Managing Risks in the European Periphery Debt Crisis Also by George Christodoulakis

Th e Analytics of Risk Model Validation (edited with Stephen Satchell) Managing Risks in the European Periphery Debt Crisis

Lessons from the Trade-Off between , Politics and the Financial Markets

Edited by George Christodoulakis Editorial matter and selection © George Christodoulakis 2015 Remaining chapters © Respective authors 2015 Softcover reprint of the hardcover 1st edition 2015 ISBN 978-1-137-30494-0 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identifi ed as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2015 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries

ISBN 978-1-349-45463-1 ISBN 978-1-137-30495-7 (eBook) DOI 10.1057/9781137304957 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. In the memory of my parents Aristotle and Georgia Christodoulakis, who taught me about qualities versus quantities This page intentionally left blank Contents

List of Figures ...... ix List of Tables ...... xii Preface ...... xiii Notes on Contributors ...... xvii

Part I: Genesis of the Crisis, Use and Abuse of Economic Policies 1 Th e Genesis of the Sovereign Debt Crisis ...... 3 Philippe d’Arvisenet 2 Th e Trade-Off between Fiscal and Competitiveness Adjustments ...... 38 Daniel Gros with Cinzia Alcidi 3 Ireland and : A Tale of Two Fiscal Adjustments...... 55 Jeff rey D. Anderson and Jessica Stallings 4 Rating Agencies vs. Sovereign Debt Markets: A Tale of Interacting Risk Preferences...... 78 George Christodoulakis 5 Th e 2012 Greek Debt Restructuring and its Aft ermath ...... 87 Miranda Xafa 6 Economic Th eories that Infl uenced the Judges of Karlsruhe ...... 101 Paul De Grauwe 7 Privatization of State Assets in the Presence of Crisis...... 108 George Christodoulakis

Part II: Crisis Resolution, Prospect and Retrospect 8 How to Manage Public Debts in the Area? ...... 127 Catherine Mathieu and Henri Sterdyniak 9 Fiscal Risk Sharing and Stabilization in the EMU ...... 148 Kerstin Bernoth and Philipp Engler 10 Sovereign Debt and its Restructuring Framework in the Eurozone ...... 163 Ashoka Mody 11 Funding Risks for Corporates in the Periphery: Disintermediation to the Rescue for the Larger Ones, Challenges for the Others ...... 198

vii viii Contents

Blaise Ganguin 12 On Solving Europe’s Financial Issues to Promote Sustainable Growth. . . . .212 Adrian Blundell-Wignall and Caroline Roulet 13 European Banking Union as a Response to the Fragmentation of the Internal Market Resulting from the Financial and Sovereign Debt Crisis ...... 237 Dimitris Tsibanoulis with Gerry Kounadis

Index ...... 273 List of Figures

1.1 Exchange rates ...... 4 1.2 Exports of G & S, volume (index Q1/1991 = 100) ...... 4 1.3 Real three-month interbank rates, % ...... 6 1.4 Financial conditions in Germany ...... 7 1.5 Eurozone: credit to non fi nancial corporate...... 8 1.6 Eurozone: credit to households ...... 8 1.7 Debt of the private sector as % of GDP...... 8 1.8 Domestic demand volume ...... 9 1.9 Goods and services balance, % of GDP ...... 9 1.10 Structural budget balance as % of GDP ...... 10 1.11 Ten-year government bond yield, % ...... 10 1.12 Real interest rate and external imbalances ...... 11 1.13 Current account balance as % of GDP ...... 11 1.14 Eurozone: fi ve-year CDS by sector (basis points) ...... 15 1.15 Eurozone trade (as % of total trade) ...... 16 1.16 Eurozone: real growth dispersion...... 19 1.17 Eurozone: core infl ation dispersion...... 19 1.18 Eurozone: output gap correlation among eurozone countries (eight-year rolling sample) ...... 20 1.19 Structural budget balance as % of GDP ...... 28 1.20 Current account balance as % of GDP ...... 28 1.21 Exports of goods and services in volume, index qi/2000=100 ...... 29 1.22 Nominal unit labour cost, country vs Germany (index 2005=100) ...... 29 2.1 Government debt as % of GDP: sovereign debt ratios not yet under control ...... 40 2.2 ECB competitiveness indicator, unit labour cost, index, 1999Q1=100 . . . 41 2.3 GDP defl ator, change between 1999 and 2012 (price index, 1999Q1=100)...... 43 2.4 : selected governance indicators...... 52 3.1 Read GDP level ...... 56 3.2 Ten-year government bond spreads vs. German bund...... 56 3.3 Unemployment rate...... 57 3.4 Inward FDI, 2000–11...... 59 3.5 Employment ...... 59 3.6 Fixed capital formation ...... 60 3.7 Relative unit labour costs ...... 61 3.8 Export volume ...... 61

