Introductory statement by Christine Lagarde, President of the ECB, at the Hearing of the Committee on Economic and Monetary Affairs of the European Parliament (by videoconference) | Frankfurt am Main, 27 September 2021 |
Madam Chair,
Honourable members of the Economic and Monetary Affairs Committee,
Ladies and gentlemen,
It is a pleasure to be with you again today for the third regular hearing of the year.
In my confirmatory hearing before this Committee back in September 2019, I set out a goal: to ensure that the ECB engaged in a reflection on whether its monetary policy framework was sufficiently robust to meet future challenges.[1]
With the successful conclusion of our strategy review in July,[2] I believe we have achieved that goal. The review took the ECB’s mandate and primary objective of price stability, which is conferred by the Treaty, as a given. At the same time, we thoroughly looked at key aspects of citizens’ lives. We have recommended a roadmap to include the costs of owner-occupied housing in the Harmonised Index of Consumer Prices to better represent the inflation rate that is relevant for households. We have also developed a climate-related action plan to address the profound implications of climate change for price stability. Finally, we have modernised our external communication to make it more understandable to all citizens.
The review has been an 18-month-long journey involving an immense collective effort by staff across the Eurosystem, and I am particularly happy that this work has now been published in 18 Occasional Papers which were made available to the public on our website last week.[3] I would also like to reiterate my gratitude to this Committee for the important input it provided during the strategy review process.
In my remarks today, I will outline some of the key elements of our new strategy and provide an update on the outlook for the economy and for inflation, together with some reflections on our current monetary policy stance. Then, at the explicit request of this Committee, I will discuss the topic of financial dominance.
The ECB’s new monetary policy strategy in practice
Starting with our price stability objective, the new strategy incorporates two key innovations.
First, we have adopted what I would call a simple and clear symmetric inflation target of two per cent over the medium term. It is simple, easy to communicate and clear because it gives a well-defined yardstick to help us steer our monetary policy. And it is symmetric because both negative and positive deviations of inflation from the target are equally undesirable. We are convinced that this new formulation will avoid misperceptions about our reaction function when medium-term inflation is above or below the target and that it will better anchor inflation expectations.
The second important change is the recognition that, to maintain symmetry, the Governing Council needs to take into account the implications of the effective lower bound on nominal interest rates. In proximity to the lower bound, an especially forceful or persistent monetary policy response will be required.
In July we also revised our forward guidance on interest rates to bring it into line with the new strategic framework. The new formulation stipulates that the Governing Council will not consider raising rates unless three conditions have been met: first, we need to see inflation reaching two per cent well ahead of the end of the projection horizon; second, after convergence, inflation should be seen to be stabilising durably at the target through the end of the projection horizon; and third, realised progress in underlying inflation should, in our judgement, be sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term. Achieving these conditions may imply a transitory period in which inflation is moderately above our target.
Against the background of our new strategy, let me now focus on recent economic developments. In summary, it is evident that the economic recovery in the euro area is increasingly advanced. This is partly due to successful vaccination campaigns across Europe, which have prompted the easing of restrictions. This, in turn, has supported the rebound in economic activity, particularly in the services sector, which was hardest hit by the containment measures.
Consequently, the euro area economy rebounded by 2.2 per cent in the second quarter of the year, which was more than had been anticipated. We expect continued strong growth in the second half of 2021, enabling euro area output to exceed its pre-pandemic level by the end of the year. This positive short-term outlook is reflected in the September ECB staff projections, which foresee annual real GDP growth at 5.0 per cent in 2021, 4.6 per cent in 2022 and 2.1 per cent in 2023. The growth outlook continues to be uncertain and heavily dependent on the evolution of the pandemic, but risks to growth are broadly balanced.
Turning to inflation developments, which you have selected as a topic for this hearing, euro area inflation rose to 3.0 per cent in August and we expect it to rise further this autumn.
Nonetheless, we continue to view this upswing as largely temporary. A range of factors are currently pushing up inflation. Chief among them are the strong increase in oil prices since around the middle of last year, the reversal of the temporary VAT reduction in Germany, and cost pressures arising from temporary shortages of materials and equipment. The impact of these factors should dissipate in the course of next year. Although underlying price pressures have edged up over the summer, this is consistent with the opening up of the economy, which remains some distance away from operating at full capacity. As a result, the September ECB staff projections foresee annual inflation at 2.2 per cent in 2021 then moderating to 1.7 per cent in 2022 and 1.5 per cent in 2023.
