An Ifop poll for the weekly Le Journal de Dimanche showed Hollande's popularity fell by one point from a month earlier to 41 percent in November.

1. ‘EuropEan financial
centres will survive
thE crisis’

2. The Summit on the Global Agenda is the world’s largest
brainstorming meeting attened by thought leaders of the World
Economic Forum’s Network of Global Agenda Councils.
The Councils, comprised of experts from academia, business, civil
society and government, address over 80 pressing issues facing
the world today. The Summit on the Global Agenda 2012 is held in
Dubai from November 12 to 14 in Dubai.
Ahead of the summit, Avinash Persaud, Chairman of Intelligence
Capital Limited and Fellow, London Business School, spoke
to Gulf News on the wide-ranging impact of the financial crisis in
Europe.
Gulf News: Is Europe in long-term decline as a financial centre?

3. Avinash Persaud: The health of financial centres can be detached from their
economic residency. It is nearly 150 years since the British economy was the
largest in the world, fed by an expansive Empire.
Yet today, London is still the largest international financial centre and ranked as
the number one centre in most surveys of international business. New York will
survive as an international financial centre long after the relative decline of the
US economy. The major financial centres of Europe will survive relative
economic decline in Europe.
Indeed, the major financial centres of continental Europe tend to be in countries
with relatively small economies, such as Switzerland, Luxembourg, Ireland and
the Channel Islands of Jersey and Guernsey.
This underscores that what makes an international financial centre is not so
much a strong underlying economy, but good access to markets and
infrastructure, an abundance of qualified, experienced people, inexpensive and
trustworthy legal systems and effective and appropriate regulation.

4. The success of the financial centres in the Gulf – like
Dubai, Bahrain, Abu Dhabi and Qatar – will depend more on these
factors than, say, the price of oil. Therefore, there is still reason for
financial centres in the Middle East to add to their strength by
developing closer links with European centres, such as joint arbitration
centres, and common rules for asset management products that could
then be sold in both
European and Middle-East centres.
Finally, just as a financial centre may be detached from the underlying
economy, relative economic decline in Europe does not mean that there
are not highly successful companies and extremely wealthy individuals
resident there today and in the future. I would not write off Europe as a
market, as a source of leading products and people just yet.

5. Do Europe’s political leaders have what it takes to put the right governance structures in
place for financial sustainability?
The arrival in 1999 of a new, single currency for the world’s major economic blocs was a
historic achievement. A dozen years later, we are discovering that it is still a work in
progress. Developing the governance and institutional structures around the euro are is
easy in democracies at the best of times, and especially in economic recession when the
electorate becomes more inward looking.
By and large, European politicians know what needs to be done, but they will say that they
do not have the political mandate from their electorate to get it done. This is why, rather
strangely from a political point of view, the initiatives are being led by the politically
independent, such as the European Central Bank (ECB).
The move by the ECB to effectively be a lender of last resort to European banks and
governments – the kind of role central banks ordinarily play in sovereign countries – has
made me more optimistic that there is, finally, an end of the road of the credit crisis in
Europe.
It is important to remember that continental Europe’s fiscal position remains far superior
to that in the United Kingdom or the United States. Spain’s budget deficit will be close to 5
per cent, half of the US deficit. The severity of the crisis in Europe – with the exception of
Greece – had more to do with regional monetary arrangements that are beginning to be
sorted out.

6. What is the most important thing Europe needs to do rejuvenate its banking sector?
When the economic boom is done and the party is over, banks are filled with remorse and
are reluctant lenders the world over. If you add to that general observation that a large part
of their lending to their “own” government had deteriorated in credit quality, you can see
why European banks are highly risk averse.
Banks will resume lending once confidence in the credit quality of euro-denominated
government bonds returns. The effective underwriting of European government debt by the
ECB – a backstop – and the European Union’s capital injections into the banks will bring
back this confidence. I do not think there is anything that needs to be done at the
institutional level to rejuvenate European banking. Once the backstops are in place, time
will heal.
That said, European politicians are marching ahead with the idea of a European banking
union where there is one regulator and one common bank rescue plan and reserve. I think
this is a dangerous distraction.
One of the key lessons of the crisis is not that there was insufficient commonality in
banking, but insufficient diversity. When Ireland and Spain were experiencing housing
booms ten years ago, we would have wanted their regulators to have applied stricter
capital adequacy requirements than those in France and Germany, where there was not a
boom in lending to the housing industry.
I fear a banking union will make such diversity more difficult in the future and so we could
end up with greater concentrations of decision-making and lending rather than introducing
the greater diversity that is at the heart of all risk management.