Interview with Pr. Dariusz Adamski from new joiner Wroclaw University
What makes your university specific in particular from the perspective of its position as an Eastern European institution?
Wrocław, the Polish town where my Centre for European Economic Law and Governance (CEELG) is located, has been one of the most buoyant locations in Central and Eastern Europe since the “big-bang” accession to the EU fifteen years ago. There are a number of reasons for this. First, it is conveniently located, with equal distance to Berlin, Warsaw, Prague and Vienna, especially now with modern transport infrastructure. This advantage has been amplified by the openness and internationalisation encapsulated in “Wrocław – the meeting place” motto, which has now largely become a part of the common conscience. The fact that it is a university town, with more than one hundred thousand students among a population estimated at about 700,000, it has also been an asset in the eyes of investors, some of which (including Credit Suisse and BNY Mellon) come from the banking sector.
The CEELG is affiliated to the Faculty of Law, Administration and Economics of the University of Wrocław. The university is one of the main universities in Poland and the faculty – ranking among the top Polish institutions in scientific excellence – is the only one in Poland which combines both law and economics.
Building on all these locational and institutional advantages, the CEELG was created in early 2017 with the goal of building bridges: between the more mature Western centres and our Eastern European colleagues, between academia and practice, between law and other disciplines. I believe you need such an approach to properly understand the trajectory of the financial markets’ evolution. To me personally, this trajectory is very much like the recent history of my town – expanding and changing at a breath-taking pace throughout the last three decades, yet also forcing one to wonder whether this pace, and the model it represents, is sustainable in the long term and how to mitigate the fallout effects of this speedy metamorphosis.
Why did you choose to join the EBI and which areas of cooperation would you favour in the future?
The fact that the financial markets are so globalised, complex and interdependent – and that quite certainly they will become only more so in the future – makes me very confident that there is a tremendous demand for institutions like EBI. EBI has all the assets necessary to become number one in the field globally in a short time span. Frankfurt places you where many of the key stakeholders are located and you have become a very professionally managed association very quickly. There is a vision behind the Institute and you have the right means to make it come true. I’m happy to witness the process as an insider.
My personal interests have gravitated towards the relationship between central banking and the economic, political and social setups which monetary policy is intended to improve. Going far beyond the question of the central banks’ independence, it builds on the lesson which policymakers have, all too often, failed to assimilate – that a suitable monetary regime can greatly facilitate economic growth and social resilience of the political and legal systems, while a suboptimal one, can trigger high unemployment, depress productivity, cause massive emigration and political unrest, etc. Another salient, and under-researched, area of the CEELG’s interests is what I call an informal banking union – the pattern represented in various Eastern European countries heavily exposed to the banking systems of the Western countries. Such a setup limits the economic benefits the local societies can accrue from banking in good economic times, as these benefits partly flow abroad in dividends. But it has powerful shock absorption capacities during a crisis.
These are just two examples of the research strands pursued in Wrocław. I hope the CEELG can contribute to further research on these topics as a member of the EBI, along with the other research themes, like the adjustment of prudential requirements to the specific circumstances of different kinds of financial institutions.
Topics-wise, as far as the Banking Union’s developments are concerned, are you studying closely the SSM and its impact on non-SSM countries?
I’ve always been in favour of very far-reaching European integration. But I have no doubts that monetary integration should be one of the last – not the first – parts of the process. By making the single currency a political goal to be achieved and defended at whatever cost, European policymakers have been making a fateful mistake, I’m afraid (last year I published a book with the CUP to explain the point more broadly).
It is yet to be seen how the mistake will be corrected, but neither the SSM nor the SRM might be in a position to remedy this crucial flaw, as they are the top layers on the underlying markets which are very fragmented and disintegrated in the Eurozone. These institutional innovations might not be in a position to correct the problem of very low profit opportunities, and huge risks, to which, in particular, the banking sectors of the Mediterranean countries of the Eurozone are exposed. For the very same reasons, unfortunately, the Capital Markets Union might not usher in any actual union, in the sense of a meaningful diversification of investment portfolios and productive allocation of capital throughout the EU.
The huge practical constraints which the concept of the CMU has encountered are very regrettable for the Eastern part of the EU. But the dilemmas that an actual banking union entails are much less relevant, especially in the countries, like Poland, outside the single currency. Profit opportunities for the banking sector are still there. Foreign investors know it and want to take advantage of these opportunities, supporting the informal banking union I mentioned earlier.
Certainly, there are also various broader corporate governance problems in the region, affecting the banking sector even where – as in Poland – money laundering is not a major issue. In this respect, the SSM as an alternative to the purely national prudential supervision could offer improvements also for the countries outside the Eurozone. But it has less to offer as a countermeasure for the re-nationalisation trend in the financial sector, for which Poland is a good example, and for the excessively close ties between the banking sector and politicians which this trend entails. Plus, the governments of the countries like Poland know that their taxpayers will not foot the bill for whatever the ultimate cost of restructuring the Italian or the Greek banking systems might prove to be, as long as they stay outside the banking union. But once you join the SSM, you just don’t know what role the Eurosystem or national treasuries may finally be forced to assume. Essentially, you only know that the current arrangement is incomplete and probably unsustainable in the longer term.