While inflation could prove weaker than foreseen if economic activity were to be affected by a renewed tightening of restrictions, there are some factors that could lead to stronger price pressures than are currently expected. For example, if the temporary shortages of materials and equipment constrain production more persistently than we currently foresee, they could feed through more strongly along the pricing chain. Persistently high inflation could also result in higher than anticipated wage demands. But we are seeing limited signs of this risk so far, which means that our baseline scenario continues to foresee inflation remaining below our target over the medium term.
Favourable financing conditions are essential for the economy to continue its recovery and for inflation to converge durably to our target. We saw market interest rates ease over the summer but recently they have reversed this decline somewhat. However, bank lending conditions have remained very accommodative. Overall, this has left financing conditions for the economy remaining very favourable.
Thus, following a joint assessment of the inflation outlook and financing conditions, the Governing Council decided earlier this month to set a moderately slower pace of net asset purchases under the pandemic emergency purchase programme. We remain entirely committed to preserving these favourable financing conditions, which are necessary for a robust recovery that will restore inflation to its pre-pandemic level.
Financial stability considerations in our new monetary policy strategy
I will now turn to the second topic which you have selected for this hearing, namely the risk of financial dominance.
Financial dominance occurs when central banks delay the removal of monetary policy accommodation for longer than appropriate, in order to avoid market turmoil. Let me be clear on this. The ECB has a very clear primary mandate which is stipulated in the Treaty: price stability. As stipulated by the Treaty, any other consideration should be subordinate and without prejudice to delivering on our primary mandate.
Regarding the stability of the financial sector, our new strategy explicitly considers the interactions of price stability and financial stability, reflecting our belief that each is a precondition for the other.
To start with, the strategy recognises that macroprudential policy, along with microprudential supervision, is the first line of defence against the build-up of financial imbalances. Indeed, effective macroprudential policy can address such risks more directly in a targeted fashion, and thereby reduce the burden that would be placed on monetary policy.
Nonetheless, given that the macroprudential framework in the euro area is incomplete, and given the interaction between macroprudential and monetary policy, the Governing Council monitors and analyses financial stability risks and their potential to jeopardise price stability over the long haul. Indeed, a careful analysis of the potential side effects of our monetary policy for the health and stability of financial intermediaries is an integral part of the proportionality assessment that we regularly conduct to test whether the policy measures in place remain appropriate.
Let me give you a concrete example of how we consider the linkages between financial stability and price stability. Household mortgages have been excluded from the pool of loans considered eligible for use as collateral under the targeted longer-term refinancing operations (TLTROs). These operations allow us to support bank lending – a key condition in the current circumstances for a durable return of inflation to the target – while containing the risk that credit extension might fuel unsustainable house price increases.
In synthesis, a systematically proportionate response to shocks is a precondition for minimising financial stability risks and, as a result, threats of financial dominance. At the same time, a coordinated macroprudential policy response across the euro area remains vital to strengthen the impact of policy actions and to support monetary policy.
Conclusion
Let me conclude. Our new strategy addresses the challenges that have emerged since the ECB announced the outcome of its previous strategy review in 2003, including the decline in the equilibrium real interest rate, the expectation that this rate will remain low and the deflationary bias induced by the effective lower bound.
And it also responds to other structural changes in the economy – an important one being climate change, as this Parliament has continuously reminded us in its Resolutions on the ECB Annual Reports. The Governing Council agreed on the need to take climate change risks into account when designing and implementing our monetary policy. That will help us make better decisions. The detailed action plan sets out an ambitious timeline and outlines a wide range of actions, encompassing many areas of the ECB’s activity, and ultimately aims to consistently integrate climate change considerations in all aspects of the ECB’s monetary policy.[4]
Moreover, to further enhance our transparency and ensure that we are aware of citizens’ expectations and concerns in relation to our policies, we have modernised our communication policy and we will make outreach events a structural feature of our interaction with the public. But our efforts to ensure that we are accountable to European citizens do not stop there. This Parliament will continue to be our main interlocutor and your role in making sure that the people’s voices are heard by the ECB and that the ECB’s voice is heard by the people remains crucial to foster understanding of and trust in our policies.
Finally, two years after my first appearance before this Committee, I remain fully convinced of the need for an “open mind” to ensure that the ECB keeps delivering on its mandate in rapidly changing circumstances. We therefore intend to assess the appropriateness of our monetary policy strategy periodically, with the next assessment expected in 2025.
Thank you for your attention. I now stand ready to take your questions.
Compliments of the European Central Bank.
The post ECB Speech | Hearing of the Committee on Economic and Monetary Affairs of the European Parliament first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today launches a consultation on proposals for improvements to the MiFID II framework on best execution reports. These proposals aim at ensuring effective and consistent regulation and supervision and enhancing investor protection.

