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What explains regulators’ preferences concerning the Single Supervisory Mechanism (SSM)? The paper answers this question by providing an alternative account of the creation of the SSM using an institutionalist perspective. It is argued that the creation of the SSM does not simply reflect the material interests of governments and domestic financial firms, but that regulators’ positions were also significantly affected by the institutional environment in which they operated. Two characteristics of domestic supervisory governance are identified: the institutional responsibilities of banking regulators (microprudential and/or macroprudential) and the fragmentation of supervisory and monetary policies. The empirical analysis demonstrates the relevance of these factors for shaping regulators’ preferences both within and across countries. [ABSTRACT FROM PUBLISHER]

Regional financial arrangements and monetary integration in East Asia and Europe have made considerable progress in recent years. This paper discusses whether governments in both regions, Japan and Germany as the most advanced regional economies in particular, can use the new dynamics as levers to raise their status vis-à-vis the United States. It will be argued that activities are defensive rather than offensive, aiming at protecting the respective region from financial risk. Japan, in particular, would find it difficult to raise its status vis-à-vis the United States significantly by promoting regional financial and monetary integration, principal reasons being actor heterogeneity, the role of China, hesitation to bear burden and risk, and the historical legacy of a bank-oriented system. [ABSTRACT FROM AUTHOR]

Ideas are at their most powerful as an explanatory variable when they lead agents to go against any broadly reasonable interpretation of their material self-interests. They become even more intriguing when they are instrumental in actuallycausinga crisis, in which actors undercut their own stated goals and then continue to make matters worse by sticking to those same ideas, even in the light of clear evidence that the policies they inspire are not working. This contribution shows two dynamics between power and ideas to explain Germany's behavior during the euro crisis. The first dynamic examines the changing macroeconomic consensus on how to conduct monetary and fiscal policy that governed the euro from 1999 to 2012. The second dynamic shows how a strict adherence to Germany's ordoliberal ideas of budgetary rules and structural reform turned a containable Greek fiscal problem into a full-blown systemic sovereign debt crisis. [ABSTRACT FROM PUBLISHER]

For decades, historians have debated why Germany's Chancellor Heinrich Brüning resorted to policies worsening the economic crisis in the early 1930s. Some scholars, first and foremost Knut Borchardt, have argued that for various reasons the Chancellor had no choice but to depress the economy. In particular, Borchardt has pointed out that Brüning was reluctant to devalue the currency because he feared a return of hyperinflation. Borchardt's critics, by contrast, have rejected this argument on the grounds that Brüning's fear of devaluation was not shared by all German policy-makers and the public in general. This article tries to make a contribution to this debate by assessing Brüning's fear of devaluation from a comparative perspective. Narrative evidence from Britain, the Netherlands, the Scandinavian countries and Switzerland strongly suggests that Borchardt's argument is well grounded. Across Europe, politicians and central bankers, as well as business and union leaders, were convinced that devaluation would lead to inflation and do more harm than good. The evidence also shows that, because of this widespread fear of inflation, not a single European country deliberately devalued its currency in the 1930s. [ABSTRACT FROM AUTHOR]

This study analyses the transmission of monetary policy in Germany for the EMS period in the framework of a structural vector error correction model (S-VECM). Three stable cointegration relationships are found: a money demand relation, an interest rate spread and a stationary real interest rate. Based on both contemporaneous and long-run restrictions, five structural shocks to the economy are identified. In contrast to analyses for the euro area, we find that output and inflation are not independent in the long run for Germany. In accordance with results previously found for Europe, we do not find strong support for monetary targeting for Germany. Our analysis indicates that uncertainties remain concerning the controllability of money and its usefulness as a leading indicator with respect to inflation. Stability of the money demand relationship does not seem to be problematic. [ABSTRACT FROM AUTHOR]