28th SUERF Colloquium - The Quest for Stability

Time: 3-4 September 2009
Venue: Utrecht University School of Economics, Utrecht, Netherlands

Jointly organized with Utrecht School for Economics and sponsored by Rabobank Nederland, De Nederlandsche Bank and NIBE-SVV. SUERF is interested in contributions from the academic, central bank, banking and insurance communities for the aforementioned Colloquium which deal with the topics addressed below. Policy-oriented papers will be given preference.

In the intrinsically dynamic environment that characterises modern market economies, economic agents are constantly seeking for reliable signals that help them to make informed decisions. It is in this sense that most investors, consumers, producers and financial institutions prefer stability to instability. In ever-changing market economies stability, however, spans several dimensions and has several meanings. A stable macro-economic environment characterised by, among other things, a properly functioning price mechanism and stable prices is one of these dimensions. Price stability however should not be interpreted to mean that all individual prices should be kept constant, as price flexibility is pivotal to an efficient allocation of resources. A second dimension along which stability is sought is reflected in the development of markets for the transfer of risk. Providers of derivatives, insurance and pension products exist because their clients want to stabilize their cash flows, income and wealth, or insure these flows against the negative financial consequences of accidents, illness, unemployment, old age or unexpected movements in asset prices such as interest rates and exchange rates. The existence of these insurance products and markets often is taken for granted. However, these instruments can only exist when there is confidence in the soundness of the instrument, in the institution providing it and in the sector of which the institution is part of. This brings them to the second and third dimensions of stability. The second or micro dimension is based on prudent behaviour of institutions. Legislation, regulation and supervision are designed to induce institutions to exhibit prudent behaviour. This provides the "raison d’être" for capital adequacy rules, deposit insurance and investment diversification rules. The third or meso dimension is based on the premise that, due to the special nature of financial institutions, i.e. they are based on trust and operate under asymmetric information, stability of its constituent parts does not automatically render the system stable.

These three dimensions of stability - the macro, meso and micro perspective - are interdependent in that the one cannot exist without the other. This interdependency is reflected in the structure of the 28th SUERF Colloquium, which is organised in three commissions. The focus of the commissions is reflected in their headlines.

Contact:

• Michael Bailey
  SUERF Executive Secretary, SUERF
  C/o Osterreichische Nationalbank, Otto Wagner-Platz 3
  A-1090 Vienna, Austria
  Tel: +43 1 40420 7206
  Fax: +43 1 40420 7298
  Email: michael.bailey@oenb.at

For more info http://www.suerf.org/... (pdf)