ESMA’s proposals include technical changes to:

 the reporting obligations for execution venues:

aimed at simplifying the reporting requirements by reducing the granularity and volume of data to be reported; and
moving to a set of seven indicators aimed at disclosing meaningful information to help firms to assess venues’ execution quality; and

the reporting requirements for firms: focusing mainly on clarifying the requirements for firms that transmit client orders or decisions to deal to third parties for execution.

In addition, it proposes amendments to the relevant provisions of the MiFID II legislative framework to enable these technical changes to come into effect in the future.
Stakeholders are invited to provide their responses by 23 December 2021.
Next Steps
Since ESMA’s technical proposals can only be implemented after the relevant provisions of MiFID II have been amended, the outcome of this consultation will not lead to any immediate change of the existing RTSs 27 and 28 which currently regulate best execution reporting by execution venues and investment firms.
However, ESMA will consider the input received in supporting the European Commission in its assessment of the adequacy of the best execution reporting obligations, and any subsequent technical work to shape a well-functioning reporting regime.
Compliments of ESMA.

The post ESMA consults on proposals for a review of the MiFID II best execution reporting regime first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

At the UN High-Level Dialogue on Energy this week in New York, Executive Vice-President for the European Green Deal, Frans Timmermans and Commissioner for Energy, Kadri Simson presented three Energy Compacts, in partnership with the International Energy Agency and the International Renewable Energy Agency. In their roles as Energy Access Champion and Just Transition Champion in this UN process respectively, the Executive Vice-President and the Commissioner highlighted the EU’s willingness to lead the global efforts to reach universal energy access by 2030 and accelerate the clean energy transition, and showed concretely how the European Green Deal plays a role on the global stage.
Executive Vice-President Frans Timmermans, said: “Clean energy is more affordable now than ever, so the time is ripe to break the global dependence on fossil fuels. Recovery from the pandemic gives us an opportunity to transition faster and to build new energy systems based on renewables. It is important that we address these issues at this moment of recovery and cooperate to accelerate the global energy transition.”
Commissioner for Energy, Kadri Simson, said: “The EU is supporting the global dialogue on just transition based on our own experience in moving away from coal. We are inviting other donors, International Financial institutions and investors to take these steps with us, to turn roadmaps and strategies into projects which bring clean energy and sustainable jobs.”
The three UN Compacts which the Commission announced will contribute to mobilising the investments necessary to reach universal energy access and to accelerate the clean energy transition around the world.

Firstly, a new project with the International Energy Agency (IEA) will prepare zero emission energy roadmaps for countries dependent on coal. The roadmaps will propose inclusive pathways for energy system decarbonisation that ensure a just, socially fair transition that leaves nobody behind, while ensuring security of energy supply and growing energy access.
Secondly, we will cooperate with the International Renewable Energy Agency (IRENA) to prepare Regional Energy Transition Outlooks for Africa, Latin America and the Caribbean and Europe. They will provide a thorough analysis of the regions’ potential and options in terms of renewable energy, energy efficiency, infrastructure, energy access and cross-border cooperation, as well as an assessment of investment needs and socio-economic impact. They will include concrete policy recommendations to achieve the Sustainable Development Goal on energy, in line with the 1.5 degree Paris objective.
Thirdly, we will work with Denmark, Germany, IRENA and other partners on a Green Hydrogen Compact Catalogue. This will be designed to give a boost to green hydrogen worldwide, including a commitment to cooperate on renewable hydrogen development with the African Union in the framework of the Africa-Europe Green Energy Initiative.

The three Compacts are strongly linked to EU’s climate and energy priorities, in particular universal energy access, just transition, and the promotion of renewable energy, including green hydrogen. The Compacts will contribute to achieving the global clean energy transition and complement the EU’s commitments on climate finance.
The roadmaps and regional energy transition outlooks to be developed by the IEA and IRENA with targeted countries and regions will provide opportunities for guiding EU’s further energy policy orientations and investment cooperation. The roadmaps and outlooks will also support the Africa-EU Green Energy Initiative, to be launched next year.
Background
The UN High-Level Dialogue on Energy, taking place from 22 to 24 September 2021 (virtual), is the first UN gathering on energy since 1981. It aims at accelerating the achievement of Sustainable Development Goal 7 in support of the Decade of Action ahead of COP26. The main outcomes of the dialogue will include a global roadmap based on the recommendations of the Working Groups to achieve universal global access by 2030 and net zero emissions by 2050, and a series of “Energy Compacts” that present multi-stakeholder partnerships and voluntary commitments from Member States and non-state actors. The High-Level Dialogue is structured around five themes, supported by global champions, including EVP Timmermans (energy access) and Commissioner Simson (enabling the SDGs through inclusive and just energy transitions).
On the first day of the High-Level Dialogue, Executive Vice-President Timmermans delivered a speech during the panel on “Energy as a golden thread: a means to deliver on domestic and international priorities and goals”. Today, 24 September, he also participates in the leadership dialogue “Accelerating action to achieve universal energy access and net zero emissions.”
On 22 September, Commissioner Simson intervened with a speech at the session “Knowledge into Action: Advancing a just and inclusive energy transition that also addresses achieving universal energy access.”
In both keynote interventions, they outlined the European Green Deal ambition to make Europe the first climate-neutral continent by 2050 and to achieve a 55% reduction in greenhouse gas emissions emissions in the EU by 2030, presented in an ambitious package of legislative proposals on 14 July 2021.
Compliments of the European Commission.
The post Energy Transition: EU Commission announces three Energy Compacts at UN High-Level Dialogue in New York first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, at the 8th Conference on the Banking Union, Goethe University, Frankfurt am Main |

