EMU architecture and governance of finance

19  June 2017    5:00 pm CEST

Helene Schuberth, Head of Foreign Research Division, National Bank of Austria (OeNB)


wiiw, Rahlgasse 3, 1060 Vienna


Governance reform is imperative for containing the centrifugal forces in the euro area.  Completing the banking union is decisive for containing the centrifugal forces in the euro area and much has been accomplished so far. A banking union, in its current design, is a remedy to weaken the sovereign-bank nexus, but does little to alleviate the destabilising features stemming from the ‘shadow-fiscal nexus’: Since government bonds are the most important collateral in market-based finance in Europe, the fortune of sovereigns hinges, via the repo market, on the pro-cyclical shadow-banking activities of large banks, potentially leading to flight-to-safety and self-fulfilling crises. The most effective cure would be pooling sovereignty via euro bonds, or, given the reluctance for risk-sharing, introducing European Safe Bonds (ESBies) that work without mutualisation of debt.

Helene Schuberth has been Head of Foreign Research Division at the National Bank of Austria (OeNB) since 2013. Between 1999 and 2007 she was Deputy Head of the OeNB’s Economic Analysis Division. She studied economics and social sciences at the University of Vienna and Harvard. Her research interests include monetary and fiscal policies, structural and labor market policies, financial governance, European integration and economics of transition, which is documented in her publications. Since 1992 she has been teaching macroeconomics at the Vienna University of Economics and Business Administration.