Framework assesses security and efficiency of electronic payments, including electronic wallets and crypto-asset-related services
ECB calls for swift progress on overseeing global digital payment solutions and stablecoins
Overseen companies to adhere to new principles within one year

The ECB’s Governing Council has approved a new oversight framework for electronic payments following a public consultation. The framework is designed to make the current and future payments ecosystem safer and more efficient, as part of the ECB’s statutory task to promote the smooth operation of payment systems.
The Eurosystem oversight framework for electronic payment instruments, schemes and arrangements (PISA framework) includes an assessment methodology and an exemption policy. It replaces the current Eurosystem oversight approach for payment instruments and complements the Eurosystem’s oversight of payment systems. The Eurosystem will use the new framework to oversee companies enabling or supporting the use of payment cards, credit transfers, direct debits, e-money transfers and digital payment tokens, including electronic wallets. The PISA framework will also cover crypto-asset-related services, such as the acceptance of crypto-assets by merchants within a card payment scheme and the option to send, receive or pay with crypto-assets via an electronic wallet.
“The retail payments ecosystem is evolving fast owing to innovation and technological change. This calls for a forward-looking approach in overseeing digital payment solutions,” said ECB Executive Board member Fabio Panetta. “The PISA framework will include digital payment tokens such as stablecoins, alongside traditional payment instruments and schemes we have gained experience in over the years. Internationally coordinated action will also have to be stepped up to cope with the challenges posed by global digital payment solutions and stablecoins.”
The PISA framework complements forthcoming EU regulations on crypto-assets (including stablecoins) and international standards for global stablecoins. The Eurosystem also aims to cooperate with other authorities.
Companies that are already subject to Eurosystem oversight are expected to adhere to the principles of the new framework by 15 November 2022. Other companies will have a grace period of one year from the moment they are notified that they will be subject to oversight under the new framework. All overseen companies will be invited to submit self-assessments and supporting documentation, which will form the basis of a continuous dialogue between them and the overseer.
Contact:

Nicos Keranis | nicos.keranis@ecb.europa.eu | tel.: +49 69 1344 7806 and +49 172 758 7237

Compliments of the European Central Bank.
The post ECB | Eurosystem publishes new framework for overseeing electronic payments first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

To continue playing its role as the anchor of the monetary system, central bank money will need to respond to evolving needs, says Executive Board member Fabio Panetta. This means that we must intensify the work on central bank digital currencies.
Just as the postage stamp became less relevant with the arrival of the internet and email, so too could cash lose relevance in a digital economy.
The use of cash in payments is declining as people increasingly prefer to pay digitally and shop online. In the euro area, half of consumers now prefer to pay with cashless means of payment. Online sales have doubled since 2015. If these trends continue, cash could lose its pivotal role.
This has implications for the key role of central bank money in payments. Today, it is widely used by households and businesses for consumer and person-to-person transactions in the form of cash, and by financial institutions for wholesale transactions in the form of electronic deposits.
But the role of cash is challenged by digitalisation, while the emergence of new technologies creates new possibilities for wholesale transactions. To continue playing its role as the anchor of the monetary system, central bank money will need to respond to evolving needs. This means that work on central bank digital currencies must be intensified.
Retail central bank digital currencies (CBDCs) are about creating the possibility for everyone to use central bank money for digital retail payments. This is the focus of the ECB’s project to develop a digital euro.
Some people have argued that retail CBDCs would be redundant given the vast supply of private digital means of payments.
In my view, the opposite is true. The smooth functioning of payments, which is critical for monetary and financial stability, ultimately depends on sovereign money continuing to play its anchoring role in the digital era. So central banks must evolve with changing technologies, payment habits and financial ecosystems. Let me explain why.
We are accustomed to using different forms of money interchangeably. We are confident that “one euro is one euro” whatever form it takes, and this allows payment systems to run smoothly and commerce to flow.
But this “singleness” of money has not come about by chance. Confidence in private money – bank deposits, credit cards and e-payment solutions – rests on the ability to convert it, at par, into central bank money, which is the safest form of money available. Runs on private money start when this confidence disappears.
This is not to say that other safeguards, like banking regulation and supervision, deposit insurance and the monitoring function of capital markets, are not also important and effective. But they need to be complemented by the convertibility anchor as a basis for maintaining a well-functioning payments system and financial stability.
Without central bank money to provide an undisputed monetary anchor, people would have to monitor the soundness of private issuers in order to assess the value of each form of private money, undermining the “singleness” of the currency. Indeed, history has repeatedly shown us that different forms of private money coexisting in the absence of sovereign money leads to crises.
The primary policy objective of a digital euro would be to pre-empt such a situation. Retail CBDCs aim to ensure that public money remains widely accessible and usable for daily transactions.
The challenge is different for wholesale CBDCs. These already exist: central banks provide digital infrastructures for the settlement of transactions between banks in central bank money. In the case of the Eurosystem, these are its Target Services: Target2 for wholesale payments, Target2-Securities (T2S) for securities settlement, and Target Instant Payment Settlement (TIPS) for instant payments.
The widespread use of central bank money, as the safest and most liquid settlement asset for wholesale transactions, helps reduce risks to the financial system. In parallel to our work on a digital euro, we thus need to continually assess the need to upgrade the services we offer for the settlement of wholesale transactions. This is why we are working on consolidating the Target2 and T2S platforms.
The attractiveness of Target Services has recently been confirmed by the formal expression of interest to study further a migration to Target Services by the Danish Nationalbank and the Swedish Riksbank. The former has relied on T2S for several years and the latter has already decided to adopt TIPS.
By ensuring that central bank money remains the anchor of the payment system, we will support financial stability and trust in the currency. This is crucial to preserving the transmission of monetary policy and thus protecting the value of money.
This blog post first appeared as an opinion piece in the Financial Times on 18 November 2021.
Compliments of the European Central Bank.
The post ECB | The case for central bank digital currencies first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

