10 Years On – How Ireland has Changed Since the Financial Crisis – Highlights from the Conference

Videos of the keynote speeches by former Central Bank of Ireland governor Patrick Honohan and playwright and author Colin Murphy at last Friday’s conference at NUI Galway to mark the 1oth anniversary of the financial crisis can be found here on the website of the Whitaker Institute. I strongly recommend both. Audio podcasts of the two associated panel discussions will be posted shortly.

10 Years On: How Ireland Has Changed Since the Financial Crisis

1:30pm, Friday, 28 September 2018

The Institute for Lifecourse and Society Building, NUI Galway

In the fateful decade since the collapse of Lehman Brothers and the Bank Guarantee of September 2008, much has happened in Ireland – financial crisis, deep recession, bailout by the ‘Troika’, a protracted period of austerity followed by vigorous economic recovery. But what has really changed over the last ten years? What developments in the financial and political system have taken place and what has been the cultural effect of the crisis? Will we repeat the same mistakes or find ways to avoid them? A major public event convened by the Moore Institute and Whitaker Institute at NUI Galway will examine these questions with a high profile group of participants, including keynote speeches by former Central Bank of Ireland governor Patrick Honohan and playwright and author Colin Murphy.

Conference Programme

14:00 – 14:05
Joint welcome
Alan Ahearne, Director, Whitaker Institute
Daniel Carey, Director, Moore Institute

14:05 – 14:15
Opening remarks
Ciarán Ó hOgartaigh, President, NUI Galway

14.15 – 14:35
Keynote speech
Patrick Honohan
former Governor, Central Bank of Ireland

14:35 – 15:35
Panel discussion
Chair: Ciarán Ó hOgartaigh

  • Angela Knight CBE, former Chief Executive, British Bankers’ Association
  • John McHale, Dean, College of Business, Public Policy & Law, NUI Galway
  • Frances Ruane, former Director, Economic and Social Research Institute

15:35 – 16:00 Open discussion
16:00 – 16:20 Coffee break

16:20 – 16:40
Keynote speech
Colin Murphy
Playwright and author

Chair: Alan Ahearne

16:40 – 17:45
Panel discussion
Chair: Dan Carey

  • Stephen Collins, former Political Editor, Irish Times
  • Kate Kenny, Professor, Queen’s University Belfast
  • Gearóid Ó Tuathaigh, Emeritus Professor in History, NUI Galway
  • Fiona Ross, Chair, CIÉ

17:45 – 18:00 Open discussion

This event will take place in the ILAS Building on the north of the NUI Galway campus from 1:30-6pm. A reception with light refreshments will follow the event.

The event is free and open to the public, however those who wish to attend must pre-register.

Guest post: An Ireland of Alternative Private Currencies Without Bailouts

Today, we have a guest post by Sean Kenny (Lund), who below summarises some lessons for policymakers from a recent working paper with John Turner (Queens) on the Irish banking system before joint-stock banks.

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As the Irish economy continues to emerge from the financial crisis of 2008 and the controversial blanket guarantee which followed it, from the comfort of hindsight a number of decisions have been criticised by prominent commentators. In particular, the terms of the bailout package and the shouldering of bank debt by the Irish taxpayer have featured frequently in the debate. In other words, the domestic and international political machinery employed to address the collapse of the banking system was deemed by many to be inappropriate, as events unfolded all too rapidly. Over the critical weekend of the guarantee, concerns were raised that no currency would be available from ATM machines at the open of business the following Monday.

It is interesting to ponder what might have happened under such a scenario where no support mechanism, instead of an inadequate one, had existed and where money may in fact have disappeared from the economy. As my research with Professor John Turner (Queen’s University, Belfast) documents, such was largely the experience during the last Irish banking crisis of comparable scale in 1820. During this era, money consisted of alternative private bank notes which were redeemable in Bank of Ireland notes considered “as good as gold.”

