Friday we woke up for our last day of meetings at the European Central Bank (ECB), and it did not disappoint. We had four lectures and they were all held in the Governing Council Room on the top floor of the ECB. The environment and tone of the lectures was similar to the European Commission: serious, official and informative.

Our first lecture, presented by Mr. Jonathan Yiangou, was a basic overview of the role and functions of the ECB, especially in the current crisis. Unlike the U.S. Federal Reserve, the ECB does not have a dual mandate. It’s primary objective is to maintain price stability, while the Federal Reserve tries to both maintain price stability and encourage maximum employment and increase production. The ECB wants to keep the rate of inflation in the Euro Area below or close to 2%. Yiangou then talked about the financial crisis of 2008-2009, triggered by the collapse of Lehman Brothers. He detailed the ECB’s “enhanced credit support” response to the crisis in which they basically contributed to conditions enabling banks to focus on lending despite the financial crisis. Finally, Yiangou discussed the ECB’s role in the current sovereign debt crisis. The ECB cannot ensure that sovereign government’s maintain proper fiscal policies. It is the job of members of the Euro to police themselves, but Yiangou did mention the new 6-pack plan, which allows the European Commission to fine countries not following fiscal responsibilities. The main problem he see’s with the new policies is that they are not automatic enough, although they are an improvement from previous measures. The ECB thinks like a bank, exclusive of what national strife or tendencies are.

Olga Arratibel, a principal economics for the EU Countries Division of the ECB, presented the next lecture. Arratibel broke her lecture into three major sections. The first was the benefits and risks of euro adoption. The benefits include a stable exchange rate with a country’s most important trading partners, price transparency and increased competition and higher growth and living standards. Some of the risks, like a problem with competitiveness, suboptimal interest rates and local bubbles and crises and an inability to adjust to changes in shocks can occur when a country adopts the euro prematurely. The second part of the lecture was a basic macroeconomic background in Central and Eastern Europe and the third part of the lecture was the enlargement process of the Euro Area, which discussed the Exchange Rate Mechanism II and convergence criteria.

After a delicious lunch of chicken and cauliflower (one of the best meals I’ve ever had) we attended a lecture by Thierry Bracke on ECB relations with the neighboring regions. Basically countries the ECB monitors the financial situations of countries that are trying to enter the European Monetary Union and eventually adopt the Euro in order to give banks and countries guidance on how to develop the economy and prepare for EMU accession.

Our final lecture of the day was on economic imbalances and adjustments with in the Euro Area by David Sondermann of the EU Countries Division. Sonderman first discussed the development of imbalances within Europe. One of the main causes was a failure by fiscal institutions to build up surpluses and buffers during normal, good economic times in order to avoid the development of fiscal imbalances. Sonderman also analyzed potential issues and vulnerabilities caused by government debt and a weak labor market. He touched upon the new ways that the EU will be surveying the development of future imbalances in order to prevent them early. This has been done by a revised Stability and Growth Pact, and a new Excessive Imbalances Procedure. This lecture was a good reinforcement of our previous lectures at the European Commission. One thing that I enjoyed about all the lectures at the ECB was the use of graphs and images. Often the lectures would present just a slide of graphs or data charts, and help us analyze them. This was an experience that I had not really had before and found helpful for my future approaches towards economic analysis.

After the ECB we went out together as a group for dinner one last time. Over dinner we reviewed our day at the ECB with Professor Banerjee as well as the trip as whole. We also just talked about life. I’ve think we have all enjoyed getting to know one another at a deeper level, What I love about Haverford is that despite the fact that it is on the “small side” of colleges, there are still plenty of people to meet and learn more about and this trip has allowed me to make 16 new friends. It was pretty much bedtime by the time we paid the bill. Today we woke up at 6 am and hustled to catch our flight home. The flight was less eventful then the first one (Professor Banerjee didn’t try to instigate a pillow fight- it might be because of the selection of movie that US Airways offered). And now I’m right where I started this post: we’re back!

What’s the next step? Where do we go from here? Over the next month we will be writing project reports on the various lectures we attended, and I will try to provide occasional updates of our progress. Additionally I will try to post some more photos later this week. What’s on my mind (and I think everyone else’s) is what is going to happen to the Euro, the European Union, and Global Stability (I could also say the same things about the U.S.)? This is a crucial juncture in the economic crisis, and it is up to officials in the European Commission, the ECB, the United States, and all over the world to create positive growth and prepare for future possible crises. At the same time, we as individuals need to continue to be responsible at a more micro-level. The decisions from the top cannot be executed if we’re not focused on balancing our own budgets and ensuring that we are financially stable.

