Florian Heider didn't have to get used to his new workplace. Geographically, certainly not: The 51-year-old worked for 18 years at the European Central Bank in Frankfurt, where he most recently headed the Department for Financial Market Research. His new place of work is only a few kilometres further west, in Frankfurt's Westend. Heider now sits in the "House of Finance" on the campus of Goethe University and heads Germany's youngest economic research institute, the Leibniz Institute for Financial Market Research, or SAFE for short. On 1 December, he took over from the Institute's founding director, Jan Pieter Krahnen.

Alexander Wulfers

Editor in the economy of the Frankfurter Allgemeine Sonntagszeitung.

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At the beginning of 2020, the SAFE moved into the top league of German research institutes. Since then, it has held the status of a Leibniz Institute, as have the six other well-known economic research institutes in Germany, including the Munich-based Ifo Institute, the Berlin German Institute for Economic Research (DIW) and the Kiel Institute for the World Economy (IfW). In mid-February, Heider sat for the first time at the annual Leibniz Economic Summit next to prominent institute heads such as Clemens Fuest and Marcel Fratzscher. This is the league in which he now plays – even if the SAFE is still smaller than the other institutes.

His new tasks are very similar to those at the ECB, says Heider. "The job has a certain continuity: in the field of tension between academic research and the transfer of knowledge to the outside, without being distracted by the minutiae of academic analysis. I found that appealing." The biggest difference is the "start-up atmosphere" in the still young institute compared to the huge bureaucracy of the ECB.

Response to the financial crisis

The abbreviation SAFE stands for "Sustainable Architecture for Finance in Europe", which describes the institute's research goal quite well, at least in English: It is about a sustainable financial architecture for Europe. It was created in 2013 as a reaction to the financial crisis. After the crash of 2008, a new awareness of the importance of the financial markets suddenly set in. A paradigm shift in banking regulation was the result, with a whole series of new rules, the implementation of which was analytically accompanied by the SAFE.

With its admission to the Leibniz Association three years ago, the institute has received more funding and more long-term planning security. So far, however, it has not yet been able to fully develop its potential. A few months after the ascent, the abrupt interruption of everyday research came with the beginning of the corona pandemic. Lockdowns and home office compulsion made it difficult to really get started. The institute was therefore "a bit in a deep sleep," says Heider today. "The challenge will be to get it back to normal temperature in the next few years." Open professorships would have to be filled – and then the people in the new premises would have to be brought together, "so that there is also continuity in the exchange." The first evaluation is due in two years. Until then, Heider and his team must show that they live up to the claim.

He sees plenty of tasks for his institute – starting with the topic of banking regulation, which remains relevant, even if the financial crisis seems to have moved into the distant past. "Liquidity regulation by banks, for example, is not that old. And we now also have a new environment. We don't know: What does normal operation look like? How do these regulations work in practice? None of this has been seen yet, because we are practically moving from crisis to crisis." It is also not clear where perhaps over-regulated – with unexpected side effects. For example, many transactions have now migrated to the non-banking sector, and financing takes place via corporate bonds directly in the markets or via insurance companies. This means less regulation and less data.