Many thanks for your kind introduction and for having me here today at this 8th Conference on the Banking Union. I am especially happy to be here, for this is the first time since I joined the European Central Bank last December that I am joining in a conference on site. It shows that we are indeed making progress in moving closer towards a world after the pandemic, which is the topic of this session of the conference. That being said, we are not there yet, and we are all certainly mindful of the many risks to global public health that currently still remain. This is also the first speech that I am making in a more traditional conference setting since moving to Frankfurt. And I am proud and humbled to deliver it in the university named after Frankfurt’s most renowned son and standing alongside the many past board members of the European Central Bank who have visited this house of Goethe over the years.
When preparing this address, I went back as far as April 1999 when, for the first time, a member of the ECB’s Executive Board spoke at Goethe University. The board member was Tommaso Padoa-Schioppa, and he was delivering the address on the occasion of his being appointed honorary professor of the University ‒ a position he held until his passing in late 2010. The ECB had just been founded, and the Governing Council had adopted the institution’s first monetary policy strategy. At Goethe University, Professor Padoa-Schioppa spoke of “new challenges for old missions”, referring to a number of daunting developments that the newly born central bank of the euro area would be facing.[1] In my address today, I will not dwell on the challenges that Professor Padoa-Schioppa identified back in 1999. They were certainly topical and some continue to carry relevance even today.[2] What I want to emphasise here is the notion he conveyed that central bankers – and I would add supervisors – should always be mindful of the circumstances in which they will pursue their tasks and fulfil their responsibilities in the years to come. This message resonates strongly in the activities through which the ECB delivers on its mandate, in particular with respect to the key challenge that we are facing today and that will be the key topic of my address: the ongoing climate and environmental crisis.
The challenge of climate change and environmental degradation
While many of our societies have been gradually reopening over the past months, the summer still sent us stark reminders of another ongoing crisis. And, just like the pandemic, it is a global one. Unfortunately, unlike the pandemic, we are not even close to start thinking about a world after the climate and environmental crisis. We have barely seen the beginning. We have seen major flooding in north-western Europe, the north-eastern United States and China, as well as extreme heatwaves and wildfires in North America and southern and eastern Europe. Each of these events is yet another tragic confirmation that the climate and environmental crisis is already upon us. Confirmation that the associated consequences are materialising to an increasing extent. Confirmation that significant efforts will be required to achieve an effective transition to a net zero global economy in a window of time that is all too rapidly narrowing.
The recent analysis of the Intergovernmental Panel on Climate Change (IPCC), which was also published this summer, adds to the existing overwhelming evidence that climate change is real and caused by humans.[3] The report’s findings and conclusions emphasise the need for urgent action. It concludes that unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, limiting global warming to close to 1.5 or even 2 degrees Celsius will be beyond reach. Note that the report also finds that, even when keeping within the 2 degrees bound, the incidence of extreme weather events is already set to double or triple compared with now. If we manage to limit global warming to only 1.5 degrees Celsius, a very big if, the incidence of such events would increase less dramatically, but still by a massive 50% to 75%. A report by the UN’s climate agency released last week suggests that, based on current commitments, the global economy is on a path to a warming not of 1.5 or 2, but of a whopping 2.7 degrees Celsius.[4] This is clearly too high. This clearly shows more needs to be done. Governments clearly need to step up their efforts to keep the impact of the climate crisis within the bounds of what is manageable.
The IPCC report is expected to play a fundamental role at the 26th UN Climate Change Conference of the Parties (COP26) that is taking place in Glasgow in November this year, bringing countries together to update their plans for reducing emissions. And the challenge goes beyond our climate. As I have advocated on various occasions over the years and as was stated also by the ECB’s President, Christine Lagarde, at a recent conference: “Climate and biodiversity are two sides of the same coin; it is vital that we look at them together”.[5]
The climate and environmental challenge and the missions of central banks and supervisors
To understand why and how all this is of importance for central banks and supervisors like the ECB, it is useful to imagine a frame for thinking about the economic consequences of the climate and environmental crisis. Typically, when thinking about climate change and environmental degradation we distinguish between physical risks and transition risks.
Physical risks refer to all risks resulting from the changing climate, that is, from more frequent extreme weather events and gradual changes in climate to environmental degradation, such as air, water and land pollution, water stress, biodiversity loss and deforestation. For example, extreme weather events – which have been steadily increasing over recent decades – can harm borrowers’ ability to repay their debts and thus make the loan portfolios of banks much riskier. These risks can be further heightened if extreme weather events also depreciate the value of the assets used as collateral in those loans.
