*** PANICOS DEMETRIADES: A diary of the euro crisis in Cyprus. Lessons for Bank Recovery and Resolution. Palgrave MacMillan Publishing (4 Crinan Street, London, N1 9XW, United Kingdom, Tel: (44- 20) 78334000 - Internet: https://www.palgrave.com ). 2017, 215 p., ISBN: 978-3-319-62222-4.
“In my opinion, the work has not progressed far enough. (...) Those who claim to want to make Europe a power but are against euro area reform put us in an impossible situation,” said an irritated Emmanuel Macron on 18 October 2018. The French President was speaking at the end of yet another meeting of the Eurogroup, which had not yet finalised the banking union, the definition of a budget for the euro area and the strengthening of the European Stability Mechanism. After almost a decade of recession and unemployment, the 19 countries that share the common currency fail to listen to European Commission President Jean-Claude Juncker, who believes that “the best time to fix your roof is when the weather is fine”. The “diary” of Panicos Demetriades, Governor of the Central Bank of the Republic of Cyprus (CBC) between 2012 and 2014, provides a glimpse into the days when a tsunami, fuelled by the economic and financial collapse of the States, almost killed the euro. The author was not “the biggest fan” of the single currency, perceiving “many of its flaws from the first day of its conception”, to such an extent that he was not surprised when the crisis broke out in 2010, let alone that it had hatched in Greece. However, he understood the euro, above all and above all, as a peace project, so important for this small scrap of land on the southern and eastern borders of Europe, “half of whose territory is occupied by Turkey, with weak institutions and a fragile democracy”. Thus, at a time when the euro seemed to be on the verge of collapse in Cyprus, the author could not help but think that he was writing a new page in the history of the Union, or at least that of his country, whose evolution since the Palaeolithic period he traces in this book.
“May 3, 2012, Barcelona”. The economist begins and builds his story like a police thriller. After all, “finance is about money, often a lot of money, and the way a crisis is resolved determines who loses and who wins”, giving way to clashes of interests and power, as explained in the Charles de Goodhart preface to the London School of Economics. “A diary of the euro crisis in Cyprus” tells the story of two banks “that became too big to collapse, then too big to be saved and too big to be regulated”. Against the background, the island's links with Moscow, which has become an obsession of the German media, the backstage of the bitter negotiations with the Eurogroup and the frustrations of Cypriot politicians, in search of a scapegoat they would find in the CBC, having inherited the “poisoned gift” of implementing the agreement with the Eurogroup. Having become havens for foreign capital, particularly Russian oligarchs, in the euphoria of the day after EU accession, Laiki and the Bank of Cyprus had come to weigh four times Cyprus' GDP, enabling them to protect themselves from regulations and supervision that would have prevented the crisis. These two banks employed 5000 people and financed media with loans and advertising revenues, just like the cultural sector. “No wonder few people dared to question, let alone criticise their excessive risk-taking”, in particular the acquisition of a significant proportion of Greek debt.
Thus, the restructuring of Greek debt directly precipitates Cyprus' descent into hell, but politicians try to hide their faces until the last minute, refusing to bear the political cost of a European aid programme. On 25 June 2012, Nicosia decided to apply for EU financial assistance to bail out its banking sector, while the rating agency Fitch had just downgraded the island's rating to speculative grade from BB+ to BB. But this process did not succeed until 25 March 2013, when a €10 billion aid plan was granted to Cyprus through bank restructuring. This was not without the failure of a first agreement that gave the Cyprus crisis a European dimension. The government of Nicos Anastasiades, anxious to protect Moscow's interests, hoping to be the deus ex machina of the crisis, and the “troika”, wanting at all costs to limit the Cypriot envelope, first thought of introducing an exceptional tax of 6.75% on all bank deposits below €100,000. Either to “tax the poor to protect not only the Russian oligarchs, but also the economic model from which the Cypriot elite drew their money” as the author summarises it, whose pen still seems to shake in the memory of this episode.
Panicos Demetriades makes you experience the Cyprus crisis as if you were there, sometimes from Nicosia, sometimes from the Frankfurt headquarters, the European Central Bank (ECB), which has “done everything necessary to save the euro” - that legendary phrase with which Mario Draghi would have saved the common currency - despite its incomplete architecture. Within the ECB, “I witnessed the superhuman efforts that were being made to make the euro work against a political environment that was becoming increasingly hostile to the single currency and the idea of a united Europe”, he says in terms that have not lost all their meaning today. The author concludes, moreover, that “perhaps the only and greatest lesson to be learned from Cyprus is that populism, if not controlled, can shake the foundations of monetary union beyond the repair point”.
