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International Seminar Series: European Sovereign Debt and Banking Risk- The Good, the Bad, and the Really Ugly!
Title of Presentation: European Sovereign Debt and Banking Risk: The Good, the Bad, and the Really Ugly!
Speaker: David L. Cleeton, Ph.D., Chair of the Department of Economics, Illinois State University
Presentation Overview: Debt financing in its safest mode, usually associated with riskless government borrowing, serves multiple virtuous purposes. It provides a safe and secure investment foundation for household savings and retirement. It offers financial and non-financial business safety, liquidity and predictable returns plus the advantages from these properties in terms of service as collateral for additional borrowings. In addition, within the banking system, holding sovereign debt instruments typically has no capital reserve requirements. However, the notion of all sovereign debt being default or risk-free certainly no longer holds. The lecture will focus on the key relationships that presented the most troubling dilemma in the ties between sovereign and banking risk as played out in the financial crisis in Europe and the subsequent sovereign debt crisis. In particular, an explanation will be given why a negative reinforcement is particularly problematic for nation states within a monetary union, what policy and institutional changes have been implemented in the context of the Eurozone, and what major issues remain to be adequately addressed, particularly with regard to the Banking and Capital Market Unions projects.
Speaker Bio: Dr. David L. Cleeton (Ph.D., Washington University in St. Louis) is a professor and chair of the Economics Department at Illinois State University. Professor Cleeton joined Illinois State University having served as Associate Provost and Economics Department Chair at Oberlin College and Dean of Social Sciences and Business at Christopher Newport University. His research appears in the American Economic Review, Public Finance Quarterly, Quarterly Review of Economics and Business, Health Care Financing Review, and the Southern Economic Journal. He is coauthor (with Nobel Laureate Robert C. Merton and Zvi Bodie) of the textbook Financial Economics. He was selected as the Fulbright-Schuman Chair of EU-US Relations at the College of Europe in Bruges (Belgium) and recognized as a Fellow of the Euro Area Business Cycle Network affiliated with the Centre for Economic Policy Research in London. He holds affiliated faculty appointments with the EU Center of Excellence at the University of Illinois in Urbana-Champaign and the Center for European Studies at Maastricht University (Netherlands).
Series Overview: The International Seminar Series offers the Illinois State campus and Bloomington-Normal communities weekly opportunities to learn about a wide range of international topics. Guest speakers are usually experts in their fields across a range of disciplines who cover a wide array of cultural, historical, political and social topics.
Series events have become one of the most popular internationally focused events on campus and continue to draw ever-growing crowds of students, faculty and community members. Audience members are given time at each event to raise questions to enable a two-way participation and learning.
International Seminar Series events are free and open to the public, and occur every Wednesday from noon to 1 p.m. in the Bone Student Center. The spring 2018 series will focus on Europe in a global context.