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Why my `pro bono' work is relevant to market participants

My experience can frequently supply answers to obvious questions including: (i) what do these changes in financial sector regulation mean for my business? (ii) Could these regulatory changes have profound influences on the supply of, and demand for, different asset classes?


Your support will enable me to participate more substantially in the campaign to keep Britain a full, committed and active member of the European Union. Such activity with a wide spread of the pro-European think tanks and lobby groups (such as the European Movement) in the UK is essential. A country that is haemorrhaging influence in Europe and is also addicted to capital inflows to sustain its living standards will be at grave risk from a rising perception of a probable "hard" Brexit.

The Temporary Eurobill Fund (TEF) – my five-year personally funded marathon

My principal `micro’ policy proposal is for a Temporary Eurobill Fund (TEF) as the next step for the euro area. For the past five years, I have been developing a proposal for a ‘Temporary Eurobill Fund’ – see my explanation to ECON and the latest text is here. I presented the idea to the European Commission and extensively around the EU so the concept has evolved substantially.

As a result of this work, the proposal was examined by a European Commission `Expert Group’ – of which I was a member. Its analysis of the pros and cons of a debt redemption fund versus eurobills was published in March and the Group presented its Report to ECON on 1st April 2014 – see the video of my ECON presentation.   

The electoral calendar of EU27 now seems to offer a rare period of stability ahead to digest the stream of proposals from th Commission to deepen the Economic and Monetary Union.  There should now be further examination of the TEF's mechanics as it would be a “concrete achievement”.

Such a development would change the euro area government debt market dramatically and mark another step towards a Genuine Economic and Monetary Union.The Temporary Eurobill Fund - acting as a precursor to a European Treasury - would be a foundation  for CMU.

Capital Market Union (CMU)

A properly-designed Capital Market Union would deepen the single market in finance and simultaneously offset some of the pooling of sovereignty inherent in Banking Union. CMU would be an open union enabling the savers of Europe to make their own choice about where to put their money – a de-centralisation of power, both financial and political.

Such de-centralisation is critical to avoid the vicious pro-cyclicality that is inherent in the fact that the great majority of EU financial intermediation is in the hands of financial institutions that are subject to strict rules on matching assets and liabilities. The requirement to maintain minimum capital buffers – even though they are large – would force sudden de-leveraging if there were major losses on assets. If the risk of a major loss due to currency shifts becomes apparent, then we have already seen how quickly the single market is forced to fracture as a natural consequence of these rules.

In contrast, if the bulk of financial intermediation is done via securities held by citizens, then citizens are not compelled by law to respond in such a leveraged manner.  However, if a risk becomes obvious, there should be no doubt that they will still respond in what I call a `rolling referendum’ on the economic policies of the state concerned. That would be a powerful force for corrective action.

Commission President Juncker has made this project a keystone of his Presidency programme. But  it will be a long haul: the key elements will represent a major step towards the deep integration of large swathes of commercial life in the EU.




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