It has been an exciting week, and I am off to bed. Our research papers are due in a month, and I am ready to get started. This experience has been intellectually inspirational. My mind has certainly been pushed and pulled in ways that I had never experienced before and I can’t wait to build off of this trip.

Of course I would like to thank both Professor Banerjee and Parker Snowe for their tireless efforts in making this trip happen. Everything was executed perfectly. We had no hiccups in traveling and the lectures we attended were superb. I and my peers are forever grateful to both Parker and Professor Banerjee for this experience.

Today we spent our morning at the Frankfurt School of Finance and Management attending a crash course on microfinance. Our first lecture was an introduction to the concepts of microfinance by Professor Adalbert Winkler. In a quick overview, Winkler described microfinance as a way for an organization to provide low-income clients with loans that they would not normally be able to access in a regular bank. This organization is confident in distributing financial support because the people that it is lending to take out loans as a group. Everyone in the group is required to pay back part of the loan or cover for people who are unable too. Thus, when people form groups they must vet their partners to ensure that will not be deliquent on their loans. Additionally, loans are given to groups of people who are in diverse enterprises. So if 5 people, in 5 separate businesses get together and take out a loan then it is more likely that some of those businesses will succeed and someone will be able to repay the loan. But if five people who are all in the farming industry take out a loan, and it is a bad harvest, then no one will be able to pay back the loan. Most microfinance banks have not been moneymaking endeavors, in fact only around 200 of the 10,000 organizations are generating revenues. Many microfinance banks are begining to shift away from the non-governmental sector to get government support as well as provide the impoverished with a place where they can hold their savings. Microfinance is a developing effort to find a safer way of providing funds for the impoverished.

Microfinance is a relatively new form of lending that has been around for approximately 20 years. As a result there hasn’t been the same amound of academic research as there has on other topics in economics. Our second lecture, by Norah Becerra, was a presentation of how the Frankfurt School works to help microfinance organizations transition from NGO status to more government regulation. Our final lecture was an academic report by Charlotte Wagner comparing the abilities of traditional banks and microfinance banks in coping with financial crises. Based on the data she collected, in the 1990′s microfinance banks were able to withstand the financial crises better than traditional banks, but the expanision of microfinance banks and growth of microfinance investment has made the microfinance banks more vulnerable to the current crisis. Thus despite structural differences between microfinance banks and traditional banks, both are being negatively affected by the current financial crisis.

Tomorrow we are off to the European Central Bank (ECB) to study more European Economics! In the morning we will review the role and functions of the ECB and discuss Euro Area Enlargement. In the afternoon we will attend lectures on the EU and Neighboring Regions and Euro Area Imbalances and Adjustment. It’s going to be an intense, exciting day. I’m not sure what we will be doing tomorrow evening but Saturday morning we will be waking up around 6am to head back to Haverford. It’s likely that this will be my last post until we get back Saturday since we have to pay for internet. Anyways, I’m off to explore Frankfurt for the rest of the afternoon! See you soon Haverford, Ma and Pa I hope that the chocolates survive the flight, there might not be any left by the time we land….

After our meetings at the EC, we headed back to the hostel. I was planning on taking a well deserved nap, but one of my classmates, Mary Clare O’Donnell, suggested that we go for a bike ride around Brussels. We spent 4 hours exploring “Little Africa,” the European Parliament and Leopold’s Park for just 6 euros! I got back to the hotel and promptly went out again to a famous sports club called Celtica to watch the Belgium v. Germany soccer match. However, I feel like I was robbed of my experience to watch European football in Europe because Belgium lost 3-1 and the crowd was kind of depressed (next time, I’ll go to Spain to watch soccer). This morning, after a mad dash to the train station, we took a three hour ride from Belgium to Germany. It’s amazing how interconnected European nations are; we didn’t have to get our passports checked crossing the border. Europe is a far more unified continent now then its history would lead one to believe. The European Commission emphasized the importance of unanimous decisions and consensus in EC decision making because there are 27 different nationalities all working together to build a better future (reminds me of Haverford).

Anyways, tomorrow we are off to learn about Micro-Finance at the Frankfurt School of Finance and Management. It’s a little bit of a shift from our course but it should be very interesting. I’m off to bed. Gute nacht!!

Our first lecture was a briefing on the role and functioning of European institutions by James Andreu, a member of the European Commission Department of Communication. He explained that the whole concept of intra-continental European governance organizations emerged post- World War II, when Europeans realized that a mediating body would be necessary to prevent another war from happening. Over the last 65 years, a number of different organizations have emerged that promote economic and social interaction among the nations. Andreu specified that in the current European Union, founded in 1993, there are seven organizations that are essential to managing the economic and political situations between European Nations. They include the European Parliament, the European Council, the Council of Ministers, the European Commission, the Court of Justice, the Court of Auditors, and the European Central Bank. These institutions work in concert to make sure that sovereign states in the Union implement policies and manage the Euro currency. Members of the Euro Area have already adopted the Euro currency, which was instituted on January 1st, 1999.