With more than a century of consumer protection experience under our belt, we at the FTC know that hard times for American families can be boom times for scammers. Today’s COVID-19 pandemic is the latest crisis creating fertile ground for fraud – and scammers today have a new and powerful weapon: social media platforms. These platforms generally earn their revenue by targeting users with advertising. The more time we spend on platforms consuming content and revealing valuable personal information, the more that platforms profit by having information to target ads. So, the algorithms tend to favor content that drives engagement, which, in turn, leads to still more information gathered to target ads and to further refine their algorithms.
Recent news stories have reported that for some platforms, this system has resulted in amplification of content that is divisive or otherwise harmful. Here at the FTC, we are seeing how these platforms are becoming hotbeds for deception. Since the pandemic began, the FTC has sent more than 400 letters to companies demanding that they cease making false promises that various pills, potions, and treatments could prevent, treat, or cure COVID-19. Strikingly, about half of the advertisers who received letters made problematic claims on one or more of the four largest social media platforms:

172 of the letters cite claims that appeared on Facebook
69 of the letters cite claims that appeared on Instagram
35 of the letters cite claims that appeared on Twitter
27 of the letters cite claims that appeared on YouTube

The breadth of claims appearing on social media platforms is staggering. For example, on Facebook Live, a marketer pitched beaded bracelets with the promise they would “cleanse[] lung tissue,” “open[] congested bronchia,” and “help you with your immune health and breathing issues, which is what we need with the [coronavirus].” A clinic advertised vitamins, injections, and other “therapies” on Instagram, including a concoction promoted as “a crucial weapon in supporting your immune cells in the fight against COVID-19.” A naturopathic practitioner used multiple social media platforms, including YouTube, to promote light treatments, IV drips, and supplements to protect against the virus. Then there was the doctor who used Facebook to post claims that Ivermectin was effective both to prevent COVID-19 and to treat patients who had already been diagnosed.
The individuals and companies that received the cease-and-desist demands marketed vastly different kinds of products and services, but they had one thing in common: They all extended the reach of their deceptive COVID claims by using major social media platforms.
The FTC’s analysis didn’t evaluate why these problematic claims are appearing so frequently on social media, but here are some observations. First, we know that platforms are built and designed to amplify content, making it easy for scammers to spread false claims and target them at the consumers most likely to be open to those claims. Second, we know that this type of content can be highly profitable for platforms, as false promises of miracle cures are attractive to consumers, making it more likely they’ll engage. And we know that while platforms may take steps to remove misleading content once flagged, this is often after it has already spread to millions of consumers – making it too late for those who have been harmed.
The FTC will continue to monitor social media and demand that the false claims be taken down, but platforms must do more to ensure that this type of content cannot thrive in the first place. Bogus claims of miracle cures may be successful in attracting consumers’ eyeballs, but they can have devastating consequences for Americans who forgo needed treatment or part with hard-earned money in pursuit of false cures. No firm should be putting profits ahead of public health.
Compliments of the Federal Trade Commission.
The post FTC analysis shows COVID fraud thriving on social media platforms first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The European Commission has adopted a Communication on a competition policy fit for new challenges, which frames the important role of competition policy for Europe’s path towards recovery, the green and digital transitions, and for a resilient Single Market. The Communication highlights the in-built ability of competition policy to adapt to new market circumstances, policy priorities and customer needs: for example, today, the Commission has adopted the sixth amendment of the State aid Temporary Framework to enable Member States to provide targeted support to companies during the coronavirus crisis. Furthermore, the Commission is currently pursuing a review of competition policy tools to make sure all competition instruments (merger, antitrust and State aid control) remain fit for purpose, and complement its existing toolbox.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Strong competition enforcement is fundamental for businesses and consumers to reap the full benefits of our Single Market. It gives businesses of all sizes a fair chance to compete. It makes sure businesses are challenged to deliver the best, most innovative solutions for consumers. And it gives customers a choice of products and services, contributing to reliable and diverse supply chains. That’s why effective competition policy is needed now, more than ever, to give the European economy the agility and drive to overcome the challenges it faces. At the same time, competition rules have an in-built flexibility to adapt. We have adopted today the sixth amendment to the State aid Temporary Framework, and are in the middle of a review of competition policy with unprecedented scope and ambition.”
Since the creation of the European Union, competition policy has contributed to preserving and fostering the Union’s economic prosperity. Vigorous competition enforcement has served European consumers and businesses, and has helped nurture the dynamic and vibrant fabric of the European economy, made up of businesses of all sizes.
Today, the Union is facing new challenges: to climb the steep path to recovery following the coronavirus crisis, while enabling European industries to strengthen their resilience and to lead the twin green and digital transitions. An effective and well-calibrated competition policy can contribute the success of this agenda, which will require extraordinary public and private investments, innovation and a well-functioning Single Market.
To illustrate this by way of a few examples mentioned in the Communication:

