"We do not want a system that creates crisis",Columbia University Professor Griffith-Jones said. He argued that we need a financial system which is sustainable and able to withstand future shocks. This means better regulation and simple rules for hedge funds, derivates and off-balance banking sheets
Europe should pave the way for a better regulated financial system and take the lead on global recovery, said keynote speaker Professor Stephany Griffith-Jones at a hearing on Economic Exit Strategies held by the European Parliament special Committee on the Financial, Economic Crisis on Thursday.
How Europe can lead
"What kind of financial system does the world need?" and "How can Europe lead?", were the main questions raised by Professor Griffith-Jones, of Columbia University. Comparing the great depression of the 1930s to the recent crisis, she concluded that despite differences both events had proved that Keynesianism works: we have emerged from the crisis due to strong counter-cyclical measures.
The question is now what kind of financial sector we need to underpin economic recovery. "What we do not want is a system that creates crisis", said Professor Griffith-Jones, arguing instead that we need a financial system which is sustainable and able to withstand future shocks. This means better regulation and simple rules, Professor Griffith-Jones said, listing hedge funds, derivates and off-balance banking sheets as areas which should be examined.
Restructuring the banking sector
The hearing on Economic Exit Strategies, the 7th and last of a series of hearings organised by Parliament's CRIS Committee, also included two panels on "Financial and Monetary Aspects" and "Job Creation, Internal Market, Innovation and Sustainable Green Growth".
On the first panel, William Nicholas Hutton from The Work Foundation argued that instead of looking into hedge funds we should be looking at German, French and British banks with a view to better regulation, while Mrs Reichlin from London Business School, focused on differences in interest rates between the Federal Reserve, Bank of England and the European Central Bank during the crisis.
Next steps
After further discussions, the committee is scheduled is adopt its draft report on 13 July. The report then will be put to a vote by Parliament as a whole at the September II plenary session
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