Risk Sharing Mechanisms for the EU Workshop Outcomes

On May 20-21 2016, an ADEMU workshop was held at the European University Institute, organized in collaboration with the International Monetary Fund and the European Stability Mechanism. The workshop aimed to analyze the potentials of risk-sharing mechanisms in the European Union, evaluating existing strategies and discussing new proposals for a more efficient system.

The workshop benefited from the contribution of top economists from the organizing institutions and from a number of other Universities and research institutes (Zurich University of Applied Sciences, London Business School, University of Amsterdam, University Cambridge-INET, New York University, Washington University, Wuhan University, CEPS, Zew), as well as from the EC, the ECB, the Bank of Spain and the Bank of France. The juridical aspects of risk-sharing were also covered, thanks to the contribution of Tuomas Saarenheimo and Päivi Leino-Sandberg, from the Finnish Ministry of Finance and the University of Helsinki, respectively.

The workshop was divided into 4 main sessions:

  1. Market VS Fiscal Risk-Sharing
  2. Risk-sharing in the European Union and in the Euro Area
  3. Bank financing, sovereign debt, contagion and risk-sharing
  4. The design of a common unemployment insurance system for the Euro Area

During the two days of the workshop, the paper presentations were alternated by three panels, which provided room for discussion on the current situation (analyzing both risk-sharing strategies without specific regulating institutions and the ESM experience) and on new possible risk-sharing mechanisms that could be adopted in the European Monetary Union.

Tom Cooley (NYU), Chair of the ADEMU Advisory Committee positively commented the event: “The conference was an enormous success because it illustrated the potential of this project to bring together policy makers and researchers from multiple public, transnational agencies and academic researchers from multiple disciplines to discuss a well defined topic. The topic, broadly, was, how to promote risk sharing via markets, institutions, and mechanism design, including empirical evidence on risk sharing and redistribution in existing federations, income insurance, the optimal design of a stability fund, unemployment insurance, banking union and deposit insurance.  There was a lot of discussion about risk sharing achieved through markets and risk sharing via organized fiscal mechanisms.  The conference was largely dominated by economists and policy makers but it was enriched by the legal scholars present who talked about the legal basis for the existing institutions, like the ESM, and proposed institutions like deposit insurance funds.  There was a sense that the ADEMU project is stimulating the right discussions about how to make the Union more stable and also a sense that progress is being made.”

The full proceedings from this workshop will be published in the forthcoming weeks.

The full summary of this event and the related materials can be found here.