ix x List of Figures

3.9 Greece: output gap...... 62 3.10 Ireland: output gap...... 62 4.1 Ten-year European periphery bond yield...... 80 4.2 Five-year implied probability to default for Greece ...... 82 4.3 Evolution of relative market and CRA pessimism 2008–11 ...... 84 5.1 PIGS: general government gross debt (% GDP) ...... 88 5.2 PIGS: real GDP, 1999=100 ...... 88 5.3 PIGS: investment ratios, 2007–14 (% GDP) ...... 89 5.4 PIGS: general government defi cit (% GDP)...... 91 5.5 Spreads over ten-year German bond yield (bps)...... 91 5.6 Distribution of PSI losses on €198bn of accepted bids (€bn) ...... 93 5.7 Outcome of debt buyback targeting €62bn of new GGBs (€bn)...... 96 5.8 Greece: breakdown of public debt by creditor, 2013 (€bn) ...... 96 7.1 Privatization activity in the EU – 15 ...... 110 8.1 Ten-year government interest rates...... 128 9.1 Output gaps “German bloc” ...... 154 9.2 Output gaps “French bloc” ...... 155 9.3 Output gaps France, Germany and Eurozone average ...... 155 9.4 Standard deviations of output gaps and GDP: all eurozone countries but “big four” ...... 156 9.5 Standard deviations of output gaps and GDP: the “big four” economies (GER, F, I, ES)...... 156 10.1 Trends in public debt ratios ...... 170 10.2(a) Household debt/income ratios: eurozone vs USA ...... 172 10.2(b) Corporate debt/GDP ratios: eurozone countries and USA ...... 173 10.3 Sovereign bond market reactions to policy announcements (cumulative abnormal change (basis points)) ...... 185 11.1 Funding mix by country ...... 199 11.2 Loans to euro area non-fi nancial corporates ...... 200 11.3 Sales growth GIPS vs Europe ...... 200 11.4 Profi tability – GIPS vs Europe ...... 201 11.5 Interest coverage – GIPS vs Europe...... 201 11.6 Cash balance – GIPS vs Europe...... 202 11.7 European default rate ...... 203 11.8 National insolvency statistics ...... 203 11.9 Average % of debt sourced from seven categories of debt for European non-fi nancial fi rms ...... 205 11.10 Capital expenditures/sales (%)...... 205 11.11 US and European non-investment grade issuance ...... 207 11.12 New speculative grade ratings ...... 207 11.13 Disintermediation potential 2014–16...... 208 11.14 Funding preferences and investors’ appetite...... 209 List of Figures xi

12.1 Infl ation and defl ation risk ...... 216 12.2 Unemployment rates across Europe ...... 217 12.3 Central Bank QE, Europe lagging ...... 218 12.4 Core Tier 1 capital versus IFRS assets of banks by country ...... 219 12.5 Distance to default: US and European bank comparisons ...... 221 12.6 Bank versus sovereign CDS spreads ...... 223 12.7 Spreads before and aft er monetary union...... 225 12.8 Bank lending and the prime rate spread to cash and sovereign bonds. .226 12.9 Policy problems in Europe ...... 231 12.10 UK and Ireland currency union 1820–1920...... 233 12.11 Unemployment 15–24-year olds in Europe ...... 234 List of Tables

