14th Annual European Economy Lecture by Charles WYPLOSZ

On 28 October 2015, the 14^th European Economy Lecture was delivered by Dr Charles WYPLOSZ, Professor of International Economics at the Graduate Institute, Geneva, where he is Director of the International Centre for Money and Banking Studies. Previously, he has served as Associate Dean for Research and Development at INSEAD and Director of the PhD program in Economics at the École des Hautes Études en Science Sociales in Paris. He is a CEPR Research Fellow and has served as Director of the International Macroeconomics Programme at CEPR. The title of his lecture was: "The Eurozone: Clean-up Time".

The acute phase of the Eurozone crisis is over. However, the fact that risk premiums are down to more manageable levels hides the risk for a potentially disruptive follow-up crisis. Public debt levels are higher, in some countries much higher, than before the Eurozone crisis. These high levels of debt are susceptible to a self-fulfilling crisis that is only a matter of time. That being said, a proper clean-up of the Eurozone could reduce the risk of yet another crisis and could finally pave the way for renewed growth.

In his lecture, Dr WYPLOSZ pointed out the institutional failures that led to the crisis and that make it difficult for the Eurozone to recover. He also proposed several solutions to each of the institutional failures. While the debt legacy has to be dealt with, the single supervision of banks has to be extended and the single resolution mechanism needs to be streamlined. Moreover, the ECB should return to the "right side of the table" when negotiating with the IMF and member countries whereas the IMF itself should be in charge for dealing with the debt and reforms in distressed countries.

The slides of his lecture can be downloaded here.