To contribute to Europe’s response to the coronavirus crisis and support the European recovery, the Commission has adopted a sixth amendment of the State aid Temporary with a limited prolongation of existing measures until end-June 2022. It sets the path for a progressive phase-out of crisis measures, while avoiding cliff-edge effects, and accompanies the recovery with new tools to kick-start and crowd-in private investment in the recovery phase (see further information here).
To contribute to the green transition, the upcoming Climate, Environmental Protection and Energy Aid Guidelines aim at supporting industry’s efforts towards decarbonisation, circularity and biodiversity, as well as clean or zero-emission mobility and the energy efficiency of buildings.

Moreover, the Commission intends to provide guidance and legal certainty to enable cooperation to pursue more sustainable products and production processes,  as part of the update of the Horizontal Block Exemption Regulations and Guidelines.

To contribute to the digital transition, the upcoming Broadband State aid Guidelines aim to foster digital infrastructure development by facilitating the deployment and take-up of broadband networks which respond to fast-evolving user needs.

Moreover, the Commission has strengthened control of potentially problematic acquisitions in digital sector through its new guidance on the application of Article 22 of the Merger Regulation. This encourages Member States to refer potentially problematic transactions for its review, even if they do not meet national notification thresholds, and allows the Commission to review acquisitions of innovative companies having competitive potential beyond what their turnover would indicate, in particular in the digital sector.

The Commission will continue to support ongoing Member State efforts to design pan-European Important Projects of Common European Interest (IPCEI) that jointly overcome market failures by enabling breakthrough innovation and infrastructure investments in key green and digital priorities, namely hydrogen, cloud, health and microelectronics. The upcoming IPCEI State aid Communication will further enhance the openness of IPCEIs, facilitate participation of SMEs and clarify criteria to pool national and EU resources.
To contribute to resilience by means of open and competitive markets, European merger control will continue to allow companies to achieve greater scale, while making sure that markets remain competitive and supply chains diversified. Furthermore, antitrust policy allows businesses in the EU to join forces to advance their research and development efforts, to design, produce and commercialise products, or to jointly purchase products or services they may need for their operations.