1.1 Correlations between supply disturbances ...... 18 1.2 Size and speed of adjustment following supply shocks ...... 18 2.1 Competitiveness-adjusted debt-to-GDP ratios (reference year 1999 for equilibrium price level) vis-à-vis EA-11 ...... 44 2.2 Competitiveness-adjusted debt-to-GDP ratios (reference year 1995 for the equilibrium level) vis-à-vis EA-12 ...... 44 2.3 Competitiveness-adjusted debt-to-GDP ratios (reference year 1999 for equilibrium price level) vis-à-vis Germany...... 46 2.4 Interest rate–growth rate diff erential (government debt), selected countries ...... 46 2.5 Interest rate–growth rate diff erential for the non-fi nancial sector, selected countries ...... 47 2.6 Average size of fi rms ...... 48 2.7 A continuing squeeze on the non-fi nancial sector? ...... 49 3.1 General government developments, 2007–15: Ireland and Greece ...... 66 3.2 Relative eff ects of fi scal consolidation ...... 67 3.3 Fiscal consolidation measures ...... 67 7.1 Banks, credit institutions, gambling ...... 115 7.2 Transport ...... 115 7.3 Telecoms, energy, water ...... 116 7.4 Defence, exhibitions, other ...... 116 7.5 Real estate, state rights ...... 117 8.1 Public debts in 2007 and 2013, as % of GDP...... 127 8.2 Public debt stability in 2007...... 130 8.3 Government balances in 2012 % of GDP...... 132 8.4 Ten-year government interest rates...... 133 8.5 Net position in the Target 2 system...... 137 9.1 Correlations of output gaps within eurozone ...... 154 10.1 Fiscal solvency estimates: all advanced economies, 1995–2013 ...... 174 10.2 Fiscal solvency: how the euro area responded to the Great Recession . . .174 12.1 Alternative policies ...... 214 12.2 Bank exposures by country to the sovereign debt of eight countries. . . . .225 12.3 Cross-border exposures of banks: millions of US dollars, 2013 Q3...... 228 12.4 Sovereign, household and corporate debt: % GDP averages...... 231

xii Preface

Th e origin of the European Periphery Debt Crisis is rooted primarily in the structural characteristics of the European Union (EU) member state economies, trading-off a number of European and international economic, regulatory, institutional and political factors as well as the fi nancial markets. Th e emergence and evolution of the crisis can now be assessed both in prospect and in retrospect, learning lessons on what policy measures could have been designed and introduced in order to avoid or at least manage the crisis more effi ciently and what policy measures could potentially minimize the risk of future crises. In late 2009 I was given the opportunity of participating in the government of Greece as a secretary of state and chief executive for asset restructuring and privatization, a role I kept until early 2012, thus spanning both the George Papandreou and the Lucas Papademos governments. Th e escalation of the crisis quickly turned this role into a lifetime experience, triggering refl ections on the plethora of factors involved, analysing problems and synthesizing solutions. In the presence of a prolonged crisis and extensive contagion and spillover eff ects, I was motivated to edit a book that I hoped would contribute to its diagnosis and provide an analysis from a risk management point of view of the available policy options, both prospectively and retrospectively. Th e group of contributors I have assembled comprises senior policy makers, regulators, active policy advisors, bankers, and decision makers in the markets, drawing experience from the peripheral EU member states, the EU itself and other Western economies. Th e book is intended to be a practical reference source for all those involved in the decision-making process in banking, the fi nancial markets, investment, business, policy making and regulation. Part I ‘Genesis of the Crisis, Use and Abuse of Economic Policies’, occupies Chapters 1–7, while Part II, ‘Crisis Resolution, Prospect and Retrospect’, occupies Chapters 8–13. Chapter 1, by Philippe D’Arvisenet, contributes an analysis on the genesis of the crisis and its association with the divergent structural characteristics of member state economies, institutional inadequacies and concurrent market conditions. It is argued that the EU policy steps that have been taken are insuffi cient and asymmetric; defi cit countries have been invited to adjust but surplus countries have not, showing up the lack of cooperation. Although the possibility for mutualization of liabilities, subject to conditions, could partially address the debt issue, stability would also require a mechanism to help smooth the eff ects of the business cycle, thus raising political trade-off s among member states. In Chapter 2 Daniel Gros and Cinzia Alcidi argue that the EU authorities have failed to recognize the trade-off between these two recommendations for indebted

