Global Markets Forum
April 10, 2013, 5:30 PM - 7:00 PM
The Euro Crisis
The European Monetary Union is currently experiencing a serious internal balance-of-payment crisis. The so-called periphery countries, and especially Greece, are finding it difficult to finance their national budgets. Various bail-out measures have been intro-duced to save individual Eurozone countries from insolvency, which are collectively referred to as the "euro bail-out package". In addition to this package, however, there have been purchases of government bonds and the option for countries to help them-selves via money creation, which the ECB System grants crisis-hit countries at the ex-pense of the other euro countries. About half of Germany's net foreign wealth is now a Target claim of the Bundesbank against other central banks in Europe. To March 2013, Germany's overall exposure in the case of a cumulative default on the part of the GIPS countries, Italy and Cyprus totaled around EUR 688 billion taking all bailout packages into consideration. In the end, the ECB Council, and not German parliament, was re-sponsible for deciding how to dispose of most of this sum.
The steps taken by the ECB are not merely the side-effects of a monetary system, but are the result of a system failure, which is precluded in the US financial system where Target claims must be settled with marketable securities. In his lecture, Hans-Werner Sinn shows why this system failure poses a threat to Germany and the eurozone, and is forcing it to make concessions in negotiations over bail-out packages.
The speaker, Hans-Werner Sinn, is Professor of Economics and Public Finance at the University of Munich (LMU) and president of the Ifo Institute.
This event was part of the Initiative on Global Markets (IGM) and was generously sponsored by Myron Scholes.
The IGM also receives financial support from AQR Capital Management and Kenneth and Anne Griffin.
University of Chicago Booth School of Business
450 N City front Plaza Drive, Room 100
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Hans-Werner Sinn is Professor of Economics and Public Finance at the University of Munich (LMU) and president of the Ifo Institute. He is the director of the LMU's Center for Economic Studies (CES) and runs the CESifo Research Network. Sinn has been a member of the Council of Economic Advisors to the German Ministry of Economics since 1989 and a member of the Bavarian Academy of Sciences since 1996. He holds honorary doctorates from the University of Magdeburg and of Helsinki. He taught at the University of Western Ontario and has held visiting fellowships at the University of Bergen, the London School of Economics, Stanford University, Princeton University, Hebrew University and Oslo University, and he has been a fellow of the NBER since 1989.
He received the top prizes at the university for his doctoral dissertation and post-doctoral theses as well as a number of other prizes and awards from various institutions, including the international Corinne Award for his best-seller on Germany's economic problems. In 2005 he was awarded the Officer's Cross of the Order of Merit of the Federal Republic of Germany. In 1999 he gave the Yrjö-Jahnsson Lectures, in 2000 the Stevenson Lectures, in 2004 the Tinbergen Lectures, in 2005 the World Economy Annual Lecture at the University of Nottingham, the Bavarian Order of Merit (2008), Europe Award of the Maastricht University (2008), Gustav Stolper Prize of the German Economic Association (2008), the Agnar Sandmo Lecture at Norwegian School of Economics and Business Administration (2009), and the D.B Doran Lecture at the Hebrew University of Jerusalem (2010), among many other distinctions.
From 1997 to 2000 he was president of the German Economic Association, and president of the International Institute of Public Finance (IIPF) from 2006 to 2009. His fields of interest include the economics of transition, risk and insurance, natural resources, monetary trade theory and public finance. In these areas he has published more than 100 scholarly articles, a number of scientific comments, more than 200 policy articles, and numerous interviews and newspaper articles. He has published a dozen monographs with more than 30 editions in six languages. They include titles such as Economic Decisions under Uncertainty, Capital Income Taxation and Resource Allocation, Jumpstart - The Economic Unification of Germany, The New Systems Competition, Can Germany Still Be Saved?, Casino Capitalism, and The Green Paradox.