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.

One of the many figures in a new report released today by the European Commission shows just how important an open trade policy is for European employment. The Trade and Jobs Report provides a host of statistics on European jobs connected to European trade.
The report provides data over time at both European and Member State level, and gives statistics by industry, skill level, gender etc. For example, it shows that over 38 million jobs in the EU are supported by EU exports, 11 million more than a decade ago. These jobs are on average 12% better paid than those of the economy as a whole. The increase in export-supported jobs follows an even stronger increase in EU exports: alongside a 75% increase in export-related jobs between 2000 and 2019, total exports increased by 130%. The data indicate clearly that more trade means more jobs, and the best way to increase this is through securing new opportunities through trade agreements and diligently enforcing them. Given that 93% of all EU exporters are small and medium-sized companies (SMEs), it is also vital to help them understand opportunities and terms offered by a comprehensive network of 45 trade agreements concluded by the EU.
Executive Vice-President and Commissioner for Trade, Valdis Dombrovskis, said: “These figures confirm that trade is a key driver for job growth in the EU, as shown by the astonishing 75% growth in export-related jobs in the last two decades. As economic recovery gathers pace, it is our priority to keep boosting exports and create markets for EU goods and services. This will support our companies – especially SMEs, which represent 93% of all EU exporters – to create jobs for people across the EU. The continued roll-out of our new EU trade strategy, with its strong emphasis on opening new opportunities and being assertive in implementing our trade agreements, will play a crucial role in reinforcing this trend.”
Trade creates and supports jobs all across the EU, and the numbers are increasing. The highest increases seen since 2000 have been in Bulgaria (+368%), Slovakia (+287%), Ireland (+202%), Slovenia (+184%) and Estonia (+173%). The report includes detailed factsheets about the results for every EU Member State.
The figures released today also highlight an important positive spillover effect within the EU from exports to the world. When EU exporters in one Member State do well, workers in other Member States also benefit. This is because firms providing goods and services along the supply chain also gain when their end-customer sells the final product abroad. To give an example, French exports to non-EU countries support around 658,000 jobs in other EU Member States, while Polish exports support 200,000 such jobs.
Moreover, EU exports to countries around the world support almost 24 million jobs outside the EU. These jobs have more than doubled since 2000. For instance, 1.5 million jobs in the United States, 2.2 million in India and 530,000 in Turkey are supported by the production of goods and services in those counties that are incorporated into EU exports through global supply chains.
Finally, the study also looks into the gender pattern, concluding that there are more than 14 million women in jobs supported by trade in the EU.
Background
The European Commission identified trade policy as a core component of the European Union’s 2020 Strategy. Given the fast-changing global economic landscape it is more important than ever to fully understand how trade flows affect employment. This can only be done by gathering comprehensive, reliable and comparable information and analysis to support evidence-based policymaking.
Guided by that objective, the European Commission’s Joint Research Centre (JRC) and the Commission’s Directorate-General for Trade have collaborated to produce a publication that aims to be a valuable tool for trade policymakers and researchers.
Following the first edition from 2015, the report features a series of indicators to illustrate in detail the relationship between trade and employment for the EU as a whole and for each EU Member State using the World Input-Output Database released in 2016 as the main data source. This information has been complemented with data on employment by age, skill and gender. All the indicators relate to the EU exports to the world to reflect the scope of EU trade policymaking.
Although this report and analysis focus on exports for methodological reasons, it is important to note that imports are vital for the EU economy as well. Indeed, they are also essential for our domestic production and exports; two-thirds of the EU’s imports consist of raw materials, parts and components, many of which find their way into the EU’s exported goods and services. Access to the best inputs is a critical factor for EU production and competitiveness in today’s world.
Compliments of the European Commission.
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The Council of the European Union:

NOTES that in 2020, the framework for the annual coordination of economic, fiscal and employment policies across the European Union known as the European Semester was temporarily adjusted due to the COVID-19 pandemic towards addressing the negative health and socio-economic consequences. New economic circumstances and the European response to the COVID-19 crisis caused a temporary adjustment of the European Semester also in 2021 with policy guidance focusing solely on fiscal policies, as the attention was put on the preparation, adoption and implementation of the Recovery and Resilience Plans.
WELCOMES that the adjustment of the European Semester in 2020 and 2021 including on fiscal guidance contributed to the coordination of policy actions to effectively address the pandemic, sustain the economy and support a sustainable recovery. AGREES that also during this exceptional period, the European Semester proved to be a credible and flexible framework for the EU economic, fiscal and employment policy coordination.
UNDERLINES that the European Semester and the Recovery and Resilience Facility should continue, without duplications, to tackle the crisis’ impact and to contribute to strengthening economic resilience and sustainable, dynamic and inclusive long-term growth, thus enhancing convergence among the EU economies. STRESSES that the European Semester should continue to ensure comprehensive surveillance of fiscal, financial, economic and employment policies, and it should closely monitor remaining and evolving risks and challenges, detect policy gaps, and ensure their follow-up. The European Semester should pay particular attention to the green and digital transition, which must be a key driver in the recovery; it should promote sustainable economic growth, well-functioning labour markets and social inclusion.
CALLS for a swift return to the core elements of the European Semester in the 2022 cycle, especially reinstating country reports and country-specific recommendations. UNDERLINES the need to take into account the ongoing recovery process, the related uncertainties and the implementation of the Recovery and Resilience Facility. STRESSES that country-specific recommendations should focus on a comprehensive range of challenges concerning economic, fiscal and employment policies, including those with large spillovers.
STRESSES the need for ensuring the complementarity and exploring synergies between the European Semester and the implementation of the Recovery and Resilience Facility, including streamlining of reporting requirements, wherever possible, to avoid excessive administrative burden and overlaps. LOOKS FORWARD to the Commission’s early guidance on national reporting and monitoring requirements, especially regarding the minimum requirements for the annual national reform programmes.
UNDERLINES the importance of an open dialogue with the Commission services on national economic, fiscal and employment policies throughout the European Semester cycle. Broad-based mutual understanding of national policy needs can increase national ownership in the European Semester and contribute to the improved implementation of relevant policy reforms. HIGHLIGHTS that, together with national ownership, transparency of the process must be ensured.
RECALLS that multilateral surveillance and the related peer reviews remain central in the EU economic policy coordination under the European Semester. UNDERLINES that high-quality Commission analysis and policy recommendations are key for efficient multilateral reviews and subsequent national policy action.
ACKNOWLEDGES the expectation of the deactivation of the general escape clause of the Stability and Growth Pact as of 2023. STRESSES the need to safeguard the economic recovery, also taking into account the uncertainty of the economic outlook and the asymmetric impacts of this crisis, while ensuring that fiscal policy is agile and adjusted to circumstances, and fiscal sustainability preserved in the medium term.
STRESSES the importance of continued monitoring of the implementation of country-specific recommendations under the European Semester and the communication of the annual assessment of the implementation progress. Regular stocktaking at the EU level and related peer reviews remain crucial for promoting reform implementation. NOTES that it may require several years to effectively implement major structural reforms, and therefore RECALLS the possible benefits of issuing policy recommendations on structural economic policies less frequently than annually, combined with an annual assessment.
WELCOMES the continued implementation of the Macroeconomic Imbalance Procedure also during the COVID-19 pandemic and in the context of the related heightened economic uncertainties, including the Commission’s 2021 Alert Mechanism Report and in-depth reviews. CALLS for close monitoring of the evolution of existing imbalances and remaining vigilant for detecting and addressing also new imbalances. RECALLS that swift and effective implementation of the Recovery and Resilience Facility has a potential for contributing to the correction and prevention of imbalances.
PLANS to have thorough discussions on the economic governance review which was relaunched by the Commission on 19 October, and its potential implications on the operation of the European Semester, especially as regards the Stability and Growth Pact and the Macroeconomic Imbalance Procedure

Compliments of the Council of the European Union.
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Economic governance and recovery
Ministers exchanged views on the EU economy following the COVID-19 pandemic, and on the implications of recent developments for economic governance. They discussed the future of the EU’s economic governance framework and gave their initial views on the way forward. This topic will be discussed further and ministers will continue their consultations in order to reach a broad consensus in due course.

Our efforts on boosting the economic recovery are taking effect. The EU’s response to the pandemic is showing good results. Now it is time to reflect on the future of our economic governance. Today, we exchanged initial views on the future of fiscal policy. It is necessary to continue discussions and try and find common ground.

Andrej Šircelj, Slovenia’s Minister for Finance

They also discussed the current situation regarding the financing of Next Generation EU, a temporary recovery package to help boost EU economies in the wake of COVID-19, and the implementation of the Recovery and Resilience Facility, the centrepiece of Next Generation EU which supports reforms and investments in EU member states through loans and grants.