xiii xiv Preface countries, since internal devaluation would improve competitiveness, but that lowering nominal GDP growth would also worsen the debt-to-GDP ratio. Th erefore one should look at the value of the debt-to-GDP ratio only aft er competiveness adjustments. Chapter 3, by Jeff Anderson with Jessica Stallings, contributes a comparative study of the diff erent fi scal adjustments of Ireland and Greece. Th e authors show how fi scal consolidation helped Ireland succeed in triggering the growth needed to restore debt sustainability, while at the same time the far more severe adjustment required of Greece has had a severe negative eff ect on its GDP, thus further undermining its creditworthiness. It is argued that applying the Irish example in Greece would require some additional funding, but the fi nal cost would be much less than might eventually be needed in the case of continuing output fall. In Chapter 4 George Christodoulakis presents a discussion on the role of rating agencies’ and sovereign debt markets’ risk preferences for the evolution of credit spreads in the fi ve EU periphery crisis countries. It discusses the propagation mechanisms of market attitudes towards sovereign risk, and describes how attitudes to risk evolve during a period of crisis. It is shown that a ranking of the relative optimism and pessimism is present, revealing diff erent preference asymmetries for countries of Hellenic, Latin and Celtic origin, with the striking result that although the interaction between credit default swap and bond markets played a primary role in the escalation of conservatism for all countries, this was overshot by the credit rating agencies’ risk preferences in the case of Greece in particular. Chapter 5, by Miranda Xafa, contributes to the ongoing debate on the trade-off between the need to ensure debt sustainability upfront, versus the risks of contagion and euro area bank insolvency. Th e author concludes that although the restructuring was eff ective in achieving considerable debt relief, the subsequent underperformance of Greece’s adjustment programme thwarted this result. Moreover, Greece’s enormous fi nancing needs and worse-than-expected growth path put the possibility of improved debt sustainability at risk as a result of an earlier restructuring. In Chapter 6 Paul De Grauwe presents a discussion on the attitude of Germany towards the European Central Bank’s Outright Monetary Transactions (OMT) programme in the sovereign bond markets. While the German constitutional court has declared the OMT programme illegal according to EU law, De Grauwe argues that this ruling is based on economic theories such as the effi cient market theory and the central bank positive equity theory, and explains why that should be rejected. In Chapter 7 George Christodoulakis reviews the importance of state asset management, restructuring and privatizations for the control of government defi cit, national debt and economic effi ciency. It presents a discussion on the trade-off s between economic rationality and the politics underpinning various European privatization plans, especially those imposed on countries receiving Troika funding. It is shown why Greece constitutes a genuine special case, in which the interconnection between economic events and European and national politics led Preface xv to massive underperformance. Th e chapter concludes with international evidence on the performance of privatization asset classes. Part II commences with Chapter 8 by Catherine Mathieu and Henri Sterdyniak, who contribute an analysis of two main issues. Th e fi rst concerns the sustainability of high debt levels in developed countries and whether these countries should aim for pre-crisis public debt levels. Th e second question concerns the re-establishment of public debt homogeneity within the euro area member states in the presence of a single monetary policy and autonomous fi scal policies. Th e authors contribute a comparative discussion on alternative options for euro area governance as well as public debt governance. Chapter 9, by Kerstin Bernoth and Philipp Engler, contributes an elaboration on policy options for the stability of the European Monetary Union (EMU). In the absence of monetary and exchange rate policies as stabilization tools, the authors propose a system of compensatory payments between the member states, and identify the degree of fi scal sovereignty that needs to be surrendered as a requirement. Higher compensatory payments could be a more eff ective stabilization tool but require less fi scal sovereignty; therefore the optimal balance between the two is left as a challenge for political debate. In Chapter 10 Ashoka Mody argues that in the presence of fi xed exchange rates the eurozone needs fl exibility through a system of orderly debt restructuring, by recognizing debt as an equity-like residual claim on the sovereign, which could become operational by automatically lowering the nominal debt when it crosses an agreed level. Moreover, the author argues for the implications of this framework for private deleveraging as well as its role in stability. Chapter 11, by Blaise Ganguin, focuses on the implications of the European periphery crisis on corporate fi nancing. He discusses empirical evidence showing that rated corporates enjoy more diversifi ed funding sources than unrated ones, and lower funding costs even in stress periods, signifying that information asymmetries between the companies and the creditors are costly since the creditors pay attention to rating assessments. Moreover, while corporate fi nancing in Europe is still bank-based, there is a recent trend in Greece, Italy, Spain and where corporations are seeking ratings, thus raising expectations for the development of corporate bond markets in Europe. However, family-owned businesses and SMEs are shown to be reluctant in sharing information outside the traditional banking relationship. Chapter 12, by Adrian Blundell-Wignall and Caroline Roulet, provides a comparative analysis and assessment of the main policy proposals that have been made in Europe in the light of key economic constraints. Th e authors provide justifi cation and support for a mix of policies focusing on growth and structural changes, thus giving a chance for Europe to resolve its problems without risking the euro. In the presence of the euro, the authors argue that Europe should choose between either the costly path of monetizing its debts and adopting exchange rate xvi Preface management as a growth strategy, or a fi scal union which would trigger political trade-off s on sovereignty. In Chapter 13 Dimitris Tsibanoulis and Gerry Kounadis identify a number of institutional loopholes in the EU legislation which, in the presence of the sovereign debt crisis, played a role in the fragmentation of the single market for banking services. Moreover, the chapter contributes an analysis of the European Banking Union and its remedial implications for the institutional gaps in EU law and the enhancement of the supervisory process, as well as a discussion of the single bank resolution regime as a necessary step towards the restoration of the single market. Th e book constitutes a collective eff ort, providing analysis and understanding of how to manage the European Periphery Debt Crisis and the associated risks from both a prospective and a retrospective point of view. Th e evolving nature of the crisis and the institutional and structural complexities of the EU and member state economies make such an eff ort diffi cult, but hopefully this book has contributed to the advancement of our knowledge. I would like to thank all the authors for their excellent work and expert insights. George Christodoulakis Notes on Contributors

