1.Essay: [1000 words]
Has European Union Over Come Its Debt Crisis?
[Its Implications to Global Economy]
By Jitendra Kumar Sharma
European Union set up a high-level Commission under the chairmanship of Jacques de Larosière in order to confront the Debt Crisis. The Debt Crisis had phenomenal dimensions. The Commission itself noted in the Introduction to its Report published on 25 February, 2009 that “the world faces a very serious economic and financial crisis” as the “financial markets depend on trust but much of this trust has evaporated” .
Though Debt Crisis originated in the USA, EU got badly hit, so also several emerging economies. India, however escaped its onslaught. Still, Debt Crisis was, no doubt, global. European Union in cooperation with IMF, Basel Committee, G-20 and FSF as its partners acted on several financial fronts for overpowering the Debt Crisis.
Resolution of the multiplex Debt Crisis and implementation of global standards, according to Larosière Report, could be effected only through a firm and integrated European System of regulation of its capital markets that are among the world’s largest. The Commission’s report also lists the ‘CAUSES OF THE FINANCIAL CRISIS’ as also its ‘Recommendations’. However, not the causes of the crisis but measures adopted to drive out the crisis are more important for the purpose of this essay. Adequacy and effectiveness of the banking and supervisory structures at EU level are our central concerns. We shall consider these issues.
A midterm review two years after London G-20 observed that the de Larosiere institutions were “making good progress” . It exuded optimism about the Commission meeting its commitment to introduce a new banking regime by 2013, date fixed for this purpose both at the regulatory and institutional levels. On the issue of remuneration, EU had moved farther than the USA but it had yet to catch up on banking resolution and structural changes.
The ‘de Larosiere institutions’ were working with a sense of urgency as early as in 2011. The reviewer, however, expressed doubts on the plethora of regulation that were yet to come into force and if all the procedures shall be firmly operational by 2013 and whether the “citizens’ confidence will be restored” . He also had doubts about the long term success of “the new European Stability Mechanism (ESM)”  and concluded that the sovereign crisis had caused complications and hampered EU’s response to the crisis.
In Heliodoro Temprano Arroyo’s analytical presentation on European Union’s Policy Response vis-à-vis Fiscal Crisis for reforming economic governance, Commission’s long term projections show that debt-to-GDP ratio is likely to rise to around 110% by 2030 for lack of “fiscal consolidation.”.This raises serious concerns. It seems Debt Crisis has pushed Europe’s dream of One Market, One Political Entity into doldrums. Brexit confirms this incertitude.
In this context, Emilios Avgouleas and Douglas W. Arner provide an interesting aside. According to them, financial integration may not necessarily yield benefits, even though currently assertive “regionalism” demands “integration” and its heightened importance in policy formulation cannot be denied even so a “balanced” approach should be preferred. 
Malaise, observers point out, lies in the Banker-Politician nexus in EU/Eurozone countries. Powerful banking magnates fund election campaigns of politicians and influence governments’ finance policy to their advantage. Moreover, the Financial Structures have become too complex and complicated. Even the big bankers failed to understand their own financial structures. They remained myopic to the approaching Debt Crisis.s
Currently, three academic approaches are in vogue to understand the EU/EZ financial functioning and regulation, namely: (i) Quaglia, who regards complexity and asymmetries as inbuilt in the EU/EZ financial system and their policy making process, inevitably resulting in a balance between the EU/EZ authorities and market stakeholders. (ii) Admati and Hellwi argue that banking regulation can make the banks strong as well as safeguard the citizen’s interests against “having to bail them out and face austerity measures as a result”. (iii) Macartney, influenced by Gramscian hegemony theory, rejects the view that rigorous regulations lead to beneficial change. Macartney also suggests that the financial system cannot survive without a king-sized debt.
