The Bank of England was a grand venue to announce the new findings of our Financialisation, Economy, Society and Sustainable Development (FESSUD) research project, on 25 May 2016.
The venerable bank has hosted some of Europe’s most powerful people during the course of 322-year history, and the coordination team of FESSUD in Leeds was delighted to secure speakers from institutions including the European Central Bank (ECB), the OECD, the European Investment Bank, the US Senate Budget Committee, the European Commission and several business schools and research institutions from across Europe and the US.
The common thread of 25 May’s event was developing a better understanding of how financialisation – the emergence of the financial system over other aspects of the economy – has grown to exert a domination over other parts of Europe’s economy over the last 30 years and what will happen in the future.
The Bank of England event was open to the public. Around 100 tickets were snapped up in a matter of hours and attendance was very good on the day. It was great to see members of the public and students sitting alongside powerful policy makers and distinguished academics. A vigorous debate followed many of the presentations – always a sign that the research was relevant and of interest.
FESSUD partners from the Berlin School of Economics and Law sought to investigate the stability of economies in the face of the degree of debt-financed expenditures, which is particularly relevant in light of the rapid growth of debt prior to the financial crisis. Professor Jan Kregel (Levy Institute, USA and Tallin Technical University, Estonia) presented ideas on how regulation could be designed and operated to limit financial instability, with a particular emphasis on the impact of innovations in the payments and financing systems.
Vítor Constâncio, Vice-President of the ECB, offered his thoughts on the current challenges to the international monetary and financial systems. Meanwhile Stephanie Kelton, former Chief Economist of the US Senate Budget Committee and advisor to Bernie Sanders, gave a transatlantic perspective on national budgets in the European Union. We were also delighted to hear Anita Fürstenberg-Lucius, Director at the European Investment Bank, discussing the role that the bank plays in bridging the gap between public and private financing.
One of the key papers was the Delphi Study on the Future of Finance, which was delivered by FESSUD colleagues at the University of the Basque Country in Spain, and which drew together predictions about the future of finance in Europe which was made by 50 leading economists. The findings of this paper generated coverage in the national UK media, with the Guardian and the Independent reporting the findings of this research. We used social media to share our findings as widely as possible.
Certain themes were repeated during throughout the day:
The financial system is too large; the system is not really working to the benefit of society; the financial system needs reforming; and the current regulatory framework will not be enough to prevent another crisis. In fact, previous studies have shown that there comes a point where further enlargement of the financial system can reduce real growth in the economy. Other studies have shown that the sector growth can act as a drag on productivity growth.
Despite the gloom, the Bank of England event was a great success, and the degree of consensus about the need for reform (if not how specifically to do it) was notable and should lead to warning signs in the minds of Europe’s policy makers and financial regulators.
Presentations
- “Public or Private Finance?” (Stephanie Kelton Professor of Economics University of Missouri-Kansas City)
- “Financialisation, Economy, Society and Sustainable Development” (Malcolm Sawyer University of Leeds, UK and FESSUD)
- “Inequality, Debt and Demand Regimes” (Daniel Detzer and Eckhard Hein, Berlin School of Economics and Law)
- “The Future of Regulation: Can Financial Regulation Prevent the Next Financial Crisis?” (Jan Kregel)
- “Mapping the Future of Financialisation: Key Challenges for a Foresight Analysis” (Giuseppe Fontana Univ. of Leeds, UK, Univ. of Sannio, Italy and FESSUD)
- “Economic policies, financial stability and economic performance” (Jérôme Creel, OFCE-Sciences Po & ESCP Europe)
- “A Delphi study on the future of finance” (Jesús Ferreiro, Carmen Gómez and Jon Landeta, University of the Basque Country UPV/EHU)
- “EIB: A Third Way between Public and Private Finance” (Anita Fürstenberg-Lucius, European Investment Bank Group)
- “The international monetary and financial system – a European perspective: Moving towards a multipolar financial system” (Annika Eriksgård Melander, European Commission)
