Sovereign Debt in the European Union

Tuesday, 8 September 2020, 15.00-18.00 CEST

Webinar part of Distributed Interdisciplinary Sovereign Debt Research and Management Conference — D-DebtCon

Organised by:

The COVID-19 pandemic is causing havoc in an already fragile global economy. While its full impact in terms of capital flows and debt levels is yet unknown, unprecedented government interventions to minimize the economic impact have spiked public debt to levels unseen in the last 50 years. According to the IMF projections¹ for 2020 public debt relative to GDP will increase by over 13% in the Euro Area and worldwide.

At the same time, new trends are emerging in sovereign debt markets. A number of European sovereigns have announced plans to issue green bonds in 2020, as well as other new debt instruments such as social bonds, sustainability bonds and sustainability-linked bonds. New market developments, in particular after the COVID-19 outbreak, have included floating-rate notes and index-linked bonds.

During the euro area crisis of a decade ago the EU sovereign debt markets suffered damage as never before, while the policy response involved the creation of new instruments and institutions. Today, as a response to the huge shock caused by the COVID-19 outbreak, EU leaders have agreed on a historic package for European recovery, ‘Next Generation EU’. Within this recovery package, the European Commission was mandated to raise €750bn of funds on the markets during the next two years.

Against this background, the research papers to be presented will address a number of facets of EU sovereign debt markets: their maturity structure and cost, the pace of debt crises, and the characteristics of the bank-sovereigns doom-loop. The policy panel to follow will explore the future challenges of sovereign debt in the EU, by focusing on debt sustainability at the national level, common EU borrowing and safe assets.

¹IMF Fiscal Monitor, April 2020 regarding General Government Gross Debt in percent of GDP, available at https://www.imf.org/en/Publications/FM/Issues/2020/04/06/fiscal-monitor-april-2020

More information

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The Coronavirus pandemic has wrought havoc on households, businesses and the economy. Like all organisations, insurance companies and pension fund providers had to rapidly adapt and take steps to maintain business continuity and services to customers, whilst also ensuring the safety of employees. Given the scale of the pandemic, supervisors and regulators reacted swiftly to put in place measures to reduce the burden on insurance companies and pension funds so that they could concentrate on their essential operations. Risk-based capital buffers built-up with Solvency II helped insurers to withstand the initial severe market shocks experienced with the Covid-19 crisis. However, a high level of uncertainty on the magnitude of economic disruption and further dissemination of the virus threatening health of European citizens increases downside risks looking ahead. Some six months in to the crisis, there are already some early lessons to draw. From a supervisory perspective, this means reviewing the measures that were put in place and how the regulatory frameworks to set up to ensure the stability of the sectors fared in withstanding the shock. However there are also broader lessons to consider, for example how to close protection gaps and the case for pandemic insurance; what the accelerated take up of digital technology by consumers means for business models and communication; and, most importantly, the role of the insurance and pensions in underpinning Europe’s recovery. The crisis may be far from over, but it is not too early to starting thinking about the post-pandemic world.

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Moderator

Elena Carletti (Bocconi University and Florence School of Banking and Finance, European University Institute) Elena Carletti is Professor of Finance at Bocconi University. She is also at the Florence School of Banking and Finance at the European University Institute, is a member of Board of Directors of Unicredit SpA and a member of the Advisory Scientific Committee of the European Systemic Risk Board (ESRB). Furthermore, she is research professor at the Bundesbank, a member of the Expert Panel on banking supervision for the European Parliament, a member of the Scientific Committee “Paolo Baffi Lecture” at the Bank of Italy, a member of Bruegel Scientific Committee, Research Fellow at CEPR, Fellow of the Finance Theory Group, CESifo, IGIER, and Wharton Financial Institutions Center. She is the author of numerous articles on Financial Intermediation, Financial Crises and Regulation, Competition Policy, Corporate Governance and Sovereign Debt.    