A hard-nosed banker and hands-on finance executive Michael Pomerleano’s comment is an appropriate gloss on these three theoretical assumptions. He says,“shadow banking” will play a larger “role in lending vis-à-vis the banking sector”. He also explains that banks will have to observe the rules, thereby restricting their scope for banking operations. He insists on rigorous controls for achieving greater harmony between the “shadow-banking and the traditional-banking sectors” for which entirely new procedures shall be needed to keep an eye on “markets and instruments” rather than institutions. Those who devise policy, now must enhance their efforts to keep an eye on “excessive liquidity” and also prevent its “build up” 
From the above recapitulation of major theories, reviews and considerations of the Debt Crisis, we may safely conclude that the European/Eurozone banking and supervisory structures are unable to master the Debt Crisis, seriousness and hard work of Larosière institutions, notwithstanding. Both regulatory and structural inadequacies still stalk the European Financial System.Banking and supervisory structures at EU level have, no doubt, proved inadequate in responding to the debt crisis.
Satayjit Das is sure that Europe has “NWO (no way out)”.Only a robust growth could redeem EU which is improbable. EU/Eurozone debt troubles will remain unhealed. European Central Bank’s repeated claim that it has “adequate”  capacity against pressure is feeble indeed as it is refuted by the continuing threat of financial collapse.
Notably, Telegraph Business on Feb 7, 2017 warned that “ EU faces a looming crisis” and Eurozone will find it hard to sustain itself as the International Monetary Fund has notified that Greece stands on a debt explosion in spite of its continuingly grappling with austerity measures and “economic reforms.” 
Among the keen observers of the EU/EZ’s lingering Debt Crisis, there are the proverbial Cassandaras who firmly believe that yet another banking collapse caused by some defaulting Eurozone member or even of the Chinese economy alone will set the stage for a renewal or rejuvenation or total overhaul of the European and global financial system.
Are we ready to hail the Apocalypse then?
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 Larosière Report, Brussels, Feb 25, 2009 ,p.6, http://ec.europa.eu/economy_finance/publications/pages/publication14527_en.pdf
 Karel Lannoo , April 2011 Crisis,”The EU’s Response to the Financial: A mid-term review”, CEPS Policy Brief, No. 241,p.1, https://www.ceps.eu/system/files/book/2011/04/No_241_K_Lannoo_G20_update.pdf
 Karel Lannoo ,ibid.”p.7
 Karel Lannoo ,ibid.”p.9
 Heliodoro Temprano Arroyo, undated,“The EU’s Fiscal Crisis and Policy Response: reforming economic governance in the EU”, A Presentation, slide 6, https://www.oecd.org/governance/budgeting/48871475.pdfhttps://www.oecd.org/governance/budgeting/48871475.pdfhttps://www.oecd.org/governance/budgeting/48871475.pdf
 Emilios Avgouleas, University of Edinburgh∗ Douglas W. Arner, University of Hong Kong∗ October 2013The Eurozone Debt Crisis and the European Banking Union: A Cautionary Tale of Failure and Reform, p. 44,
 Adamati, Anat, and Hellwig, Martin,2013. The Banker’s New Clothes: What’s wrong with Banking and What to Do about it: Princeton, Cited on pages 19, 20 of “ Frozen Europe: Regulatory Responses to the Eurozone Banking Crisis.”,website accessed on 6/7/2017
 Pomerleano, Michael,June 5, 2011, The fallacy of financial regulation: neglect of the shadow banking system,– Economists’ Forum, accessed 6/7/2017
 Satyajit Das on October 16, 2013 , “The Return of Europe’s Debt Crisis”, Roubini’s EconoMonitor ACCESSED ON Thursday, July 06, 2017 from http://www.economonitor.com/blog/2013/10/the-return-of-europes-debt-crisis/
 Peter Foster, europe editor, Steven Swinford, deputy political editor ,7 FEBRUARY 2017 • 9:00PM,EU faces crisis as IMF warns Greek debts are on ‘explosive’ path ,Telegraph Business, Front Page, accessed on 6/7/2017 http://www.telegraph.co.uk/business/2017/02/07/eu-faces-crisis-imf-warns-greek-debts-explosive-path/
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