Joerg asmussen biography examples

Over time, they have also benefited from sizeable capital inflows from the euro area that have helped finance the transformation of their economies. True, the same capital flows were a key ingredient in the credit booms and busts in most countries of the region. While I will return to this aspect in a moment, we should not overlook the importance of financial interconnectedness between the euro area and Central, Eastern and South-Eastern Europe.

Around three quarters of bank assets in the region are foreign-owned, mostly by banks from other EU countries. Their subsidiaries and branches have played and will continue to play a central role in improving the efficiency of financial intermediation across the region and contributing to credit availability. Moving now from the good to the bad experiences with economic convergence, we are probably all on the same ground in this room.

Let me stress those aspects which, in my view, policy-makers should never forget in the future. First, in the run-up to the crisis the growth models in many Central, Eastern, and South-Eastern European countries became dominated by credit-fuelled domestic demand booms. For example, between and the average contribution of domestic demand to economic growth in Central and Eastern Europe increased by more than 2 percentage points per year.

We now all agree that this was an unsustainable development, fuelled by overly optimistic income expectations and excessive ease of financing. It led to large and persistent current account deficits. Across the region, the domestic demand booms were mainly financed by euro area banks through funding of their local subsidiaries and direct cross-border lending.

The ready availability of such external financing was a contributing factor to the credit frenzy that gripped most economies in the region. The median growth rate of real bank credit to the private sector over the period averaged 20 per cent per annum across Central and Eastern Europe and 25 per cent per annum in Western Balkan economies. This experience now sounds very much as something that belongs to the past, but we have all learned the hard way that complacency is the best recipe for future disasters.

Second, the pre-crisis credit booms turned into post-crisis credit busts. The resulting impairment of the bank lending channel has been a stumbling block for the economic recovery ever since. Double-digit NPL ratios are now more the norm than the exception across the region. Banks have responded by setting aside provisions to cover expected losses and tightening credit eligibility standards to prevent new loans from going bad.

These developments have limited banks' ability and willingness to lend. The post-crisis behaviour of euro area banks in Central, Eastern and South-Eastern Europe has been generally cautious, but also responsible. The Vienna Initiative played an important role in preventing a "run for the exits" scenario. On the one hand, euro area parent banks kept their local subsidiaries sufficiently capitalised to avoid bank failures.

On the other hand, they have been unwinding in an orderly fashion their creditor positions towards the region. This deleveraging has contributed to the tightening of credit conditions in many countries in the region.

Joerg asmussen biography examples

Local subsidiaries were gradually weaned off cheap parent bank funding and forced to compete for the more limited pool of domestic deposits. A new banking business model is emerging in response to these developments, but it will still take some time before we can clearly identify a new "steady state". Finally, the most worrying development is that real convergence has come to a virtual halt in the wake of the global financial crisis in many countries in the region.

The average annual growth rate of real per capita GDP, adjusted for differences in purchasing power, slowed from around 4 per cent per annum before the crisis to 0. Unemployment has soared throughout the region, at times to unacceptably high levels of close to 30 per cent in Bosnia and Herzegovina and 17 per cent in Croatia. Let me now draw two broad policy lessons from the good and bad experiences which I briefly outlined.

The post-crisis economic recovery, while being subdued nearly everywhere, was faster in Central and Eastern European countries than in the Western Balkan economies. Exporters from Central and Eastern Europe were in a better position to take advantage of the recovery in global demand, due in part to their tighter integration in euro-area affiliated cross-border production chains.

Looking ahead, the dismantling of trade barriers between the Western Balkans and the EU should allow exporters in this region to also realise in full the advantages of vertical specialisation in international trade. This is one of the reasons why closer integration in Europe will continue to be beneficial. Another reason is that implementing the new EU governance framework will be key to prevent future macroeconomic imbalances in the Member States.

The so-called Macroeconomic Imbalance Procedure explicitly monitors the emergence of internal and external macroeconomic imbalances. Moreover, the existing Stability and Growth Pact was strengthened, introducing earlier sanctions and more automatic enforcement procedures. Other activities [ edit ]. Corporate boards [ edit ]. Non-profit organizations [ edit ].

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Toggle the table of contents. In office 8 January — In office 1 January — 8 January Reuters reported that Asmussen urged the Finance Minister to consider a plan that would minimize the impact on German banks in the event of a Greek default. Regarding the second Greek bailout, Asmussen emphasized the need to delay the disbursement until Greece met conditions for stricter fiscal discipline.

Jorg Asmussen German economist and politician Date of Birth: Wolff Thomas Sowell. Contact About Privacy.