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Speaker

Gabriel Bernardino , (Chairman of the European Insurance and Occupational Pensions Authority – EIOPA) Gabriel Bernardino is Chairman of the European Insurance and Occupational Pensions Authority (EIOPA). He is responsible for the strategic direction of EIOPA and represents the Authority at the Council of the European Union, the European Commission and the European Parliament. Mr. Bernardino prepares the work of EIOPA’s Board of Supervisors and also chairs the meetings of the Board of Supervisors and the Management Board. Mr. Bernardino is the first Chairperson of EIOPA. He was elected by the Board of Supervisors of EIOPA on 10 January, 2011. His nomination followed a pre-selection of the European Commission and was confirmed by the European Parliament after a public hearing held on 1 February, 2011. Mr. Bernardino assumed his responsibilities on 1 March, 2011 for a first five-year term. On 16 December 2015 the European Parliament confirmed the re-appointment of Mr Bernardino for a second five-year term, which started on 1 March 2016. Prior to his current role, Mr. Bernardino was the Director General of the Directorate for Development and Institutional Relations at the Instituto de Seguros de Portugal (ISP). He has served in several positions of increasing responsibility since he joined the ISP in 1989 and represented EIOPA’s preceding organisation, CEIOPS, as Chairman between October 2009 and December 2010.  

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Commentators

Roel Beetsma (University of Amsterdam) Roel Beetsma is the MN Professor of Pension Economics at the University of Amsterdam. He is also Vice-Dean of the Faculty of Economics and Business and Chairman of the Department of Economics and Econometrics. He holds a Ph.D from CentER, Tilburg University. Prior visiting positions include the University of California at Berkeley, the University of British Columbia, and DELTA (Paris). Beetsma is a research fellow of the Centre for Economic Policy Research in London, CESifo in Munich, the Tinbergen Institute and the Network for Quantitative and General Economics. He is also an International Research Fellow of the Kiel Institute of World Economics.    



Giuseppe Corvino (Associate professor of financial markets and institutions, Bocconi University) Mr. Corvino served as Chairman, board member or advisor to global asset managers and investment banks, top tier Italian insurance companies and pension funds, consulting firms, IT companies and family offices. In order to better understand the business model of the modern investment industry, in April 2017 he received a two years academic leave of absence from Bocconi University and served as a full-time Managing Director at BlackRock Investment Management (UK) LTD, becoming a member of the Italian Executive Committee and head of the Financial Institutions Group and the Institutional Client Business for Italy. Throughout his career, Mr. Corvino cooperated with several Regulatory and Market authorities. Inter alia, he has been Member of the EIOPA Occupational Pensions Stakeholder Group, participant in the International Decade for Natural Disaster Reduction of the United Nations project and referee for the ESMA Working Paper Series.    

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Technical disclaimer

The online seminar will take place on Zoom. Registered participants will receive the credentials to join the event at 10:00 AM (CET) on 16 September 2020. You can access the seminars from personal computers, laptops, tablets and smartphones. To ensure an optimal experience in terms of connection speed and video quality, we suggest to attend the seminar via a device connected to a stable network connection, avoiding if possible shared wi-fi or mobile connections.

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The G20 central clearing obligation for OTC derivative markets has been implemented in the aftermath of the financial crisis to address risk contagion across the financial system. This assumes that central clearing counterparties (CCPs) have the capacity to manage this risk concentration in stressed circumstances. But what if these critical nodes were reaching their own limits? The purpose of this on-line seminar is to provide state-of-the-art insights on the mechanics, tools and policy questions that relate to the recovery and resolution of CCPs. The on-line seminar will focus on the role and importance of CCPs for financial markets by illustrating the type and magnitude of events that could lead to a resolution situation. It will also highlight the continuum between supervision and resolution but also the tension between the respective standards for CCPs and banks. Finally resolution triggers will be presented and the notion of public interest discussed. For each element, a balanced mix of regulatory and industry perspectives will be presented, thereby offering a view on the current debates in this field.

