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PROF. AZZIM GULAMHUSSEN:
Hello, my name is Azzim Gulamhussen,
and I'm a professor of
financial institutions
at the Vlerick Business
School, based in Brussels.
In this talk, I am going to address
the topic of financial crises
and bank failures in Europe.
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I will cover the following issues.
What are the reasons for
the recent interest in the topic?
The pervasiveness of crises
and their interrelatedness.
Evidence from
the recent crisis in Europe.
The road from bail-outs to bail-ins.
The rationale for
resolution and the process.
The practicalities of bail-in.
The differences between bail-in
and other financial instruments.
And some perspectives on
going forward with bail-ins.
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A first and obvious question
relates to the reasons
for the recent surge in interest
in bank failures in Europe.
The recent financial crisis and
the need to bail out several banks
had massive costs for
taxpayers that led to outcries
from the media and the public.
These outcries were
justified on the grounds
that managers and shareholders of
banks ripped off benefits from risk
taking activities prior to
the onset of the financial crisis,
but the losses had to
be ultimately borne
by taxpayers rather than
the share and debt holders of banks.
From the academic
perspective, the main interest
resides in understanding the causes
and consequences of the crisis.
From the policy perspective,
the main interest
resides in immunizing
the financial system
from future financial
crisis, guaranteeing
the sound functioning of
markets, and facilitating
economic development.
