On April 3, 2019, Philip R. Lane, Governor of the Central Bank of Ireland, visited Tsinghua PBCSF and presented a speech at the Tsinghua PBCSF Global Academic Leader Forum. Governor Philip Lane is recently appointed to the Executive Board of the European Central Bank and will take up duty in Frankfurt in June. Speaking on the topic of “Macro-Financial Stability and the Euro”, he analyzed from multiple angles the implications of monetary integration for macro-financial stabilization policies at national and area-wide levels.

The forum was jointly organized by Tsinghua PBCSF and Tsinghua University National Institute of Financial Research, and moderated by Zhou Hao, Associate Dean and Unigroup Chair Professor of Finance, Tsinghua PBCSF. Eoin O’ Leary, Ambassador of Ireland to China, and John Lynam, head of the Economic Section at the Embassy of Ireland in China, attended the forum.

 

Zhou Hao presided over the forum

Philip Lane pointed out in his speech that the “boom-bust-crisis-recovery” cycle, the euro area experienced, revealed the cost of monetary integration, while the national and international institutional frameworks proved inadequate to manage the policy challenges of this period. After the 2007-2009 crisis, much has been done to remedy these policy shortfalls, even though the reform agenda is not complete. National and area-wide policymakers must make use of the improved institutional architecture to do a better job in ex-ante risk management and ex-post crisis management.

Based on his long-term observation and research, Philip Lane pointed out that during 1999-2008, there was significant variation across member countries in the euro area in terms of their participation in globalization, the speed of technological progress, exposure to impacts outside the euro area, natural endowment, and domestic politics, which leads to a widening gap between surplus member countries and deficit member countries each year. The global financial crisis led to significant declines in both output and domestic spending in the euro area, and the synchronized involvement of member countries in the crisis was strongly correlated to their cross-country variation.

 

(Philip delivered a speech)

At the end of the speech, Philip concluded that the 20-year development of the euro area provided two important revelations: ex-ante fiscal policies and macro-prudential regulation should be adopted to prevent excessive divergence across the member countries, and vigorous efforts should be made to develop crisis management tools. He also added that, despite the unified monetary system, the euro area has a unique political and economic structure as its 19 member countries have their respective histories of development; although various sides have gradually reached a consensus on the monetary and regulatory policies in the euro area, relevant research is still going on to deeper levels.

 

 (At the forum)

After the speech, the audience exchanged views with Philip on the coordination of monetary policies and macro-prudential regulation, China’s exchange rates and housing prices, Brexit, China-US economic and trade disputes, and the “Belt and Road” Initiative.

The Tsinghua PBCSF Global Academic Leader Forum is a non-profit platform for academic lectures focusing on the financial sector. It invites world-renowned scholars, senior executives of domestic and overseas regulatory institutions, senior professors of finance, as well as economists with profound academic and practical attainments to share academic views and promote academic exchanges and progress.