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Chair

Prof. Thorsten V. Koeppl (Queen’s University) Thorsten V. Koeppl is a Professor and RBC Fellow in the Department of Economics at Queen’s University. He is currently also the Scholar in Financial Services and Monetary Policy at the CD Howe Institute one of Canada’s most influential policy think tanks. Prof. Koeppl advises the Bank of Canada on Central Bank Digital Currency and in the past has served as an adviser to several other policy institutions in matters of financial market organization, regulation and intervention in the past. Prof. Koeppl has degrees in management and in economics from the Universities of Eichstaett/Ingolstadt and Basle, and received his Ph.D. in economics from the University of Minnesota in 2002. His main research interests are in the areas of macroeconomics (in particular monetary economics), financial market infrastructure and blockchain economics. He has published on these topics in top economics journals such as Review of Economic Studies, Journal of Economic Theory, Review of Financial Studies and the Journal of Financial Economics among several others.  

Speakers

Prof. Ron Berndsen (Tilburg University and LCH) Professor Berndsen is an independent director of LCH and chairs the LCH Risk Committees. He is also attached to the Tilburg School of Economics and Management at Tilburg University as full professor of Financial Market Infrastructures and Systemic Risk. He is also the editor-in-chief of the Journal of Financial Market Infrastructures and a member of the Advisory Council of the SWIFT Institute. He has been active in the field of payments and market infrastructures for over 15 years. Previously, Ron was Head of the Oversight Department and Head of the Market Infrastructures Policy Department at De Nederlandsche Bank. Ron also served as a member on the Market Infrastructure Board at the European Central Bank and as member of the Committee on Payments and Market Infrastructures at the Bank of International Settlements. He also co-chaired the FSB Group on Cross-Border Crisis Management for Financial Market Infrastructures and was a member of the oversight committees of CLS, EuroCCP, Euroclear, LCH, SWIFT and TARGET2. He was awarded a doctorate of Tilburg University in 1992 for his PhD thesis in Economics and Artificial Intelligence. Dr. Marc Peters (European Commission) Since April 2016, Marc Peters serves as an Official in the Resolution and Crisis Management Unit of the European Commission’s DG for Financial Stability, Financial Services and Capital Markets Union. Marc benefits from more than 15 years of experience in the supervision and policy-making area for financial institutions gained at the Belgian Banking, Finance and Insurance Commission and at the National Bank of Belgium. He holds an Executive Master of Finance and a MSc in Management from the Solvay Brussels School of Economics and Management (Université Libre de Bruxelles – ULB). He is a research fellow at the Centre Emile Bernheim, ULB’s research Institute in Management Sciences.  

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As a result of COVID-19, Non-Performing Loans (NPLs) are on the rise in Europe and globally. The Covid-19 pandemic has indeed halted the already fragile European economy. As the latest global financial crisis confirmed it – higher levels of NPLs slowed down economic recovery and deepened recession. In this context, containing and possibly reducing NPL levels is proving to be a major challenge, both for market participants and for policy-makers. The too timid economic recovery indicators combined with the weak macroeconomic context and structural issues will no doubt put NPLs high on the policy agenda.

Against this background the purpose of this online debate is to review the lessons learned from the previous financial crisis, explore the suite of possible solutions and discuss how to better prepare for handling new NPL surges in the future.

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Chair and Moderator

Elena Carletti (Bocconi University and Florence School of Banking and Finance, European University Institute)
Elena Carletti is Professor of Finance at Bocconi University. She is also at the Florence School of Banking and Finance at the European University Institute, is a member of Board of Directors of Unicredit SpA and a member of the Advisory Scientific Committee of the European Systemic Risk Board (ESRB). Furthermore, she is research professor at the Bundesbank, a member of the Expert Panel on banking supervision for the European Parliament, a member of the Scientific Committee “Paolo Baffi Lecture” at the Bank of Italy, a member of Bruegel Scientific Committee, Research Fellow at CEPR, Fellow of the Finance Theory Group, CESifo, IGIER, and Wharton Financial Institutions Center. She is the author of numerous articles on Financial Intermediation, Financial Crises and Regulation, Competition Policy, Corporate Governance and Sovereign Debt.    