Finally, in view of the exceptional situation as regards semiconductors, their relevance and the dependency on supply from a limited number of companies in a challenging geopolitical context, the Commission may envisage approving support to fill potential funding gaps for the establishment in particular of European first-of-a-kind facilities in the semiconductor ecosystem. Such aid based on Article 107(3) TFEU would be subject to strong competition safeguards as well as ensuring that benefits are shared widely and without discrimination across the European economy.
Compliments of the European Commission.
The post Competition: Commission outlines contribution of competition policy and its review to green and digital transition, and to a resilient Single Market first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Introductory remarks by Fabio Panetta, Member of the Executive Board of the ECB, at the ECON Committee of the European Parliament |
Madam Chair, honourable members of the Committee on Economic and Monetary Affairs,
Thank you for inviting me to report on the investigation phase of the digital euro project, which we started in October. I am happy to finally meet at least some of you in person, once again. Our interactions started a year ago when we published the Eurosystem report on a digital euro.[1] I am pleased that these exchanges of views continue, and I am committed to having regular topical hearings with you during the investigation phase of the project.[2]
In my remarks today I will focus on why we would issue a digital euro. I will then outline how we will structure our work in the investigation phase to ensure that we design a digital means of payment that is attractive to consumers.
Maintaining the role of central bank money in the digital age
When we decided to launch the investigation phase of the digital euro project in July[3], we did so knowing that we had the support of the European Parliament and other EU institutions, which all recognised the importance of this project.[4]
Let me recall why such a project is necessary.[5]
Issuing a digital euro for use in retail payments may appear superfluous to some, given that Europeans already have access to a wide range of private digital means of payment. These include bank deposits, credit cards and mobile applications.
But even if private money and central bank money are used interchangeably by the public, we should not forget why this is possible. We take certain things for granted, and they are often the things that could create the biggest problems if they didn’t exist.
Central bank money is by definition the safest form of money, because it is backed by the strength, the credibility and the authority of the State.
Private forms of money are liabilities of private issuers. They rely on the soundness of the issuer and, ultimately, on the promise of convertibility into central bank money. But this promise could prove to be ephemeral, for instance if the issuer manages its liquidity or solvency imprudently.
In practice, many people are unaware of these differences. This is what economists call “rational inattention”. We don’t think twice about storing and using our money via private intermediaries because we can regularly go to the cash machine and withdraw banknotes from our deposits without any problems. This provides tangible proof that our money in the bank is safe. It reassures us that we will always be able to get cash if we ask for it and that, when private forms of money cannot be used, we will still be able to make payments in cash. Runs on private money usually only start when the confidence in convertibility disappears.
Convertibility with central bank money on a one-to-one basis anchors people’s confidence in private money, supporting its wide acceptance.[6] This is not to say that other safeguards like banking regulation and supervision, deposit insurance and the monitoring function of capital markets are not also important and effective. But they need to be complemented by the convertibility anchor as a basis for maintaining a well-functioning payments system and financial stability. And this is a pre-condition for preserving the transmission of monetary policy, and thus for protecting the value of money and trust in the currency.
Today, people have easy access to central bank money in the form of cash. But we know that they increasingly prefer to pay digitally and shop online.[7] In an increasingly digital economy, cash could become marginalised because it would no longer serve people’s payment needs. And people would have little incentive to hold cash if they were unable to use it as a means of exchange.
Let me be clear: the ECB intends to ensure that people continue to have access to cash. But at the same time, we need to ensure that central bank money remains fully usable and can provide an effective anchor at a time when payment behaviours are changing. And this is where our work on a digital euro comes in: it would enable people to continue using central bank money as a means of exchange in the digital era.
But the decline in the use of cash is not the only factor that could alter the payments landscape in the years to come.
Non-European payment providers already handle around 70% of European card payment transactions[8] and if the footprint of these providers continues to grow, it would raise serious questions for Europe’s autonomy in payments, with potential implications for users. Let me give you an example: today, many Europeans can use their debit cards – such as the German EC-Karte or the Italian Bancomat – abroad, thanks to an existing agreement between their banks and international credit card companies. But for some debit card schemes, this use in cross-border settings could be curtailed in the future as it depends on the continued willingness of the international card schemes to provide such services.[9]
Moreover, although the take-up of digital assets such as crypto-assets and stablecoins – as well as their reach in payments – has remained limited so far, they are growing rapidly: the market capitalisation of stablecoins has increased from USD 5 billion to USD 120 billion since early 2020.[10] In parallel, big tech companies have entered the world of financial services. If these two trends meet, the functioning of global financial markets could be altered and traditional payment services could be crowded out.[11]
These developments mean there is reason to redefine the regulatory and supervisory landscape, but this may not be enough.[12] The presence of a digital euro could reduce the risk that the functioning of – and competition in – European payments could be altered by the dominance of digital means of payment managed by foreign-based entities and big techs with scale and information advantages. If we want to preserve an open, level playing field in payments and monetary sovereignty, we should start taking action today.
Designing a retail central bank digital currency
While individuals may currently only have access to central bank money in physical form, this is not the only form of central bank money that exists.
Banks have been able to access central bank digital currency via the so-called TARGET services[13] for a long time, and the Eurosystem is currently working on a new consolidated TARGET platform to offer the market enhanced and modernised services.[14] In July 2021, the ECB’s Governing Council decided to launch a new Eurosystem work stream in order to explore possible technological improvements in the wholesale infrastructure.[15]
By comparison, the digital euro project is about ensuring that everyone can use central bank money in digital form for their daily transactions. It would also allow users to benefit from high standards of privacy. With the digitalisation of payments, each individual transaction contains a large amount of personal data, which are often used by private companies for a variety of purposes. Regulation does its best to avoid these data being abused, but it often struggles to keep pace with technological innovation. Crucially, however, the ECB has no commercial interest in monetising user data, so a digital euro would improve citizens’ welfare by giving them the option to use a form of digital money that protects their privacy.[16]
Finally, a digital euro would provide new business opportunities and act as a catalyst for technological progress and innovation in the private sector. It would create a level playing field for financial intermediaries and strengthen their competitiveness. And it would offer them the opportunity not only to distribute central bank money, but also to develop new services with “digital euro inside”.