Cinzia Alcidi is Head of the Economic Policy Unit at the Centre for European Policy Studies (CEPS) in Brussels and a research fellow at the LUISS School of European Political Economy . Prior to joining CEPS in 2009, she worked at the International Labour Offi ce in Geneva, and taught International Economics at University of Perugia. Since her arrival at CEPS she has worked extensively on the macroeco- nomic and fi nancial aspects of crisis in Europe as well as on the policy response to it. During this process she has acquired a deep knowledge of the functioning of the European Union, and the EMU in particular; she has written and lectured widely on these topics. She participates regularly in international conferences. Her research interests include international economics, macroeconomics, central banking and EU governance. She holds a PhD in International Economics from the Graduate Institute of International and Development Studies, Geneva. Jeff rey Anderson has been with the Institute of International Finance (IIF) since 1984. He is Senior Director for European Aff airs, focusing on key issues arising from the eurozone crisis, including implications for banks and impediments to fi nancing for small businesses in Europe. He was Director of the Institute’s European Depart- ment from 1992 to 2012, where he followed the economic progress of central and Eastern Europe, as well as Russia and Turkey, and led the expansion of the Institute’s country coverage to the eurozone periphery. Before that, he was Director of the Comparative Country Analysis Department and Senior Economist in the Institute’s Asia Department. Prior to joining the Institute, he was part of the World Economic Service at Wharton Econometric Forecasting Associates. He received an MA in International Studies from the Johns Hopkins University School for Advanced International Studies in 1983. Kerstin Bernoth is Professor of Economics at the Hertie School of Governance, and Deputy Head of the Macroeconomics Department at the German economic think tank DIW Berlin. She holds a PhD from the University of Bonn, and worked from 2004 to 2009 as a researcher in the economic policy and research department of the Central Bank of the Netherlands. Her research interests include empirical fi nance, monetary and fi scal policy, and fi nancial stability. Her articles have appeared in the Journal of Banking and Finance and Journal of International Money and Finance. Adrian Blundell-Wignall is the Special Advisor to the Secretary-General on Finan- cial Markets and Deputy Director in the Directorate for Financial and Enterprise Aff airs (DAF) at the OECD, eff ective from 14 February 2007. He is founder and chairman of a charitable foundation (the Anika Foundation) that raises and invests

