Pietro Reichlin's picture
Affiliation: 
Università LUISS G. Carli
Credentials: 
Professor of Economics

Voting history

The Eurozone COVID-19 Crisis: EU Policy Options

Question 2: What is the best mechanism to pay for economic support provided by and to EU member states to combat the COVID-19 crisis?

Answer:
Monetary finance
Confidence level:
Confident
Comment:
Enlarging the EU budget to a limited extent and deploying a specific credit line within the ESM and EIB is certainly a good idea, but, given the lack of fiscal and political integration, I do not consider these options to be up to the task of providing the amount of financing that is necessary. Southern Europe will end up with large fiscal deficits and a much larger stock of government debt in investors' portfolios. Although I think that there are margins for a further increase in overall public debt in the EU, I think that the ECB should overcome any residual regulatory constraint on the way to absorb a much higher amount of sovereign securities to avoid financial disruptions and speculative attacks.

Question 1: What is the total size of funding that you would advocate at the EU level in support of its members to weather the COVID-19 crisis this year?

 

 

Answer:
5-10% of GDP
Confidence level:
Confident
Comment:
There may be variation across EU countries depending on the impact of the COVID-19. I evaluate 10% of GDP for the worst hit countries (France, Italy, Spain).

Labour Markets and Monetary Policy

======================================================================

Question 2: Do you agree that, in a period of great uncertainty and after a prolonged period of weak real wage growth, monetary policy makers can afford to wait for greater certainty about real wage developments and building inflationary pressure before raising interest rates?

======================================================================

Answer:
Agree
Confidence level:
Confident
Comment:
In addition to wage growth being less responsive to falling unemployment, I would add that credit growth is not particularly strong and the overall economic scenario appears to be subject to many risks.

======================================================================

Question 1: Do you agree that a strong labour market is a good indicator of building inflationary pressure?

======================================================================

Answer:
Disagree
Confidence level:
Not confident
Comment:
I tend to agree with Summers that changing conditions in the labor market (de-unionization, digitalization, globalization, etc.) may have contributed to the weaker negative correlation between inflation and labor market slackness.

Bitcoin and the City

======================================================================

Question 2: Do you agree that the regulatory oversight of cryptocurrencies needs to be increased?

======================================================================

Answer:
Disagree
Confidence level:
Confident
Comment:
I share the view that bitcoins are mostly held as store of value in limited supply (similar to gold). Holders are mainly motivated by speculative activity and subject to risks of capital losses. As long as bitcoin holders are aware of what these risks are, I don't see why we need more regulation or oversight than it already in place for other stores of value. The power of monetary policy may not be affected by bitcoin diffusion, since Central Banks (or governments) are the only authorities able to provide the fiscal backing required to offer safe assets and generate lender of last resort type of policies.

Pages