But there are also risks associated with a transition to a low-carbon and more environmentally sustainable economy. This adjustment would be triggered by legislation that will be adopted, such as carbon-pricing ‒ where Germany has been leading compared with other European countries ‒ or banning of carbon-intensive activities. In addition, the transition is supported by shifting consumer preferences towards goods and services that are more sustainable. These changes will have a significant impact on climate-sensitive economic sectors and the broader economy and financial system, in particular in the case of an abrupt transition to a low-carbon economy.
Whatever combination of physical and transition risks will materialise, the macroeconomic consequences and financial risks of the climate and environmental crisis will be profound. This is confirmed by an ECB Occasional Paper that was published earlier this week in the context of our monetary policy strategy review.[6] These consequences place the need to act squarely within the traditional mandates of central banks and supervisors. Sharing this insight, many central banks and supervisors have joined forces in the Network for Greening the Financial System (NFGS). The NGFS is a coalition of the willing that brings together 95 central banks and supervisors from all continents. It is a network that I have been proud to chair since its foundation by – at that time – eight central banks and supervisors in late 2017. The network is committed to developing climate and environmental risk management in the financial sector, as well as to mobilising mainstream finance to support the transition to a sustainable economy. It pushes frontiers and ensures that best practices are shared in and implemented by our policy community, covering all the tasks and responsibilities of central banks and supervisors.
ECB activities to address the climate and environmental crisis
In this context, the ECB has been systematically and consistently integrating climate and environmental considerations into the activities through which it carries out its tasks and fulfils its responsibilities. Or ‒ to be more specific ‒ in monetary policy, banking supervision, our non-monetary policy-related balance sheet management and in all our operational duties. Let me outline some of the main steps that we have set and are currently taking.
In November of last year, ECB Banking Supervision published a guide on climate-related and environmental risks.[7] In that guide, we make clear that we expect banks to take a comprehensive, strategic and forward-looking approach to disclosing and managing all climate-related and environmental risks – which also include, for example, the risks of biodiversity loss and pollution. We then asked banks to conduct a self-assessment relating to the expectations we set out in that guide and to draw up action plans for how they intend to comply with them. This supervisory exercise has begun with, but will not be limited to, taking stock of banks’ self-assessments.
We are now in the process of benchmarking the banks’ self-assessments and action plans and will then challenge them as part of our ongoing supervision. The preliminary results show that no bank has the full picture on climate risks yet. None of the banks under our supervision meet all the expectations. But the good news is that many pieces of the climate and environmental risk puzzle can already be found scattered across the banking union. Almost all banks have developed implementation plans and many have started to progressively improve their practices. The progress that we have identified can be observed in banks from different countries, with different business models and different asset volumes. This confirms that what we are asking of the banks can be done. The ECB will see to it that every bank is making expeditious progress in embedding climate and environmental risks into their institution by following up with supervisory requirements where needed. This supervisory exercise will also offer banks a strong incentive to bolster their ability to identify and quantify their exposures to climate and environmental risks and their tolerance of these risks. To give you a sense of the magnitude of this exercise, we are reviewing plans covering €24 trillion worth of banking assets.
Next year, we will conduct a full supervisory review of banks’ practices for incorporating climate risks into their risk frameworks, as we gradually roll out a dedicated Supervisory Review and Evaluation Process (SREP) methodology that will eventually influence banks’ Pillar 2 capital requirements. In addition, ECB Banking Supervision will conduct a supervisory stress test with a focus on climate-related risks for which the methodology will soon be shared with the banks under our supervision. Let me reiterate here that the reflection of the outcome of our supervisory exercises next year will be of a qualitative nature. A possible impact – if any – will be indirect, via the SREP scores on Pillar 2 requirements and no bank-specific results will be published. But let me stress that it is unlikely that in the years to come things will stop here. This is not the endgame. In an analytical report published earlier this year by the Basel Committee on Banking Supervision it was concluded that climate-related risks can be captured in risk categories that are already used by financial institutions, for example credit risk, market risk, liquidity risk and operational risk.[8] The ECB treating climate-related and environmental risks as any other risk, with a reflection in all relevant supervisory requirements, would be in line with this conclusion. Gradually we will start doing just that.