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Speakers

Nicoletta Mascher (European Stability Mechanism)
Nicoletta Mascher is Head of Division within the Chief Economist’s department of the European Stability Mechanism (ESM), which she joined in October 2018. She is responsible for monitoring financial sector conditions and regulatory developments in the euro area. In the execution of the ESM post-programme activities, she is country team coordinator for Ireland. Prior to this, Ms Mascher worked at the European Central Bank as Joint Supervisory Team Coordinator. She previously served as supervisor, on-site inspector and director at Banca d’Italia; she also worked as financial analyst in the asset management industry, specialising in fixed income and derivatives. Ms Mascher is a graduate of Luigi Bocconi University of Milan, where she received a Master’s degree in economics.


Charles-Antoine Dozin (Morgan Stanley)
Charles-Antoine Dozin is Executive Director, Capital Markets and Bank Solutions at Morgan Stanley.







Nicolas Véron (Peterson Institute for International Economics and Bruegel)
Nicolas Véron is a Senior fellow at the Peterson Institute for International Economics since October 2009 and is a senior fellow at Bruegel, the Brussels-based economic policy think tank he helped cofound in 2002–2004. A French citizen and graduate of Ecole Polytechnique and Ecole Nationale Superieure des Mines de Paris, he has held various positions in the public and private sectors, including as corporate adviser to France’s labor minister (1997–2000), as chief financial officer of the publicly listed internet company MultiMania / Lycos France (2000–2002), and as an independent financial services consultant. Since July 2013 he has been a board member of the derivatives arm of the Depository Trust and Clearing. His research is mostly about financial systems and financial reform around the world, including global financial regulatory initiatives and current developments in the European Union. He has published on accounting standards, audit firm governance, banking supervision, cross-border financial crisis management, economic nationalism, financing of high-growth firms, industrial policy, internationalization of large companies, oversight of inward investment in the European Union, and rating agencies. In September 2012, Bloomberg Markets included Véron in its second annual 50 Most Influential list, with reference to his early advocacy of European banking union.

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Donwload Online Seminar Highlights

Presentation by Pablo Portugal

Presentation by Bertrand Chavasse

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In order to help the recovery from the COVID-19 pandemic, the European Commission proposed urgent amendments to the securitisation regulatory framework ahead of the review initially planned for 2022 with a view to supporting banks maintain their capacity to finance the real economy. In particular, a specific STS (‘Simple, Transparent, Standard) framework for on-balance-sheet synthetic securitisation features among the changes under discussion by co-legislators. The threefold dimension of STS securitisation, supposed to encourage the development of the securities market while allowing for a more risk-sensitive capital treatment, and soon to be extended to synthetic securitisation, has yet to deliver its full potential. As of now, transaction numbers remain rather low although one can observe a slight increase of notifications of STS securitisations to the European Securities and Markets Authorities (ESMA) over the last months (from 184 in March 2020 to 396 early November). In this context this online debate will:

• Ask whether current regulatory requirements are a barrier or an incentive for market actors;
• Discuss how to favour securitisations development and ultimately reach a single market for securitisations in Europe;
• Explore the nature of the key underlying exposures in the STS securities market;
• Reflect on the usefulness of the current regime for securitising both SME loans and Non-Performing Loans;
• Review the implications of COVID-19 on securitisation in light of the new legislative proposals.