Over the next two years we will investigate the key issues related to the design and distribution of a digital euro.[17] We will have to strike the right balance between different priorities.
For example, the digital euro will be designed to be an efficient means of payment, but also to preserve financial stability. We will be careful to ensure the financial sector can adjust in an orderly manner. To prevent excessive and abrupt shifts from commercial to central bank money, we will need to strike a balance between maximising its appeal as a means of exchange and limiting its use as a form of investment.
Different design options and decisions all have a bearing on one another, so making a coherent set of choices will be key. We have a clear timeline that takes these interlinkages into account and will ensure a coherent product. The Eurosystem High-Level Task Force on Central Bank Digital Currency[18] that I chair is working to identify use cases and design options. After this phase we will move on to examining technological solutions. We expect to narrow down the design-related decisions by the beginning of 2023 and develop a prototype in the following months.
I must stress that the digital euro will not be able to be everything everyone wants it to be on day one. We will need to strike a balance to design a digital euro that is immediately valuable to users but can be developed in a reasonable time frame.
This brings me to my last point: finding out what potential users of a digital euro would want from this new means of payment.
Making the digital euro attractive to consumers
As already mentioned, the digital euro would be available for daily transactions to all potential users. However, the vast majority of transactions will likely involve consumers’ daily purchases at the “point of interaction” (in other words, payments at physical shops, from person to person and online).
Consumers will only use a digital euro if it is widely accepted for payments, and merchants will want to be reassured that enough consumers want to use it. In practice, while we often mention the financial stability risk that would emerge if a digital euro were too successful[19], we equally need to address the opposite risk – the risk of it not being successful enough. To be successful, a digital euro must be attractive to users by providing a low-cost, efficient means of payment that is available everywhere.
To find out what users want, we will engage extensively with the public, merchants and other stakeholders during the investigation phase.[20]
Focus groups in all euro area countries will help us gain in-depth insights into the preferences of the public and small merchants, including people who do not currently have access to the internet or banking services.[21]
Given the need to make the digital euro fully interoperable with existing payment services, we have also appointed 30 senior business professionals to provide expertise from an industry perspective.[22] Consumers, retailers, small and medium-sized enterprises and market representatives will have further opportunities to share their views through the Euro Retail Payments Board. In addition, technical workshops with experts will help us explore technological options for the design of a digital euro.[23]
At the same time, the success of a digital euro will heavily depend on European authorities and institutions being closely aligned. We are therefore engaging closely with the European Parliament, the European Commission and the Eurogroup on major design issues and the aspects of a digital euro that are relevant for EU policy more broadly.
Our discussion today is part of this endeavour. As representatives of European citizens, you have an important role to play in making sure that we design a digital euro that would meet their needs in the retail payments landscape of tomorrow.
We are committed to holding regular exchanges like this one so that your views can inform the Eurosystem’s technical discussions before any endorsement by the ECB’s Governing Council, and so we can debrief you on any decisions taken thereafter.[24]
As co-legislators you will play a key role in any changes to the EU legislative framework that may be necessary to introduce a digital euro. The ECB and the European Commission services are already jointly reviewing a broad range of legal questions at the technical level, taking into account their respective mandates and independence as provided for in the Treaties.[25]
Conclusion
Let me conclude.
Effective policymaking requires forward thinking. Central banks must innovate in the face of changing payment habits and global developments. When designing a digital euro, we need to consider not only the payments landscape of today, but also the landscape of tomorrow, which may be characterised by new actors, new digital assets and new payment solutions.
The stakes here are high and we are in uncharted waters. We want to move fast, but we must not rush. We need to take the time to get it right and consider all aspects so that central bank money continues to play its role as an anchor of stability at the heart of the payment and financial system.
I now look forward to your questions.
Compliments of the European Central Bank.
The post ECB Speech | A digital euro for tomorrow’s payments first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Speech by John Bruton, former Taoiseach at the Henley School in the Renaissance Hotel Brussels on Tuesday 16th November at 10am |
ARTICLE 16 IS NO SILVER BULLET FOR THE UK
One of the puzzles in the stand off over the Northern Ireland  Protocol is that of discerning what the UK really wants.
The stakes are high, and the effects of failure immediate.
The UK talks about invoking Article 16 of the Protocol. That article allows for a temporary suspension of the application of some provisions of the Protocol, if there are serious difficulties, which would have to be identified. It does not disapply or remove the Protocol. It just allows for suspension of part of it.
Article 16 then says the suspensions should only be what was” strictly necessary”  to remedy the identified difficulties, and would have to be “limited in scope and duration”.
It also allows the other side (the EU) to initiate rebalancing (retaliatory) measures.
But the important thing to stress here is that Article 16 is part of the Protocol, and has to be interpreted in light of what the Protocol says.
It does NOT grant carte blanche to walk away from agreed obligations.
The use of Article 16 is subject to respect for the Protocol, which in turn is itself “an integral part” of the Agreement under which the UK withdrew from the EU.
The Protocol recites, as one of its underlying assumptions, a UK guarantee of “avoiding a hard(North/South) border, including any physical infrastructure or related checks”.
So no outcome of the UK invocation of Article 16, could depart from that prior UK commitment to no hard border.
If it did, it would be stepping outside the Protocol and thus the Withdrawal Agreement itself.
Indeed, by talking about invoking Article 16, the UK is actually accepting the rest of the Protocol as the framework within which its complaints would  be adjudicated. That is good in so far as it goes.
If, on the other hand, the UK were to ignore Article 16 and attempt to negate its application by the use of secondary legislation, to evade parliamentary control, this would be another breach of a solemn  international  Treaty by the UK.  It would merit a very robust response from the EU. It would lead to an economic war.
On the other hand , if the UK is only talking about using Article 16, we are dealing with issues of interpretation of existing agreements, not walking away from them.  If that is so, we should not be unduly alarmed.
ROLE OF THE EUROPEAN COURT IS AN EXISTENTIAL ISSUE FOR THE EU
But, unfortunately ,  the UK is accompanying its threats about using Article 16, with a much more radical threat.
This is the UK’s challenge to the jurisdiction of the European Court of Justice ,as the final arbiter on the meaning of EU law, which is to  be applied under the Protocol in Northern Ireland in regards to goods covered by the Protocol.
This is a challenge whose implications go far beyond Northern Ireland.  It is, in effect, an attack on the legal order on the basis of which the European Union exists.
The European Union is, in its essence, a set of rules.
These rules are based on based on three pillars. These pillars are that they are:

made, democratically, through the European Parliament and  the Council of Ministers,
enforced , uniformly,  through the agency of the European Commission and
interpreted , with certainty, under the final jurisdiction of  the European Court of Justice (ECJ).

The UK attempt to deny the ECJ the right of final interpretation of EU rules to be applied in Northern Ireland under the Protocol, is a direct attack on this third  pillar, on which  the entire EU legal order rests.
The attack by the UK on the jurisdiction of the ECJ may be an attempt to curry favour with EU members, Hungary and Poland, who are having disputes within the EU on the rule of law within their own countries. The ECJ has made adverse findings on some of the decisions of the Hungarian and Polish governments, and the UK seems to want to exploit that as a means of undermining EU unity on Brexit matters.
Some in the UK may be attacking the ECJ jurisdiction because they want to undermine the EU itself. If that trend of thought predominates in the UK, there will never be  good relations between the EU and the UK.
In adopting this tactic of challenging the ECJ, the UK is not just attacking the Protocol.
It is attacking the entire Withdrawal Agreement.
This is because ,quite separately from the Protocol, Article 174 of the Withdrawal Agreement  itself says that, in disputes over the interpretation of the meaning of particular EU laws the ECJ, not an arbitrator, shall give the final ruling  on the meaning of that EU law.
The UK demand , if  it were to be conceded, would introduce uncertainty about the meaning of EU rules, and would set a deeply destructive precedent.
That is why it will not be conceded, and I believe the UK has known , from the outset, that it would not be conceded.
DOES THE CURRENT UK GOVERNMENT WANT A DECADES LONG COLD WAR WITH THE EU?
This raises a suspicion that the UK may not be negotiating in good faith, and is seeking an excuse to maintain a prolonged confrontation with the EU.
The implications of that, if true, would go far beyond trade.
The Chair of the House Commons Defence Committee, Tobias Elwood MP, worried recently about the effect of the continuing dispute over Brexit on the security of Europe, including Britain.
He said “There is a 1930s feel to the world today”. He is right. Brexit is part of a pattern. As in the 1930’s, we are now seeing countries (including his own) breaking treaties. We are seeing concessions  being  met, not by compromise, but by escalating demands.
There is a breakdown in trust between nations, and in trust in international institutions. That was the pattern if international relations in the 1930’s. This has been aggravated by disputes over Covid.
The world is less predictable, and more unsafe, than it was five years ago.
As Irish farmers also discovered in the 1930’s, a trade war, with Ireland on one side and Britain on the other, would be devastating for rural Ireland. It could arise suddenly, and unlike climate change , there would be no time for adaptation.
So we must hope that Maros Sefcovic and Lord Frost find a solution soon.
ADDRESSING THE UNIONIST CONCERNS
One must understand that they are seeking to find solutions to genuinely difficult dilemmas, that go beyond customs formalities to include identity, allegiance and national symbolism.
The border for the EU Single Market in goods must physically exist at a precise geographic location or locations.
The UK and the EU agreed  in the Protocol that this would be at ports in Northern Ireland for goods arriving from Britain which, by its own choice, is outside the EU Single Market for goods . It does not affect services, taxation  or the movement of people for which Northern Ireland remain fully in the UK.
From a practical point of view it is much easier to exercise controls on goods traffic  at a small number of ports,  than it would be on a 300 mile long land boundary, with 200 crossing points.
On the other hand, the idea of any kind of border control within the UK is difficult to accept ideologically, symbolically, or emotionally for those who have a strong belief in the sanctity of the UK union .
The fact that the UK freely agreed to it such controls in the Withdrawal Agreement, and the fact that many of those who complain about it voted for Brexit with their eyes open, does not remove that emotional, symbolic  and ideological difficulty.
WE NEED TO LOOK AT THE WIDER CANVASS OF RELATIONSHIPS
All who favour reconciliation between the two allegiances in Ireland, and all the participants in the negotiations, need to think creatively about how these people can be reassured.
We probably will need to look far outside the parameters of Brexit and trade, and think about how people express their various identities in other ways and might be assured that those identities are respected.
We need to return the broad canvass of thought that underlay the Good Friday Agreement of 1998 and previous attempts at resolving the conflict of allegiances on the island. To use a cliché, we need to think outside the box.
While others should seek to reassure Unionists, Unionists themselves need to do some thinking about how best to maintain the Union, if that is their goal.
This goal will not necessarily be achieved simply by asserting immutable principles, and demanding that others accept them, regardless of their feelings. Instead they need to be persuasive,
The best way for Unionists to preserve the Union would be for them to make Northern Ireland work, to make it work for everybody, to make it work politically, to make it work economically, to make it work socially.
That means making the Good Friday Agreement to its full potential (North / South and East/West).
It also means making the Protocol, with its privileged access to the EU not enjoyed by any other part of the UK, work for the creation of extra manufacturing jobs in Northern Ireland.
Compliments of John Burton.
The post Speech by John Bruton | Why is Brexit so hard to Finalize? first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Speech by Luis de Guindos, Vice-President of the ECB at the 24th Euro Finance Week | Frankfurt am Main, 15 November 2021 |
Good evening to you all. I am honoured to take part in the 24th Euro Finance Week. Since I joined the ECB in 2018, we have been gathering at this event every year to discuss the recent financial and economic developments in the euro area and beyond. As we are going to publish our Financial Stability Review in two days’ time, in my remarks today I will focus on the health of the euro area financial system. I will briefly sketch the current economic situation to highlight the key role of monetary policy in the recovery and its interplay with financial stability considerations, an important dimension we now explicitly pay attention to, in line with our new monetary policy strategy. I will give you an overview of our main financial stability concerns to stress the role of macroprudential policies as a first line of defence against a build up of vulnerabilities, and highlight the need for a careful mix of overall policy support.
Over the summer we saw the economic recovery from the pandemic take hold across euro area countries led by strong consumer spending and across sectors, as lockdown measures were lifted and vaccination rates rose. Global and domestic demand have spurred production, business investment and employment. And while employment has not returned to pre-pandemic levels and that gap is even greater for hours worked, unemployment rates have fallen and the recourse to job retention schemes has declined significantly.
The rebound in economic activity continued in the third quarter of the year, but despite the positive momentum, we started to feel the headwinds from global and domestic supply bottlenecks and energy price increases. Material, equipment and skilled labour shortages are limiting production capacities in some sectors, slowing down the exit from the crisis. Rising energy costs are also weighing on growth by limiting the purchasing power of households. At the same time, the current phase of higher inflation, reflecting in part the afore mentioned increase in energy prices and supply constraints, could last longer than expected only some months ago, as reflected in the European Commission’s projections released last week.
So far there is no evidence of second-round effects from higher inflation outcomes to wages and back to prices. But wage growth is expected to be somewhat higher in 2022 than in 2021. In the near term, supply bottlenecks and rising energy prices are the main risks to the pace of recovery and the inflation outlook. Supply-side shortages may dampen activity while pushing up prices, adding to the uncertainty in the outlook for growth and inflation.
As I have already indicated, in line with our new monetary policy strategy, financial stability considerations are now more explicitly taken into account in our monetary policy decisions. Our responsibility to contribute to the stability of the financial system has not changed. And price stability remains our primary objective. However, the revised strategy acknowledges that financial stability is a precondition for price stability and vice versa. Consequently, we will be conducting more direct assessments of potential monetary policy effects on financial stability risks, and of the impact of macroprudential policies on growth and inflation