xvii xviii Notes on Contributors an endowment fund to provide scholarships in a critical area of healthcare. An Australian citizen, he obtained his PhD in Economics from Cambridge University. He is the author of numerous publications on fi nancial markets and monetary policy in journals and books, as well as broker analyst studies and reports. Senior positions held in the past include Director and Head of Equity Strategy Research at Citigroup (Australia, Ltd), Executive Vice-President and Head of Asset Allocation at BT Funds Management, Head of Derivative Overlays and Levered Products at Bankers Trust Funds Management, building a new $4 billion business, and Head of the Research Department at the Reserve Bank of Australia, directing a depart- ment and participating in monetary policy discussions at the internal pre-Board meetings. Early in his career he held economist positions in: the OECD Economics Department, the Reserve Bank of Australia and the Economic Planning Advisory Council of Australia. George Christodoulakis is Associate Professor of Finance at Manchester Business School, University of Manchester, an active fi nancial advisor and entrepreneur internationally, and a member of the Hellenic Corporate Governance Council. He served as the Secretary of State and Chief Executive for Asset Restructuring and Privatizations of Greece between 2009 and 2012. He was formerly employed as an Advisor to the Governor of the Bank of Greece, an academic at Cass Business School, the University of Exeter, as well as an advisor in the international fi nancial sector. Dr Christodoulakis holds a PhD from the University of London. His research expertise concentrates on quantitative fi nance, credit and market risk, which has applied in the market, to risk management, asset management and pricing, asset privatization and restructuring transactions, forecasting, systemic fi nancial stability and regulation. Dr Christodoulakis is frequently invited as a speaker at international professional conferences, expert panels and media. He has published extensive research work in leading international refereed journals and books. He co-edited the book Th e Analytics of Risk Model Validation and is Associate Editor of the Journal of Risk Model Validation. Philippe D’Arvisenet is currently an adviser to BNP Paribas. From 1974 to 1977 he was a research fellow at Lille Catholic University, where he also taught econometrics. From 1978 to 1982 he was with the French planning unit (Commissariat au Plan) in charge of incomes policy. He then joined the banking sector, was appointed chief economist of BNP in 1994 and of BNP Paribas in 2000. He has been an associate professor at Panthéon-Assas University since 1996 (economy and fi nance), and is a member of the Commission Economique de la Nation chaired by the Minister of Finance. He is the author of nine books, including Finance Internationale (2nd ed, 2008), and Les Politiques Monétaires dans la Tempête (2014). Paul De Grauwe is John Paulson Professor at the London School of Economics. He was a member of the Belgian parliament from 1991 to 2003. He is an honorary doctor of the University of Sankt Gallen (), the University of Turku (Finland), the University of Genoa and the University of Valencia. He was a visiting professor Notes on Contributors xix at various universities: Paris, Amsterdam, Berlin, Kiel, Milan, Pennsylvania and Michigan. He obtained his PhD from the Johns Hopkins University in 1974. He is a research fellow at the Centre for European Policy Studies in Brussels and Area Director “Macro, Money and Finance” at CESifo in Munich. His research interests are in the economics of monetary unions and behavioural macroeconomics. Books include Th e Economics of Monetary Union (9th ed. 2012) and Lectures on Behavioral Macroeconomics (2012). Philipp Engler is Junior-Professor of Economics at Freie Universität Berlin and he joined the University of Hamburg during summer 2014. He holds a PhD from Freie Universität. His research interests include monetary and fi scal policy, fi nancial stability and European integration. Philipp Engler has published several articles in highly ranked international journals such as the Review of International