On the intersection between the macro and micro levels, yesterday we published the outcome of an ECB economy-wide stress test.[9] Unlike the stress test that will be conducted next year, this was a top-down exercise relying on data, assumptions and models developed by ECB staff. It was a granular exercise relying on counterparty-level climate and financial information collected for millions of companies to which euro area banks are exposed via loans and securities holdings. To the best of our knowledge, this data collection is the most comprehensive set of backward and forward-looking climate and financial information available to a central bank.
The results of the analysis show that the short-term costs of a green transition pale in comparison to the costs of unfettered climate change in the medium to long-term. The costs of a transition are always more than compensated by long-term benefits in terms of investing in sustainable technologies. By contrast, if policies on transitioning towards a greener economy are not introduced, physical risks become increasingly higher over time. It is thus of the utmost importance to transition early and gradually to mitigate the costs of both the green transition and the future impact of natural disasters. The results of this exercise show that the impacts of climate-related and environmental risks on average will increase moderately until 2050 if climate change is not mitigated, and they are concentrated in some geographical areas. The impact on banks’ expected losses is shown to be mostly driven by physical risk and is potentially severe over the next 30 years.
Acknowledging the climate-related and environmental risks for our own balance sheet, in February 2021 the Eurosystem – encompassing the ECB and all the national central banks of the euro area – announced a common stance for applying climate change-related sustainable and responsible investment principles in their asset portfolios not related to monetary policy.[10] The common stance prepares the ground for the measurement of greenhouse gas emissions and other sustainable and responsible investment-related metrics of these portfolios. With this, we aim to start making annual climate-related disclosures on our portfolios of this type within the next two years.
Finally, in July 2021 the Governing Council of the ECB concluded the 18-month process – delayed by around six months because of the pandemic – in which it reviewed its monetary policy strategy.[11] The outcome of the strategy review included an action plan to incorporate systematically environmental sustainability considerations in the ECB’s monetary policy. The Governing Council acknowledged that climate change has profound implications for its mandate to maintain price stability in the euro area through its impact on the economy and the financial system. Accordingly, the Governing Council has committed to an ambitious climate-related action plan. In addition to the comprehensive incorporation of climate factors in its monetary policy assessments, the ECB will adapt the design of its monetary policy operational framework in relation to disclosures, risk assessment, corporate sector asset purchases and the collateral framework.
As a concrete follow-up, the ECB will accelerate its work on new models that enable us to analyse and monitor the implications of climate change and transition policies on the economy, the financial system and the transmission of our monetary policy to households and firms. With regard to our monetary policy instruments, we will introduce disclosure requirements as an eligibility criterion or as a basis for differentiated treatment for collateral and asset purchases. We will consider climate risk in our valuation and risk control frameworks for assets that are submitted as collateral for lending operations. And we will adjust the framework guiding the allocation of corporate bond purchases to incorporate climate change criteria. Ultimately, where two different monetary policy instruments are equally conducive to maintaining price stability, the ECB will set out to choose the option that best supports addressing climate change. Finally, inspired by the economy-wide stress test and consistent with the upcoming ECB Banking Supervision bottom-up stress test, in 2022 we will conduct a climate stress test of the Eurosystem balance sheet.
Connected dots enabling connected action
The conclusion of the strategy review marks the ECB connecting the final, crucial dots to confirm its commitment to incorporating systematically and consistently the climate and environmental crisis in carrying out its tasks and fulfilling its responsibilities: monetary policy, banking supervision, our non-monetary policy-related balance sheet management and in all our operational duties. And we have announced concrete measures, expectations and action plans on how we intend to follow up on these commitments. This is not a crisis that the ECB can resolve by itself. Fortunately, we are not the only ones connecting dots, as evidenced by the activities of other central banks and supervisors, both individually and jointly in the NGFS. And the call to action is also being brought to the institutions that they supervise. In fact, not acting may even expose financial institutions to liability risks.
We are mindful that many of the steps proposed are no easy undertaking. But, to paraphrase Tommaso Padoa-Schioppa speaking here back in the ECB’s early days, identifying a challenge implies not only acknowledging the difficulty of fulfilling a task, but also its necessity. For addressing the climate and environmental crisis we know this to be true. We know we must act. Let us draw confidence from Goethe: “Unsere Wünsche sind Vorgefühle der Fähigkeiten, die in uns liegen, Vorboten desjenigen, was wir zu leisten imstande sein werden.” It will be difficult, but we know we are up to the challenge. We must be.

