The European Contribution to International Financial Stability

24 Pages Posted: 17 Sep 2001

See all articles by Richard Portes

Richard Portes

London Business School - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2001

Abstract

This Paper considers how the European Union, and more specifically the euro area, can contribute to international financial stability. It sets the issues in the broader framework of financial globalization and international capital mobility. Sections 1-3 discuss globalization, international financial stability, and current threats to it - notably, potential crises in key emerging market countries and a possible 'hard landing' for the US dollar. In that context, EMU has clearly increased internal stability in the euro area and has promoted a dynamic development of capital markets. But in some respects, monetary union may have exacerbated systemic risks. Section 4 discusses financial supervision and regulation and procedures for dealing with liquidity crises. Section 5 turns to issues raised by EU enlargement. Section 6 considers aspects of EMU and the international financial system that relate to international financial stability. It stresses the need for coherent European positions on exchange-rate policy, the international financial architecture, and the euro as an international currency.

Keywords: Euro, EMU, financial stability, liquidity crises, international currencies

JEL Classification: F02, F33, F36, G18

Suggested Citation

Portes, Richard, The European Contribution to International Financial Stability (September 2001). Available at SSRN: https://ssrn.com/abstract=282728

Richard Portes (Contact Author)

London Business School - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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