A recovery plan for Europe (background information)

Ministers approved conclusions on the future of the European Semester in relation to the Recovery and Resilience Facility. The conclusions call for the return of the essential elements of the European Semester in the 2022 cycle, in particular country reports and country-specific recommendations.

The future of the European Semester in the context of the Recovery and Resilience Facility (Council conclusions, 9 November 2021)
European Semester (background information)

Energy prices and inflation
Ministers discussed the recent steep increase in energy and consumer prices and the associated policy implications. They exchanged views on the Commission’s toolbox of measures that the EU and its member states can use and are already using to address the immediate impact of energy price increases.

Tackling rising energy prices: a toolbox for action and support (European Commission)

Financial services
Economy and finance ministers held a policy debate on a set of legislative proposals mostly aimed at implementing the outstanding Basel III agreements, i.e. reform measures intended to help reinforce the resilience of the EU banking sector and strengthen its supervision and risk management. The exchange of views was preceded by a presentation of this package of proposals by the Commission.

Banking package (European Commission)

The Slovenian presidency also provided information on the current financial services legislative proposals.
International meetings
The Slovenian presidency and the European Commission provided information and follow-up on the meetings of G20 finance ministers and central bank governors and on the IMF annual meetings of 13-14 October 2021.
Any other business
The European Court of Auditors presented its annual report on the implementation of the EU budget for the 2020 financial year.

ECA’s annual report on the implementation of the EU budget for the 2020 financial year

Compliments of the European Council.
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Today, the European Commission approved the eighth contract with a pharmaceutical company with a view to purchasing its potential vaccine against COVID-19. The contract with Valneva provides for the possibility for all EU Member States to purchase almost 27 million doses in 2022. It also includes the possibility to adapt the vaccine to new variant strains, and for Member States to make a further order of up to 33 million additional vaccines in 2023.
The contract with Valneva comes in addition to an already secured broad portfolio of vaccines to be produced in Europe, including the contracts already signed with AstraZeneca, Sanofi-GSK, Janssen Pharmaceutica NV, BioNtech-Pfizer, CureVac, Moderna, and Novavax. This diversified vaccines portfolio will ensure Europe is well prepared for vaccination, once the vaccines have been proven to be safe and effective.  Member States could decide to donate the vaccine to lower and middle-income countries or to re-direct it to other European countries.
President of the European Commission, Ursula von der Leyen, said: “The contract allows for the vaccine to be adapted to new variants. Our broad portfolio will help us to fight COVID and its variants in Europe and beyond. The pandemic is not over. Everyone who can should get vaccinated.”
Stella Kyriakides, Commissioner for Health and Food Safety, said: “Our EU Vaccines Strategy continues to deliver, at a time when COVID-19 case numbers are unfortunately rising again across the EU. The Valneva vaccine adds another option to our broad portfolio, once it is proven to be safe and effective by the European Medicines Agency. We continue to support Member States in their vaccination efforts, and the message remains the same: trust the science, and vaccinate, vaccinate, vaccinate.”
Valneva is a European biotechnology company developing an inactivated virus vaccine, made of the live virus through chemical inactivation. This is a traditional vaccine technology, used for 60-70 years, with established methods and high level of safety. Most of the flu vaccines and many childhood vaccines use this technology. This is currently the only inactivated vaccine candidate in clinical trials against COVID-19 in Europe.
The Commission, with the support of EU Member States, has taken a decision to support this vaccine based on a sound scientific assessment, the technology used, the company’s experience in vaccine development and its production capacity to supply all EU Member States.
Background
The European Commission presented on 17 June 2020 a European Strategy to accelerate the development, manufacturing and deployment of effective and safe vaccines against COVID-19. In return for the right to buy a specified number of vaccine doses in a given timeframe, the Commission finances part of the upfront costs faced by vaccines producers in the form of Advance Purchase Agreements.
In view of the current and new escape SARS-CoV-2 variants, the Commission and the Member States are negotiating new agreements with companies already in the EU vaccine portfolio that would allow to purchase rapidly adapted vaccines in sufficient quantities to reinforce and prolong immunity.
In order to purchase the new vaccines, Member States may use the REACT-EU package, one of the largest programmes under the new instrument Next Generation EU that continues and extends the crisis response and crisis repair measures.
Compliments of the European Commission.
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