makers discuss the important role that science can play for financial and economic issues. The aim is to help evaluate the main sources of risk and vulnerability in financial stability and pave the way for clear-sighted debate and targeted, evidence-based structural reforms.
The event counts on the participation of Michel Barnier, Commissioner for Internal Market and Services, MEPs Malcolm Harbour, Markus Ferber and Jean-Paul Gauzès, and Jan-Pieter Krahnen, member of the Liikanen Group. It also draws together, amongst others, high-level representatives from the European Central Bank, European Investment Bank, the European Banking Authority, the Bank for International Settlements and the International Organisation of Securities Commissions.
The one day programme covers three main topics: the state of play of science support to finance; scientific support to preventive measures, monitoring and surveillance and finally, scientific support to medium and long term solutions for financial stability. The discussions were focused on how scientific expertise and research should contribute to help regulators prevent, mitigate and manage risks to financial stability.
During the event, a Memorandum of Understanding was signed between the JRC and the College of Europe, represented respectively by Dominique Ristori, Director-General and Professor Paul Demaret, Rector. The parties have identified two initial areas of cooperation. The first one focuses on the improvement of analysis and tools for diagnosis and forecast of the economic situations and the impact of decisions concerning macroeconomic policies. The second aims to reinforce the scientific support for financial analysis in order to provide a stronger contribution for the stability of the sector.
Session I – SCIENCE SUPPORT TO FINANCE: WHAT IS THE STATE OF PLAY?
- Presentation of the SYMBOL model, applications and future developments, Francesca Campolongo, Head of Scientific Support to Financial Analysis Unit, Joint Research Centre, European Commission
- Presentation of the study: The Future of Computer Trading in Financial Markets, Oliver Linton, Chair of Political Economy, Cambridge University and Jean-Pierre Zigrand, London School of Economics
- What is the correlation between size and risk?, Rohini Tendulkar, Economist, International Organization of Securities Commissions
Session II – HOW CAN SCIENCE CONTRIBUTE TO PREVENTIVE MEASURES, MONITORING AND SURVEILLANCE?
- Early identification of systemic risks at a macro-economic level, Carsten Detken, Head of the Financial Stability Surveillance Division, European Central Bank
- Early identification of systemic risks at micro-economic level, Piers Haben, Director Oversight, European Banking Authority
- Assessing the macroeconomic impact of the transition to stronger capital requirements, Benjamin Cohen, Special Adviser on International Financial Stability Policy, Monetary and Economic Department, Bank for International Settlements
Session III – WHAT SCIENCE WILL BE NEEDED TO PROVIDE MEDIUM AND LONG TERM SOLUTIONS FOR FINANCIAL STABILITY?
- The ESCB Macroprudential Research (MaRs) Network and the Future of Economics, Philipp Hartmann, Deputy Director-General, Directorate-General Research, European Central Bank
- Presentation of the report on reforming the structure of the EU Banking sector, Jan Pieter Krahnen, Member of the High-level Expert Group on reforming the structure of the EU banking sector, Chair of Corporate Finance at Goethe-Universität, Director of the Center for Financial Studies
- How can science contribute to the Banking Union proposals?, Jan Ceyssens, Senior Policy Officer, Directorate-General for Internal Market and Services, European Commission