The International Banking Crisis and Institutional Reforms

Paul J.J. Welfens

European Institute for International Economic Relations

Prof. Dr. Paul J.J. Welfens is Jean Monnet Professor for European Economic Integration; chair for Macroeconomics; president of the European Institute for International Economic Relations (EIIW) at the University of Wuppertal; Alfred Grosser Professorship 2007/08, Sciences Po, Paris; Research Fellow, IZA, Bonn; and a Non-Resident Fellow at AICGS/Johns Hopkins University, Washington DC.

As the global financial crisis has expanded, there is considerable confusion in Germany about how to cope with the crisis and fall-out in the real economy, writes Prof. Dr. Paul J.J. Welfens, president of the European Institute of International Economic Relations (EIIW) and a former AICGS Fellow. Dr. Welfens proposes five specific ‘institutional innovations’ that would help in ending the chaos and inefficiencies in the banking systems, and argues for the introduction of a new tax regime designed to encourage bankers to have a long term time horizon in decision-making.

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