No central bank existed and the Irish and British exchequers had recently amalgamated. If a private bank had lent unwisely, pushing too many of its notes into circulation, when their notes were presented for conversion at their counters, failure could quickly occur if its current loan income and reserves fell short of its short term liabilities (notes and deposits). Of course, this tendency was exacerbated by a lack of regulation on the issue of private currency, a lack of trust in the stability of small private partnership banks and a prevailing political ethos which saw no role for government involvement in ensuring financial stability.

The 1820 crisis, which began in Cork and spread north saw 40 per cent of Irish banks fail within three weeks, leaving large portions of the country with neither currency nor banks for many years. This had predictably adverse effects on the economy as investment and consumption were largely suspended. In a scene many of us are familiar with today, many bankers, consisting primarily of the politically-connected landed elite, shielded their personal estates from liquidators as their banks’ deposits and notes went unpaid, ruining whole communities in turn. In the worst affected areas, money was simply unavailable to pay wages or to engage in trade and so consumption and employment further collapsed while price falls continued as money became scarcer. As a petition signed by the Lord Mayor of Cork put it, “all confidence, as well as Trade, is suspended, there not being sufficient currency to represent property in its transfer”.

During the following five years, a twilight zone emerged from the ashes, during which an insufficient supply of private money in the form of trade bills was circulated amongst the merchant class who constantly petitioned for reform of the entire monetary and banking system. In this era of uncertainty, many survivor banks and businesses failed as debts could not be collected and the Bank of Ireland remained solely in Dublin.

The 1820 crisis marked the beginning of the end of a quarter century which one historian called a “financial pantomime” where more than 20 percent of the banking system failed on at least four separate occasions. Compared with our own age where banks are deemed “too big to fail”, this was an era in which banks were too small to survive with primitive legislation controlling their activities. So utterly decimated was the monetary and banking system following 1820, that new legislation was introduced in 1825 which replaced the small partnership banks with a system of well capitalised joint stock banks with unlimited liability for a large number of shareholders.

This revolutionised the Irish banking system and dramatically improved financial access through the coming decades. No major banking crisis was to visit Ireland again until 2008. In an age where private (crypto) currencies are being promoted as a panacea to the alleged ills of current monetary regimes, it is appropriate to recall that when private money dies, it is not only its holders and issuers who are affected when the scale of its exchange is significant.  The demise of this group will reduce their investment, consumption and debt-servicing capabilities, which will in turn affect the wider economy. Instead, the utopia of a well-designed financial system in the context of a political apparatus which minimises the fallout when things go awry, then as now, remains a goal worthy of our finest endeavour.

Sharon Donnery (Deputy Governor, Central Bank of Ireland) speech on macroprudential policy

The Department of Economics, Finance & Accounting at Maynooth University welcomes Sharon Donnery, Deputy Governor of the Central Bank of Ireland, who will deliver a talk on “Building resilience in the face of uncertainty – what role for policy?”, followed by a panel discussion, chaired by Bridget McNally (Maynooth University) with panelists Robert Kelly (Central Bank, Head of Macro-Finance Division), Dermot O’Leary (Chief Economist at Goodbody Stockbrokers), and Gregory Connor (Maynooth University), on Thursday 31st May 2018,  at 11am – 12:15 pm, Renehan Hall, Maynooth University. R.S.V.P. EconFinAcc@mu.ie. For further information tel: 01-7083728 / 7083681

Conniffe and Norvartis Prizes

The annual conference of the Irish Economic Association was held on the 10th and 11th of May at the Central Bank. More than 160 people attended the conference.

Alejandra Ramos (TCD) was awarded the Conniffe Prize for best paper by a young economist at the conference. Alejandra received the prize for her paper titled “Household Decision Making with Violence: Implications for Transfer Programs”.

Benjamin Elsner (UCD) and Florin Wozny (IZA) won the Novartis prize for the best paper in Health Economics at the conference. The winning paper was titled ” The human capital cost of radiation: Long run evidence from exposure outside the womb”

Prof Wendy Carlin (UCL) and CORE gave the ESR lecture “The Econ 101 paradigm is broken – what is the alternative?” Her slides from the talk

IEA Dublin ESR Guest Lecture 2018

Prof Olivier Blanchard (Peterson Institute) gave the Edgeworth lecture “Should we reject the natural rate hypothesis” His slides from the talk

Edgeworth Lecture IEA 2018

On the IEA website there are plenty of pictures from the conference

http://www.iea.ie/category/latest-news/

Gerard O’Reilly

Call for Papers: Fintech and financial risk management: evolution or revolution?