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Chair and Moderator

Jean-Jacques van Helten (Florence School of Banking and Finance, European University Institute)
Jean-Jacques van Helten is a Visiting Fellow at Robert Schuman Centre for Advanced Studies & the Florence School of Banking and Finance, part of the European University Institute. He is formerly a Managing Director & Chief Risk Officer, EMEA for the Bank of Montreal (BMO) Financial Group and more recently Non-executive member of the Board of BMO Europe. He has worked in a range of senior executive risk and capital markets business roles in major investment banks in Europe, Australia, Asia and the UK where he has been responsible for market, liquidity & operational risks and credit risk analytics. Jean Jacques has also directed Bank recovery and resolution planning, enterprise risk management as well as the implementation of ICAAP and ILAAP and liquidity risk management process and procedures including liquidity stress testing. Jean Jacques completed his undergraduate and Master degrees along with his PhD in economics/economic history at the University of London, studied at the Goethe Universität, Frankfurt and Freie Universität, Berlin and has held academic research positions at La Trobe University and the University of London.

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Speakers

Patrizia Canziani, (Structured Finance Professional)
Patrizia Canziani is a finance professional with more than twenty years’ experience in capital markets, credit and structured finance at JPMorgan, Deutsche Bank, Merrill Lynch, Nomura and MUFG. Mrs. Canziani is Non-Executive Director and member of the Risk and related parties committee for listed company Sogefi, a world leader in design and manufacturing of car components. Experienced in sustainability, she holds a certificate in Sustainable Finance from Oxford University, Smith School of Enterprise and the Environment. She is also a financial crime risk consultant and bank monitor. Mrs. Canziani holds a a PhD in Economics from MIT and 14 internationally refereed publications in labour-macroeconomics, pension sustainability and fiscal rules.

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Bertrand Chavasse (BNP Paribas)
Bertrand Chavasse is a finance professional with more than twenty years’ experience in risk management, credit and structured finance at BNP Paribas, Natixis and CDC Ixis Capital Market. His main areas of expertise are in the field of banking prudential regulation (Basel II, III and IV) as well as on securitisation, with a particular focus on risk transfer securitisations.

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Bart Joosen (VU Amsterdam)
Bart P.M. Joosen is trained as civil law lawyer at Tilburg University, the Netherlands. He obtained his (equivalent to) LL.M degree in 1987. After completion of his academic study he was appointed as lecturer in the law faculty of Tilburg University in 1987. He successfully defended his dissertation on “Transfer of undertakings in bankruptcy” at Tilburg University and was promoted to doctor in law science (PhD) in 1998. He works since 1992 in private practice particularly for financial market clients. His main areas of expertise are in the field of financial services supervision with a focus on micro-prudential supervision of banks (including in-depth Basel II/Basel III and Solvency II knowledge), insurance companies and investment firms and payment services. Besides working in private practice, he is an extraordinary professor Financial Supervision Law at the VU University in Amsterdam.

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Pablo Portugal (Association for Financial Markets in Europe – AFME)
Pablo is a Managing Director in AFME’s Advocacy and Public Policy Division. His main focus is analysis and engagement across Europe on financial services policy and regulatory development. Pablo is responsible for AFME’s work on the Capital Markets Union project and advocacy in various debates covering securities markets, as well as leading cross-cutting projects. Prior to joining AFME, he was engaged with the Institute of Chartered Accountants in England and Wales, where he worked on financial reporting, auditing and financial sector issues. His experience includes roles in European organisations and the United Nations. Born in Peru, he holds a BSc Econ (first class) from the University of Wales, Aberystwyth, and a Masters Degree (with distinction) from the London School of Economics. Pablo is a member of the board of the European Capital Markets Institute.

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Technical disclaimer

The online seminar will take place on Zoom. Registered participants will receive the credentials to join the event at 10:00 AM (CET) on 25 November 2020. You can access the seminars from personal computers, laptops, tablets and smartphones. To ensure an optimal experience in terms of connection speed and video quality, we suggest to attend the seminar via a device connected to a stable network connection, avoiding if possible shared wi-fi or mobile connections.