Compliments of the European Central Bank.
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Today, the Commission takes legal action against 19 Member States failing to deliver the benefits of EU digital legislation in the area of audio-visual media and telecommunications. These Member States are required to transpose into their national laws two new sets of rules, without further delay: the Audio-Visual Media Services Directive and the European Electronic Communications Code, and inform the Commission about this transposition. Both Directives are crucial for the EU’s digital transition, after having been commonly agreed by Member States, and had to be transposed by end-2020.
Audio-Visual Media Services Directive
The Audio-Visual Media Services Directive (AVMSD) aims to ensure a fair single market for broadcast services that keeps up with technological developments. To this end, the Directive was revised in 2018 to create a regulatory framework fit for the digital age, leading to a safer, fairer and more diverse audio-visual landscape. It coordinates EU-wide legislation on all audio-visual media, including both traditional TV broadcasters and on-demand video services, and lays down essential protection measures with regard to content shared on video-sharing platforms.
Due to the delayed transposition, citizens and businesses in Czechia, Estonia, Ireland, Spain, Croatia, Italy, Cyprus, Slovenia and Slovakia may not be able to rely on all the provisions of the AVMSD, which:

Create a level playing field for different types of audio-visual media services;
Guarantee the independence of national media regulators;
Preserve cultural diversity by, for example, requiring video on demand services to have at least 30% of European works on offer;
Protect children and consumers by laying down rules for the protection of minors against harmful content in the online world, including protections on video-on-demand services; and
Combat racial, religious and other types of hatred by having reinforced rules to combat the incitement to violence or hatred, and the public provocation to commit terrorist offences.