We then met with Mr. Heikki Oksanen, a research adviser to the Directorate-General Economic and Financial Affairs (ECFIN). He lectured on the causes and consequences of the current economic and financial crisis, including the origins of the crisis, the economic growth and issues of the European Union and Euro Area compared with that of China and America, and how the European’s are responding to the crisis. He really laid the groundwork for some of our later lectures on fiscal responsibility and macroeconomic trade imbalances.

Following Oksanen’s lecture, we had lunch and then another lecture on Euro-Adoption for Central and Eastern European nations by Mr. Zdenek Cech, also of ECFIN. Cech’s lecture covered the basics of the Maastricht Criteria and convergence of national currencies with the Euro. In order to adopt the Euro, one of the things European nations need to do is maintain a deficit no larger than 3% of their Gross Domestic Product (output), and a debt no larger than 60% of the their GDP. This ensures that there government is behaving fiscally responsible and encourages investment and confidence in the country’s economy. After Cech’s lecture we had the opportunity to experience something that very few people have had the opportunity to do. We went to the restricted 13th floor of the EC and saw the private conference room of the college of commissioners where the 27 commissioners make all their big decisions. I believe they said that we were the first group tour to ever visit that room, which is crazy since around 700 people visit the EC a day.

At the end of the day we had two more lectures. One was with Ms. Lucia Piana and the other was Mr. Pieter Bouwen. They both work for ECFIN as well and discussed ways to maintain fiscal responsibility and balance macroeconomic imbalances. Piana focused on the revised Stability and Growth Pact which is a mutual agreement between the European countries to stabilize their government deficits and debt based on the Maastricht crisis. A new update to the agreement is that if the nations do not follow these guidelines, the EU has the ability to impose sanctions and to fine them for 0.2% of the country’s GDP. Bouwen’s talk focused on Excessive Imbalances Procedure. What does the European Union do when there are clear imbalances in the economy of a Euro Area nation? If the imbalances are benign, the EC will not require nations to address the issue, however if the imbalances are detrimental to the state of the nation’s economy then the nation will be required to fix the imbalances. One of the new features of excessive imbalances procedure, which is similar to the Stability and Growth Pact, is the ability to impose a sanction on the delinquent country. What I find most interesting is the new voting design the the EC has developed in order to impose sanctions. Once the European Commission proposes sanctions on a nation, a process called Reverse Qualified Majority Voting (RQMV) is undertaken. Rather than voting on whether or not the resolution should be instituted, it is assumed that it is law. In order to repeal the resolution, the European Parliament must get a 70% majority against the resolution. I think it is an interesting voting theory because it forces people to think seriously about whether or not they want something to happen, because if they don’t act, then the resolution will become law.

After we left the European Commission, we reviewed the entire day with Professor Banerjee before breaking up for dinner. My mind is spinning with economic concepts, and we still have another half day at the European Commission tomorrow before we head to Frankfurt! I’m off to bed, more to come tomorrow.

On Saturday, our first stop was the Cathedral of St. Michael and St. Gudula. Built in the 11th century, it is one of the oldest cathedrals in Belgium. After the cathedral we found a little restaurant and got to eat our first Belgian waffle with nutella! It was by far the best waffle I have ever had. After the waffles, we went to the Gran Plaz de Bruxelles, one of the largest open courtyards in Europe. The architecture was beautiful and it seemed as if we had strayed into 15th century Europe. Professor Bannerjee met us there and then took us to my favorite site of the day; the Manneken Pis: basically a little peeing child. This historic sculpture has special meaning for me. My parents have a figure of the Manneken Pis that could be attached to a faucet and one of my earliest childhood memories is asking my parents where it was from. After visiting Manneken Pis, we went out to lunch and got to see economics in action. There were two Greek restaurants adjacent to one another, competing for our money. Of course, Professor Banerjee managed to get one of the restaurants to offer us a 10% discount on lunch. We wandered around Brussels a little more after lunch. I stopped in at least 5 or 6 different chocolate stores to try out the free samples. I think it is fair to say Belgian chocolate is far superior to anything I have had from the U.S. It is richer and has a smoother texture.

Later in the afternoon, we went back to our hostel and spent an hour and a half discussing the history of the current Global Financial Crisis. One of the important points that Professor Banerjee made is that this crisis is global. Unlike previous crises such as the Mexican Financial Crises of 1982 and 1994, the Asian financial crisis in the late 1990’s and the Dot Com Bubble in 2000, this originated in the United States housing market but because of the interconnectedness of the today’s world, it immediately spread to the global economy. Of course, Europe was severely impacted by this crisis. Tomorrow we are going to learn a lot more about what has happened to European financial stability.