Original version in French by Maria Udrescu
*** KERN ALEXANDER, CATHERINE BARNARD, ELLIS FERRAN, ANDREW LANG, NIAMH MOLONEY: Brexit and financial services. Hart Publishing (Kemp House, Chawley Park, Cumnor Hill, Oxford, OX2 9PH, UK. Tel: (44-1865) 517530 - fax: 510710 - E-mail: mail@hartpub.co.uk - Internet: http://www.hartpub.co.uk ). Law and Policy Series. 2017, 225 pp., 60 €. ISBN 978-1-50991-580-4.
Whether the divorce between the European Union and London is consummated by a firm handshake, reflected in a future withdrawal and cooperation agreement, or by the feared “no-deal”, the authors of this book start from an undeniable observation: the United Kingdom's exit from the European Union may have significant consequences for the British and international financial system. Especially since the intention of both parties to develop a “deep, comprehensive, near, extensive, special and/or strong trade agreement could come up against the pitfalls of political interests and technical complexity”.
Adopting a legal perspective combined with political contextualisation, five researchers assess the consequences of Brexit for financial services through a reflection revealed in the form of concentric circles and accompanied by solutions.
Ellis Ferran examines how the British financial sector could still access the European single market, before concluding that London will have to compromise.
Catherine Barnard adds her analysis of the impacts - such as the lack of a skilled workforce - that the end of free movement will have on financial services in the United Kingdom, calling for a solution around a “fair” rather than “free” movement.
Niamh Moloney wondered about the European capacity to absorb the shock of Brexit, considering that the latter would not be decisive in the development of the Union's financial governance.
Kern Alexander outlines the limits and even the impossibility of the United Kingdom adopting the Norwegian models, according to which London would accept the laws of the Union without having its say, and Switzerland, which tends towards regulatory convergence with the Union while the British “seem to be moving in the opposite direction”.
Last but not least, Andrew Lang looks at the framework that the World Trade Organisation rules would provide for the exchange of financial services. Published at the end of 2017, this book predicted “politically difficult and technically complex” negotiations. A year later, the “political will and technical imagination”, which the authors had hoped for, are lacking, while the Brexit negotiations seem to have reached an impasse. (MU)
*** MICHALIS CHRISSOMALLIS: European economic governance. Build and deepen the issues of democracy and the rule of law. Nomiki Bibliothiki Editions (23 rue Mavromichali, GR-10680 Athens. Tel: (30-210) 3678800 - fax: 3678922 - E-mail: info@nb.org - Internet: http://www.nb.org ). 2018, 328 pp., 30 €. ISBN 978-960-622-369-3.
This monograph aims to map the mechanisms of the system of rules and procedures gradually put in place to coordinate and supervise the economic policies of the Member States of the European Union. The Professor. Michalis Chrissomallis (University of Athens) examines the legal and institutional dimensions of how this governance has evolved since the creation of Economic and Monetary Union under the Maastricht Treaty. Despite which, Member States have been unable to prevent the crisis in the euro area and to deal with the sovereign debt crisis, all of which has ultimately turned into a crisis of European economic governance. In particular, the author examines the “six legislative measures package”, the financial pact, the “two legislative measures package” and the European stability mechanism. Recent developments in the establishment of the banking union are also examined. In addition to presenting a very complex system and the difficulties arising from its legal foundations (treaties, secondary Union law, non-binding legal provisions, intergovernmental agreements between euro area Member States, etc.), the author also analyses the resulting frictions with democracy, the rule of law and fundamental rights. Finally, it considers more democratic alternative scenarios for the governance of the euro area. (AKa)
*** COSTAS LAPAVITSAS, THEODOROS MARIOLIS, CONSTANTINOS GAVRIILIDIS: Economic policy for the recovery of Greece. Livanis Publishing (98 Solonos Street, GR-10680 Athens. Tel: (30-210) 3661200 - fax: 3617791 - E-mail: webmaster@livanis.gr - Internet http://www.livanis.gr ). 2018, 256 p., 16 €. ISBN 978-960-14-3258-8.
After ten years of crisis and eight years of monetary policy in the context of memoranda, the Greek economy is now showing relative stabilisation. However, it is above all a stabilisation of... poverty, with no prospect of a reduction in unemployment and a systematic increase in income soon. Greece has therefore been trapped and is paying a high price for the sacrifices required by its presence in the Economic and Monetary Union. This study by three professors (Costas Lapavitsas teaches economics at the School of Oriental and African Studies at the University of London, Theodoros Mariolis Political Economy at the Department of Public Administration at the Panteion University of Athens and Constantinos Gavriilidis Business Administration at the University of Patras) opens the way to the design of an alternative route through a detailed examination of the Economic and Monetary Union and the Greek economy, the latter being its main victim. This is a first attempt at a comprehensive analysis and definition of the development strategy that the country needs. The study identifies the general macroeconomic policies to be adopted, as well as the necessary restructuring of the economy. Finally, the authors propose possible solutions, not only for Greece but also for other euro area countries. Indexes, diagrams for the Greek and European economies and explanatory glossaries of Greek and foreign economic terms are useful additions to the book. (AKa)