Our monetary accommodation during the pandemic has ensured favourable financing conditions, which, alongside other policy measures, helped mitigate near-term tail risks to financial stability. However, as outlined in our Financial Stability Review to be published this week, when looking further ahead, financial stability vulnerabilities are rising on the back of elevated corporate and sovereign debt levels, stretched valuations in financial and real estate markets, and continued risk-taking by non-banks. We will therefore take both near- and medium-term financial stability risks into consideration when making monetary policy decisions. Nevertheless, macroprudential and microprudential policies remain the first line of defence against the build-up of financial stability risks for the banking system and individual banks, respectively.
Turning to financial stability risks more specifically, fiscal, monetary and prudential support measures have helped stabilise corporate liquidity and debt sustainability during the pandemic. The quick reactions of public authorities have laid the foundation for favourable financing conditions and improving profits in the non-financial corporate sector, keeping euro area insolvencies 15% below pre-pandemic levels. However, high corporate indebtedness and the continuing fragility of certain sectors that were more exposed to pandemic restrictions carry risks to corporate debt sustainability in these sectors.
Government intervention played a crucial role in shielding the financial system from large spillovers due to pandemic restrictions but has left sovereign debt at historically high levels, just below 100% of euro area GDP. Although governments were able to obtain financing at low interest rates and increased the maturity of their debt, a shock to financing costs and economic growth could make market participants reassess sovereign risk, particularly in higher-debt countries, and lead to economic and financial fragmentation across the euro area.
These corporate and sovereign vulnerabilities warrant a gradual phase-out of policy support. Many fiscal and other support measures, such as moratoria, tax deferrals, short-time working schemes and loan guarantees, have already expired or are set to expire towards the end of 2021. The remaining measures have become more targeted, focusing on solvency support for viable firms rather than broad-based liquidity support.
Waves of corporate loan defaults appear to have been avoided in the near term, and banks revised their risky loans back to a more benign credit risk assessment, releasing prudential provisions from 2020. In line with better-than-expected corporate solvency, financial markets continued to rebound from the pandemic, boosting investment banking revenues. Both factors contributed to growth in bank profitability of 5.2% in the second quarter of 2021, compared with 1.3% at the end of 2020. This improvement was, however, heterogenous across euro area banks, and the profitability levels remain structurally lower than in some other parts of the world.
Looking ahead, while euro banks have recently seen their returns recover to pre-pandemic levels, low cost efficiency, limited revenue diversification, overcapacity and compressed margins in a low interest rate environment look set to hamper profitability in the long term. Consolidation through mergers and acquisitions could be one potential avenue for helping the sector return to more sustainable levels of profitability. In terms of asset quality, the gradual withdrawal of government support may translate into a higher level of non-performing loans, reinforcing the need for effective solutions to this issue.
Euro area banks also face the need to act with increasing urgency to manage the implications of the green transition and to meet digital transformation needs. The first ECB climate stress test has shown that an early and gradual transition to green policies can limit the cost and mitigate the impact of physical risk. While digitalisation offers efficiency gains that enable banks to optimise their cost structure, it increases their vulnerability to cyber threats, which calls for particular caution when developing digital financial platforms.
In contrast to many other markets, the dynamics in residential real estate prices and mortgage lending have further accelerated during the pandemic in a number of countries. Moreover, this trend has been most pronounced in countries where valuations were already stretched prior to the pandemic.
Apart from structural shifts in housing preferences during the pandemic, these dynamics were also driven by the historically low financing conditions and search-for-yield behaviour. At the same time, the robust and rising growth in mortgage lending led to further increases in household indebtedness, accompanied by signs of easing lending standards in some countries. Together, these developments have fuelled the build-up of vulnerabilities in housing markets as growing signs of overvaluation leave them increasingly susceptible to corrections; this applies particularly to areas with more stretched valuations.
As the first line of defence, macroprudential policy is the instrument of choice to address the elevated and rising financial stability vulnerabilities we observe in some countries. To bolster system resilience and limit a further build-up of risks, some countries have already started tightening macroprudential policies or are planning to do so. At the same time, in an environment of great uncertainty, appropriate timing remains a challenge so as not to jeopardise the still fragile recovery.
Owing to transmission and implementation lags, now could be the time to consider starting to gradually implement country-specific macroprudential policies. Of course, as vulnerabilities differ substantially across euro area countries, this will have to be commensurate with the specific risks and stages of economic recovery.
Turning from banks to the non-bank financial sector, the economic recovery has also reduced credit risk for non-banks, which is converging to pre-pandemic levels. Medium-term risks have built up further, as non-banks have continued to increase their exposures to lower-rated corporate bond holdings, leaving them vulnerable to renewed corporate stress.
Low levels of liquidity and increasing duration exposure could cause valuation losses for the unhedged parts of investment funds’ portfolios in the event of an interest rate shock. High leverage in certain parts of the fund sector has the potential to further amplify market stress.
Given the increasing role played by non-banks in financing the real economy and their interconnectedness with the wider financial system, it is crucial for risks in the sector to be tackled from a macroprudential perspective.
Considerable progress has been made regarding the international policy agenda for money market funds in 2021. The Financial Stability Board proposals aim to increase the resilience of money market funds, for example by reducing liquidity mismatches, and further work on enhancing rules for open-ended investment funds is underway.
Conclusion
Let me conclude.
A strong, sustained and broad-based recovery is at the centre of our policy concerns. By ensuring favourable financing conditions, monetary policy continues to pave the way for the rebound and looks to fiscal policy to support its efforts in achieving this goal.
To prevent the materialisation of the medium-term risks that we have identified, it is essential to maintain the momentum of the recovery and avoid scenarios that could put our price stability objective in jeopardy.
Compliments of the European Central Bank.
The post ECB | Rising vulnerabilities: Recovery from the pandemic crisis – challenges for the financial sector first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Chair, honourable members,
Before going to the Trade and Technology Council itself, let me first zoom out and outline why the year 2021 has been a landmark year for transatlantic relations.
We have successfully pressed the reset button with the Biden administration.
After the grounding of the Airbus-Boeing dispute at the EU-U.S. Summit in June, we also agreed to hit the pause button on the steel and aluminium trade dispute.
Our agreement includes starting discussions on a new Global Arrangement on Sustainable Steel and Aluminium.
Of course, we remain attentive and active on a number of US policy developments that may affect EU interests.
Those could be the increase of US domestic content via the reinforcement of Buy American, or the use of tax incentives, for example for the purchase of electrical vehicles.
But overall, it is clear that our trade and investment partnership remains the global engine of prosperity.
Beyond resolving our trade disputes, we must create space to find new avenues of cooperation and deal with the challenges and opportunities of the future.
In this respect, the first meeting of the Trade & Technology Council at the end of September represented an important step in the right direction, as well as an important political signal:

