SAFE will investigate the requirements for an optimal regulatory framework for financial markets and their players. Fully functional financial markets are indispensable for a flourishing economy, growth and prosperity. However, as recent years have shown, financial market turbulence can involve tremendous risks for the economy, society and governments. “Therefore, we need a framework that is flexible enough to allow for innovation and competition, but, at the same time, is as rigid as necessary to ensure stability”, said Jan Pieter Krahnen, Co-Director of the CFS and Scientific Coordinator of the new center.
Today’s financial markets are characterized by a dynamic interaction between the realms of politics, business and central banks. In order to meet the political and economic challenges hindering a sustainable financial environment in Europe and the rest of the world, the Center will follow an interdisciplinary approach. More than 35 professors working in the areas of finance, micro- and macroeconomics, financial mathematics, marketing and law will be collaborating with each other.
SAFE will employ a comprehensive approach for five key research areas: financial institutions, corporate governance, household finance, financial markets, and macro finance. In addition to traditional methods, it will enter uncharted territory by setting up so-called “Research Labs”. These labs will be a key motivator for overcoming the boundaries that normally confine finance and economics-related research. In a first phase, research labs on systemic risk and transparency will be implemented. Such an interdisciplinary set up with cooperation among different faculties is ideally suited to overcoming the limitations posed by the fragmentation of individual disciplines.
Topical issues, such as the current fiscal imbalances and the related challenges for the common currency, will be considered in association with subjects of longer interest, for example, technological progress, the global imbalances induced by the process of economic development and the challenges for old-age provision resulting from the demographic transition. The Center has been designed with a view towards benefitting from and contributing to the dynamic interaction between researchers, economic actors, policy makers and regulators. Its Visitors Center will contribute to these objectives, and also help ensure that SAFE is visible at an international level.
The Center will not only conduct research and train young professionals, but will also reach out to the wider community by creating a platform for interaction between academics and policy makers. In a continuing dialogue with Berlin, Brussels and Wiesbaden, SAFE will provide independent, research-based policy advice that will be highly beneficial to policy makers and supervisors alike.
In order to achieve cutting-edge research and policy results, the Center will not only acquire relevant data but combine and collect new and unique data sets, for example, ones on the changing behavior of banks, households, firms, and policy institutions.
Located in Goethe University’s House of Finance, the Center will be able to build upon existing relations, events and networks.