In the evening we decided to explore Belgian nightlife. I had a delicious dinner of shrimp cocktails, and steak and pomme frites at a restaurant near the Gran Plaz, followed by a lot of wandering around and more free chocolate samples. The Gran Plaz is beautiful at night. All of its buildings are lit up and there are many people with many different backgrounds in such a concentrated area. It reminds me of a medieval, more sophisticated, less flashy version of Times Square.

Today was not for sleeping. We had a tasty breakfast of bread and cheese around 8:30 am and then hopped on the train to BRUGES! Before I tell you about Bruges, we should reflect on the superiority of European trains to the United States. When I take a train from Haverford to Philadelphia, the constant rumble of the train on the tracks drowns out any conversation I am having. In Europe, the train ride is smoother than Belgian Chocolate and the seats are far more comfortable.

Bruges was unbelievable. The majority of its medieval architecture is well preserved. It has approximately 30 churches for a population of around 20,000 people. There are streets, but the city is criss-crossed by canals. When we arrived in Bruges, Professor Gerstein gave us a brief history lesson about the city. Bruges is located on the North Sea, and used to be a powerful port city along with the city of Ghent. However the two cities began to lose power to the Dutch when the entrance to their ports started silting in the 16th century. My favorite part of Bruges was just walking through the inner city, because the aroma of freshly cooked Belgian waffles and chocolate is ubiquitous, spilling out of stores and filling the streets.

Our only structured activity of the day was a canal boat tour of Bruges. There are doors that exit onto the canal (I’ve never been to Venice, Italy, but I assume that it is similar). We got to see the smallest window in all of Europe and lots of beautiful medieval designs. After the tour I accomplished one of my major trip goals. Yes mom, I had mussels with pomme frites and mayonnaise. The mussels were juicy and flavorful, and mayonnaise actually went well with the fries, though I will always prefer ketchup. We explored the ancient city a little more after lunch and visited the main Cathedral. Around 6pm we took a train back to Brussels and headed back to the hostel.

It’s around 11pm now and I’m headed to bed. Tomorrow is a big day for us at the European Commission. We are going to have around seven hours of lectures on European Stability and Post-Communist Transitional Economics. I’m unbelievably excited. There is so much to absorb and understand, and we are going to be learning from the people who are in charge of bringing Europe out of this crisis. I’m going to do my best to summarize the lectures for you guys, and I also promise a ton of pictures! Anyways, good night, sweet dreams and bonne nuit!

I just finished packing, and I have a few last minute errands to run before we head out at 2:45 pm today to the airport. I think the best thing to do right now would be to tell you our itinerary for the next week. I am going to be posting all week about the lectures we are attending as well as the cultural experience of Europe.

Our plane is scheduled to depart at 6:10 pm today and we will touch down in Brussels at 7:10 am on Saturday. We then have all of Saturday to explore Brussels. I’m really looking forward to the chocolate and the waffles. On Sunday, we will be traveling to Bruges to tour the city. I don’t know too much about Bruges other than that it has a lot of medieval architecture. My Mom also told me that I had to try the mussels there, so I guess that’s on my to do list.

Anyways, Monday we get down to work! From 9-5 we will be attending lectures at the European Commission (EC). The topics include: Role and Functioning of European Institutions; Economic and Financial Crises; Euro Adoption in Central and Eastern Europe; The Stability and Growth Pact 3.0; and Excessive Imbalances Procedure.

Tuesday we head back to the EC to discuss the current economic crisis in Europe. We will be discussing a case study of European Union Countries (EU) with EU/IMF programs to combat the crisis, as well as how to settle the European Financial Stabilization Mechanism.

Wednesday, we will hop on a train and leave Brussels for Frankfurt, Germany and spend the rest of the day touring Frankfurt. Thursday we will go to the Frankfurt School of Finance and Management to learn about Microfinance. Specifically we will be focusing on the role and functions of microfinance institutions during a financial crisis.

Friday is the capstone of our program. We will be heading the European Central Bank (ECB) for another full day of lectures on: the Role and Functions of the ECB; Euro Area Enlargement; EU and Neighboring Regions; and Euro Area Imbalances and Adjustment.

We will depart from Frankfurt Saturday morning and arrive back at Haverford in the afternoon.

It’s actually my second time going to Europe (but the first was when I was 6 months old, so that doesn’t count), and I am really grateful to the CPGC, the Provost’s Office and Professor Banerjee for providing this opportunity. This week promises to be exciting and educational, and I am really looking forward to applying the theoretical discussions we have had in class to real world situations.