We are ready to lead the way in setting the standards and rules for the technologies of the 21st century, putting our core values at the centre.
We are addressing environmental challenges and market opportunities for clean technology.
And we are ensuring more resilient and secure supply chains, in particular in semiconductors, pharmaceuticals, and critical materials for our economies.

The trade component of the TTC is of particular importance:

We have determined shared principles and areas for export control cooperation, especially on dual use technologies.
We also agreed to cooperate on best practices in investment screening, for example on risk analysis and risk mitigation in relation to sensitive technologies.
There will be a special focus on SMEs and on policies that can accelerate their uptake of digital technologies.
We will work together on Global Trade Challenges like non-market economic policies and practices. The protection of labour rights, such as combatting forced and child labour, and addressing trade-related aspects of climate and environment action will also be part of our work.
Finally, we will aim at avoiding unnecessary barriers to trade in new technologies, while respecting our regulatory autonomy.

We have thus set in motion a whole range of work strands that we will now pursue with vigour.
To ensure concrete progress we will meet regularly, at Principles level. The next meeting is scheduled for spring 2022 in the EU.
There is a strong willingness on both sides of the Atlantic to make our cooperation in the TTC a success.
We are counting on your support for this.
MEPs, but also national governments, are essential in raising awareness around the fact that the benefits we gain from  transatlantic cooperation will also require some compromises.
We are committed to providing the European Parliament with information on the work of the TTC.
And we are committed to a transparent and inclusive engagement with key stakeholders and civil society at large.
Stakeholder engagement figured predominantly also in the first TTC meeting.
Last month, the Commission also opened a one-stop-shop to collect continuous stakeholder input on a platform called “Futurium”.
I strongly encourage you to promote this point of contact among your constituencies and stakeholders.
We also encourage stakeholders on both sides of Atlantic to join forces and, wherever possible, work together to shape joint transatlantic positions.
Thank you, and now Executive Vice-President Vestager will provide you with more input on the technology side of the Trade and Technology Council.
Compliments of the European Commission.
The post Statement at European Parliament by Executive VP Dombrovskis on the outcome of the EU-US Trade and Technology Council first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.