Economics. Blaise Ganguin is Head of Standard & Poor’s Corporate and Infrastructure Ratings in EMEA, and Managing Director. He coordinates a group of 170 analysts spanning ten offi ces, and over 1500 credit opinions on corporate and infrastructure issuers, and is part of the European Executive Committee. Blaise joined Standard & Poor’s in 1994 as a corporate analyst in Toronto, Canada, and previously worked in bank- ing with UBS in Geneva, New York and Toronto. He is the co-author, with John J. Bilardello, of Fundamentals of Corporate Credit Analysis (2005). He holds an MBA from the University of Toronto, Canada; a post-graduate degree in International Development and Cooperation from the University of Ottawa, Canada; and an MA in History and International Aff airs from the University of Lausanne, Switzerland. Daniel Gros has been Director of the Centre for European Policy Studies (CEPS) since 2000. He holds a PhD in economics from the University of Chicago. In the past, Daniel worked at the IMF, collaborated with the European Commission as economic adviser to the Delors Committee that developed plans for the EMU, and taught at several leading European universities. He has been member of high-level advisory bodies to the French and Belgian governments, and has provided advice to numerous central banks and governments, including Greece, the UK and the US, at the highest political level. Daniel is currently an adviser to the European Parliament and a member of the Advisory Scientifi c Council (ASC) to the European Systemic Risk Board (ESRB). He has published extensively on international monetary aff airs in scientifi c journals, is the author of several books and is the editor of Economie Internationale and International Finance. He contributes a globally syndicated column on European economic issues to Project Syndicate. Gerry Kounadis started his studies at Law School in 2004 and successfully completed (cum laude) a Master of Laws (LLM) in Finance at the Institute for Law and Finance (ILF) of Goethe University Frankfurt with a fi rst class LLM thesis (“Evolving International and European Regulatory Regimes for Netting in Financial Transac- tions”). Gerry has also recently graduated from the ICMA Centre of University of Reading, where he completed a MSc in Capital Markets, Regulation and Compliance xx Notes on Contributors with a research project titled “OTC Derivatives Regulatory Reform: Current Topics in Central Counterparty Clearing”. He is currently studying for the Qualifi ed Lawyers Transfer Scheme, with a view to qualifying as a solicitor in England and Wales. From a professional standpoint, he has spent more than four years as a legal and compliance trainee, trainee lawyer and lawyer (Athens Bar) working for major banking institutions across Europe, including the European Central Bank and Lloyds Banking Group. He is currently employed in Tsibanoulis & Partners, one of the largest Greek law fi rms, as an associate (Banking and Finance, Capital Markets). Catherine Mathieu is a senior economist in the Analysis and Forecasting Depart- ment of the OFCE (Observatoire français des conjonctures économiques). Her main research areas are the European monetary union, macroeconomic policies, policy-mix, and macroeconomic forecasting. She is a member of the AIECE (Association of European Conjuncture Institutes) steering committee and Chair of the Working Group on Longer Term Prospects and Structural Changes. She is currently President of the EUROFRAME group of research institutes. Catherine Mathieu co-edited with Henri Sterdyniak “Towards a better governance in the EU?”, papers of the 10th EUROFRAME Conference, in the Revue de l’OFCE / Debates and Policies 132 (2014); “Th e euro area in crisis”, papers of the 9th EUROFRAME Conference, in the Revue de l’OFCE / Debates and Policies 127 (2013). She and Henri Sterdyniak co-authored “Redemption?” in Revue de l’OFCE 132 (2014), “Do we need fi scal rules?” in From crisis to growth? Th e challenge of debt and imbalances (2012). “EU public fi nances in the crisis” in Stabilising an unequal economy? Public debt, fi nancial regulation, and income distribution (2011). Ashoka Mody is Charles and Marie Robertson