A joint academic-practitioner conference on the theme Fintech and financial risk management: evolution or revolution? will be held in at the Institute of Bankers, Dublin, Ireland on Monday September 10th, 2018. The conference is organized by the Valuation and Risk Cluster (VAR), the Department of Economics, Finance & Accounting at Maynooth University, the Smurfit School of Business at University College Dublin, and the Central Bank of Ireland.

New financial technologies are producing widespread changes to financial markets and financial systems. The effects of the fintech revolution on risk measurement, analysis and control are not yet clear. How does fintech change the risk profile of financial markets? Can existing risk management systems cope with the new environment? What changes are required to existing financial risk management methods and systems? Will innovative applications of fintech improve risk measurement and management

Potential topics include:

• Flash crashes

• Risk measurement and control of black-box trading algorithms

• The impact of high speed trading on dynamic rebalancing and hedging

• Natural Language Processing (NLP)-based artificial intelligence and its trading impact

• High speed trading networks and systemic risk

• Information and noise cascading in networks

• Stability and liquidity of blockchain protocols

• Portfolio risk management with automated advisor systems

• Credit risk in fintech lending systems

• Fintech’s impact on the business models of existing financial institutions

• Applications of machine learning in risk management systems

Please send papers or detailed proposals by May 31st, 2018 at the latest to Na.Li@ucd.ie; all papers must be submitted electronically in adobe pdf format. There will be both main conference sessions and poster sessions. The academic coordinators for the conference are Gregory Connor, John Cotter and Trevor Fitzpatrick, who can be contacted at Gregory.connor@mu.ie,  John.cotter@ucd.ie,  and Trevor.Fitzpatrick@centralbank.ie. The administrative manager for the conference is Na Li who can be contacted at Na.Li@ucd.ie. There are no submission fees or attendance fees for the conference. We are grateful to the Science Foundation of Ireland and the Irish Institute of Bankers for their generous support of this conference. The Valuation and Risk Cluster (VAR) is a collaboration between University College Dublin, Maynooth University, Dublin City University and industry partners, with support from the Science Foundation of Ireland.

Conference on the German 3-Pillar Banking Model, RDS, 16 November 2016

The RDS will be hosting a conference on alternative banking models, focusing on the German 3-Pillar Banking System. The presentations will focus on the development and operation of the German Sparkasse banks and how to re-introduce that model of banking into Ireland. The Sparkasse banks focus on SME lending and form the backbone of the German banking system, especially in economically depressed regions and were a key part of the transition of the old East Germany.

Key speakers will be:

Prof. Eoin O’Dell, TCD Law School

Topic: How to create an Irish legislative environment for Sparkasse-style public mandate banking. 

Dr. Karl-Peter Schackmann-Fallis, Executive Member of the Board of the German Savings Banks Association

Topic: The Roots of German Local Banking, and its Future.

Mr.Heinrich Haasis, President of the World Bank of the Savings Banks, The Chairman of the Board of the Sparkassenstiftung für internationale Kooperation

Topic: Think global, act locally, cooperate internationally! How Sparkassen style banks have been introduced around the globe to benefit SMEs and the local community.

The event will be chaired by former TCD Economics Professor and Senator Sean Barrett.

Dr. Barrett was a member of Joint Oireachtas Inquiry into the Banking Crisis. Dr. Barrett will chair the conference and provide a closing comment on how the failures of 2008-13 could have been avoided and the need for a new approach to banking in Ireland. 

Registration for the event is here: http://www.rds.ie/Whats-On/Event/26638 

What: Conference on the German 3-Pillar Banking Model

When: 16 November 2016, 10h00-15h30

Where: The Royal Dublin Society (RDS) Library, Ballsbridge