lunedì, 25 giugno 2018

Banche e Finanza

Banche e Finanza

An empirical analysis by Brancaccio, Fontana, Lopreite and Realfonzo shows that the ECB is not capable of controlling the nominal income trend and therefore also inflation. The following study is in line with the alternative argument, according to which the real task of the central bank is to regulate the rhythm of insolvencies in the economic system.

The “dark illness” of the Euro-zone is that the abundant savings are not mobilized for investment. The question therefore arises of whether the European Central Bank is actually doing everything possible to prevent Europe from falling over the cliff. The article reports the remedies put in place by the ECB first by reducing the interest rate and then via quantitive easing. None of this has been able to cope with the insufficiency of investments which instead would be enough to create opportunities for growth via greater public spending.

Numerous experts argue that the single currency is the cause of problems in many of the eurozone countries. However, this article illustrates the fact that the roots of the Great Recession lie in a long global distribution conflict that compressed wage incomes and expanded capital incomes. Equally there is the Greek and Italian economic illness that long pre-existed joining the Euro. It is therefore not enough to leave the Euro because this would bring down the institutional framework of any battle for a different policy.

This paper summarizes some criticisms against the recent Italian reform that imposed that the largest cooperative banks must to be transformed in limited companies. The main are: better governance and business model of the mutual ownership, cooperative banks’ positive impact on system stability and their importance/resilience worldwide. It deepens the discussion, by analysing financial data of Italian banks from Mediobanca-R&S dataset and showing that limited company model is not better than cooperative one in terms of performance and risk; therefore, the 2015 reform doesn’t seem to be justified by the past empirical evidence.

The economic literaure suggests that restrictive fiscal policies can compromise the stability of banking balances, leading to plans of recapitalization, liquidation and foreign acquisitions. If this reading is accepted, a critical reflection can be made on the new double role of the ECB, whose help is conditional on the adoption of austerity policies and it is now also the Single Supervisor of the European banking system.

The European central bank recently adopted a non-accommodating policy towards the liquidity requirements of Greek banks in difficulty. Many commentators however have pointed out that it acted in violation of the Bagehot rule, which says the role of the central bank should be provide liquidity to commercial banks considered illiquid but not insolvent.