- Dutch pension fund ABP stops investing in fossil fuel producers by 2023
- French La Banque Postale will exit oil and gas by 2030
- ECB discussed inflation, but expects no rate hikes in 2022
- Swedish Handelsbanken will leave Denmark and Finland (fits into a pattern discussed on the Finrestra podcast)
- Italy and UniCredit end negotiations over the sale of MPS
- Blockchain/CBDC experiment for trading French government bonds (more on blockchain on the podcast)
- ING phases out payment subsidiary Payvision
- ABN AMRO passes on AML costs to coffeeshops
The Finrestra podcast is a weekly show about European finance.
We’ll talk about banks, green finance, the ECB, and much more.
Enjoy the first episode, with Uuree Batsaikhan of Positive Money Europe!
Read the analysis I wrote for Finrestra.
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military–industrial complex. The potential for the disastrous rise of misplaced power exists, and will persist.U.S. President Dwight Eisenhower
Today, the military hardly has any influence on European governments.
In contrast, the European Central Bank (ECB) is a very powerful institution. Former ECB President Trichet put pressure on government leaders with (secret) letters. Former ECB President Draghi said “whatever it takes“, and the euro crisis was over.
What group of people has the greatest influence on the ECB?
Bankers? Lmao. A quick look at the share prices of European banks tells you everything you need to know about the “power” of private finance.
No, academics are the real rulers of the ECB.
Former President Draghi was a professor.
After your tenure at the ECB, you can pass the revolving door into a professorship.
Maybe Europe should guard against the acquisition of unwarranted influence by the monetary–academic complex. The potential for the disastrous rise of misplaced power exists, and will persist.
Three articles casting doubt on the validity of economic knowledge.
Dirk Bezemer describes the shifting opinions of Dutch economists. Since the coronavirus pandemic, the majority thinks government debt can rise to 90% of GDP without causing problems. Few believe the 60% debt-to-GDP ratio of the Maastricht Treaty is a sensible ceiling. Compare that to December 2019, when planners at the CPB wrote that ‘sustainable’ government finances would stabilize debt at 25% of GDP. Thinking has also shifted about topics like the flexibility of the labor market, taxation and the climate responsibilities of the ECB. All of this raises questions about what economists really “know”. Is all of it politics dressed up as “neutral science”? Bezemer exposes the secret:
“The consensus among policy economists, including those at universities and research institutions, appears to correspond surprisingly well with current policy. That what becomes politically opportune, or simply happens, is suddenly embraced by many economists as being sensible and responsible.” (own translation)
JW Mason is pessimistic about macroeconomic theory:
“What is taught in today’s graduate programs as macroeconomics is entirely useless for the kinds of questions we are interested in. (…) [Macroeconomics education] provides no preparation whatsoever for thinking about the substantive questions we are interested in. It’s not that this or that assumption is unrealistic. It is that there is no point of contact between the world of these models and the real economies that we live in.”
This explains Bezemer’s secret: when the models don’t put constraints on what we expect to happen in the real world1, it’s convenient to follow popular opinion of the people in charge.2 Instead of rigorous science, policymaking relies on “a kind of folk wisdom — low unemployment leads to inflation, public deficits lead to higher interest rates, etc.”. Like Bezemer, Mason concludes that
Keynes got a lot of things right, but one thing I think he got wrong was that “practical men are slaves to some defunct economist.” The relationship is more often the other way round. When practical people come to think about economy in new ways, economic theory eventually follows.
Bezemer and Mason are not two disgruntled outliers. A survey of almost 10,000 economic researchers found that most are dissatisfied with the status quo, in terms of research topics and objectives.
- ESG risks for credit institutions and investment firms (EBA)
- A climate stress-test of the financial system (Battiston et al, Nature climate change)
- EU Taxonomy Compass
- Biodiversity risks in the French financial system (Banque de France)
- An analysis of the climate and biodiversity practices of Europe’s largest banks (ShareAction)
- How amateur sleuths broke the Wuhan lab story and embarrassed the media
- On the sudden rise of Dutch science at the end of the nineteenth century: a core-periphery approach (The dynamics of a creative periphery versus a gatekeeping core can be observed today as well, e.g. in central banking.)
- Berenberg’s capital markets transactions (notice the rise of “ESG” firms, working on renewable energy, batteries, water…)
- QE and nature loss
- Deforestation risk in production and consumption of commodities
- Maritime freight in Europe (Eurostat) (Notice the growth of Piraeus since 2009)
- Observing Many Researchers Using the Same Data and Hypothesis Reveals a Hidden Universe of Uncertainty (When I ever find the time, I should comment on this based on my own experiences as a researcher)
- Taking back control over Poland’s foreign-owned banks was led by managers, not politicians
- Results of EBA’s 2021 stress test
- European banks exit payment businesses
- Frankfurt financial center (Helaba 2019)
- Countering terrorism financing: what can we expect from banks?
European banks with an explicitly green or sustainable profile:
- ABN AMRO Groenbank1 (NL)
- ASN Bank2 (NL)
- BOŚ Bank (PL)
- ING Groenbank3 (NL)
- Rabo Groen Bank4 (NL)
- UmweltBank (DE)
- Alternative Bank Schweiz (CH)
- APS Bank (MT)
- Banca Etica (IT, ES)
- Cultura Bank (NO)
- Ekobanken (SE)
- GLS Bank (DE)
- Merkur (DK)
- Triodos Bank (NL, BE, ES, UK, DE)
I’m trying something new. I’ve started making videos about banking, monetary policy and sustainable finance.
I’m still trying to figure out the best format. But I already like the ability to use graphs and pictures. Compared to blogging, video is less nuanced. For example, you can’t link to all sources. But maybe that’s an advantage.
Here’s the first one, let me know what you think!