European contribution to international financial stability

Portes, R (2001) European contribution to international financial stability. Working Paper. London Business School Economics Discussion Paper Series.

Abstract

This paper considers how the European Union, and more specifically the Euro area, can contribute to international ficial stability. It sets the issues in the broader framework of ficial globalization and international capital mobility. Sections 13 discuss globalization, international ficial 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 ficial 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 ficial system that relate to international ficial stability. It stresses the need for coherent European positions on exchangerate policy, the international ficial architecture, and the Euro as an international currency.