Visiting Professor in International Economic Policy at the Woodrow Wilson School, Princeton University, and a non-resident senior fellow at the Bruegel think tank in Brussels. Previously, he was Deputy Director in the International Monetary Fund’s Research and European Departments. Earlier, he was at the World Bank, and at AT&T’s Bell Laboratories. He has advised governments worldwide on macroeconomic and crisis manage- ment issues, as well as on developmental and fi nancial projects and policies. He has written extensively for policy and scholarly audiences. He received his PhD in Economics from Boston University. Caroline Roulet is currently an economist in the Financial Aff airs Division of the OECD, which she joined in 2012. Her work covers issues related to banking, fi nancial markets and monetary policy. She has published various articles in books and academic journals. Previously, she worked at the JPLC, an advisory fi rm in fi nancial markets, derivatives and credit risk. She has a PhD in Economics from the University of Limoges, France. Jessica Stallings is a research associate in the European Aff airs department at the Institute of International Finance (IIF). She focuses on macroeconomic, fi nancial Notes on Contributors xxi and political developments in the euro area countries, particularly in the periphery. She also contributes to the IIF’s work on policy issues, and is part of the Institute’s ongoing eff orts on access to fi nance for small and medium-sized enterprises (SMEs). Prior to joining the IIF, Jessica served as the Special Assistant to the Ambassador at the Embassy of the Republic of Korea. Jessica received an MA from Johns Hopkins School of Advanced International Studies (SAIS), with a concentration in interna- tional economics and European studies, and a BA from the University of Virginia. Henri Sterdyniak is Director of the Economics of Globalisation Department at the OFCE (Observatoire français des conjonctures économiques). He has published many books and articles on macroeconomics, economic policy, monetary and international economics, European economy, fi scal and social issues. See entry on Catherine Mathieu for recent publications. Dimitris Tsibanoulis is the managing partner of Tsibanoulis & Partners Law Firm and legal adviser to the Bank of Greece. He studied in Athens (1980 LLB) and in Frankfurt am Main (1986 PhD). He practises banking, capital markets and corpo- rate law. He is member of the BoD of the Hellenic Deposit and Investment Guar- antee Fund (since 2009), of the Hellenic European Law Association (FIDE-Greece, since 2002) and of the European Society for Banking and Financial Law (AEDBF) (since 2003 and from 1.1.2012 Chairman of the BoD). He has been a member of the EFMLG since 1999. He was the legal Advisor to the Republic of Cyprus on the implementation of the European capital markets legislation (2000–2004) and to the Albanian Financial Supervisory Authority for corporate and capital market issues (2006–2010). He participated in several legal groups in the ECB and the European Commission advising on matters pertaining to the regulation of Banking and Financial Markets, and in numerous legislative groups advising on the draft ing of Greek Banking and Securities Laws (since 1988). He is the author of three books and several articles published in Greek and foreign legal magazines on company law, banking and fi nance law. Miranda Xafa started her career at the International Monetary Fund in Washington in 1980, where she focused on stabilization programs in . In 1991–93 she served as Chief Economic Advisor to the government of Prime Minister Mitso- takis in Athens, and subsequently worked as a fi nancial market analyst at Salomon Brothers/Citigroup in London. Aft er serving as a member of the board of the IMF in Washington in 2004–09, she worked as Senior Investment Strategist and member of the advisory board of I. J. Partners in Geneva, and is now CEO of E. F. Consult- ing in Athens. She holds a PhD in Economics from the University of Pennsylvania, and has taught economics at the Universities of Pennsylvania and Princeton. She has published several articles and papers on international economic and fi nancial issues.