European Electronic Communications Code
EU action in the area of electronic communications has led to greater consumer choice, lower phone bills, and higher standards of telecommunications service. The European Electronic Communications Code modernises EU telecoms rules, making them fit for the digital era. Due to the delayed transposition, consumers and businesses in Estonia, Spain, Croatia, Ireland, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia and Sweden may not benefit from rules, which provide for:

Clear and inclusive end-user rights rules: the same rules apply all over Europe towards an inclusive single market;
Higher quality of services: consumers can enjoy higher connection speeds and higher coverage; since the Code fosters competition for investments, in particular in very high capacity networks, including 5G networks;
Harmonisation of rules: the Code enhances regulatory predictability, including in radio spectrum assignment;
Consumer protection: the Code benefits and protects consumers, irrespective of whether end-users communicate through traditional (calls, text message) or app-based services;
Fair play: the Code ensures equality of treatment of all players in the telecom services sector, whether traditional or app-based.

In particular, consumers should benefit from enhanced protection through rules that ensure clarity of contractual information, quality of service and facilitating provider switching between networks to drive fairer retail prices. Operators and providers can take advantage of pro-investment rules, such as those incentivising co-investments in very-high capacity networks and wholesale-only networks or regulatory and investment predictability including in radio-spectrum assignment procedures.
Background
Enshrined in the EU treaties, the infringement procedure provides that the Commission may take legal action against Member States who fail to ensure the timely and accurate transposition of directives into their national legislation.
The deadline for transposing the Audio-Visual Media Services Directive was 19 September 2020. In November 2020, the Commission launched infringement proceedings against 23 Member States for failure to notify complete transposition of the revised Audio-Visual Media Services Directive. So far, 15 Member States have notified transposition measures declaring their notification complete and 3 additional Member States have communicated partial notification. The Commission is now following up by sending reasoned opinions to Czechia, Estonia, Ireland, Spain, Croatia, Italy, Cyprus, Slovenia, and Slovakia (9 Member States).
The deadline for transposing the European Electronic Communications Code into national legislation was 21 December 2020. The Commission sent letters of formal notice to 24 Member States on 4 February 2021. Only Bulgaria and Denmark notified the full transposition by the end of August (joining Greece, Hungary, and Finland who had already transposed before). Recently Belgium and Germany also notified complete transposition and their notification is under assessment. During the summer, Czechia, and recently also France, notified a great number of measures in view of partially transposing the Directive, which are also assessed. The Commission is now following up by sending reasoned opinions to Estonia, Spain, Croatia, Ireland, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia and Sweden (18 Member States), requesting them to adopt and notify the relevant measures.
The Member States concerned have two months to remedy the situation and adopt national transposing measures for these pieces of EU legislation. Otherwise, the Commission may decide to refer their cases to the Court of Justice of the European Union.
Compliments of the European Commission.
The post Stepping up legal action: EU Commission urges 19 Member States to implement EU digital and media laws first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Today, the European Parliament, the Council and the Commission celebrate the launch of an annual ‘EU organic day’. The three institutions signed a joint declaration establishing from now on each 23 September as EU organic day. This follows up on the Action Plan for the development of organic production, adopted by the Commission on 25 March 2021, which announced the creation of such a day to raise awareness of organic production.
At the signing and launch ceremony, Commissioner for Agriculture Janusz Wojciechowski said: “Today we celebrate organic production, a sustainable type of agriculture where food production is done in harmony with nature, biodiversity and animal welfare. 23 September is also autumnal equinox, when day and night are equally long, a symbol of balance between agriculture and environment that ideally suits organic production. I am glad that together with the European Parliament, the Council, and key actors of this sector we get to launch this annual EU organic day, a great opportunity to raise awareness of organic production and promote the key role it plays in the transition to sustainable food systems.”
The overall aim of the Action Plan for the development of organic production is to boost substantially the production and consumption of organic products in order to contribute to the achievement of the Farm to Fork and Biodiversity strategies’ targets such as reducing the use of fertilisers, pesticides and anti-microbials. The organic sector needs the right tools to grow, as laid out in the Action Plan. Structured around three axes – boosting consumption, increasing production, and further improving the sustainability of the sector -, 23 actions are put forward to ensure a balanced growth of the sector.
Actions
To boost consumption the Action Plan includes actions such as informing and communicating about organic production, promoting the consumption of organic products, and stimulating a greater use of organics in public canteens through public procurement. Furthermore, to increase organic production, the Common Agricultural Policy (CAP) will remain a key tool for supporting the conversion to organic farming. It will be complemented by, for instance, information events and networking for sharing best practices and certification for groups of farmers rather than for individuals. Finally, to improve the sustainability of organic farming, the Commission will dedicate at least 30% of the budget for research and innovation in the field of agriculture, forestry and rural areas to topics specific to or relevant for the organic sector.
Background
Organic production comes with a number of important benefits: organic fields have around 30% more biodiversity, organically farmed animals enjoy a higher degree of animal welfare and take less antibiotics, organic farmers have higher incomes and are more resilient, and consumers know exactly what they are getting thanks to the EU organic logo.
Compliments of the European Commission.
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The EU Commission has published its second report on the impact of SURE, the €100 billion instrument designed to protect jobs and incomes affected by the COVID-19 pandemic.
The report finds that SURE has been successful in cushioning the severe socio-economic impact resulting from the COVID-19 pandemic. National labour market measures supported by SURE are estimated to have reduced unemployment by almost 1.5 million people in 2020. SURE has helped to effectively contain the increase in unemployment in the beneficiary Member States during the crisis. Thanks to SURE and other support measures, this increase in unemployment has turned out to be significantly smaller than during the global financial crisis, despite the much larger fall in GDP.
SURE is a crucial element of the EU’s comprehensive strategy to protect citizens and mitigate the negative consequences of the COVID-19 pandemic. It provides financial support in the form of loans granted on favourable terms from the EU to Member States to finance national short-time work schemes, similar measures to preserve jobs and support incomes ­ – notably for the self-employed, and some health-related measures.
A total of €94.3 billion of financial assistance has so far been approved to 19 Member States, of which €89.6 billion has been disbursed. SURE can still provide almost €6 billion of financial assistance to Member States out of the total envelope of €100 billion.
Main findings
SURE has supported approximately 31 million people in 2020, of which 22.5 million are employees and 8.5 million self-employed. This represents more than one quarter of the total number of people employed in the 19 beneficiary Member States.
Moreover, around 2.5 million firms affected by the COVID-19 pandemic have benefitted from SURE, allowing them to retain workers.
Given the EU’s strong credit rating, beneficiary Member States have saved an estimated €8.2 billion in interest payments thanks to SURE.
The Commission raised a further €36 billion across three issuances since the time of the drafting of the first report in March 2021. These issuances were largely oversubscribed. All funds have been raised as social bonds, giving investors confidence that their money goes towards a social purpose, and making the EU the world’s largest issuer of social bonds.
On 4 March 2021, the Commission presented a Recommendation on Effective Active Support to Employment following the COVID-19 crisis (EASE). It outlines a strategic approach to gradually transition between emergency measures taken to preserve jobs during the pandemic and new measures needed for a job-rich recovery. With EASE, the Commission promotes job creation and job-to-job transitions, including towards the digital and green sectors, and invites Member States to use available EU funds.
Members of the College said:
Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People said: “The SURE scheme has proven its worth and continues to fulfil its purpose. We created it during an emergency to prop up people’s incomes, protect their families and preserve their livelihoods when they needed it most. Its success can be measured by the figures in today’s report, showing that SURE managed to keep many millions of Europeans in a job during the worst of the crisis. It has played a major part in Europe’s overall response, for which we must also thank national governments. As we exit the pandemic, our approach should gradually focus on promoting quality job creation and easing job-to-job transitions through training and other measures.”
Johannes Hahn, Commissioner for Budget and Administration, said: “It is reassuring that the money raised on the market under SURE has helped EU countries achieved impressive results in a short period of time. For the Commission, SURE has set the scene for borrowing under the much bigger NextGenerationEU recovery instrument. With €49 billion disbursed to 13 EU countries so far and a few billion to EU budget programmes, NextGenerationEU is also making sure the recovery works for all.”
Nicolas Schmit, Commissioner for Jobs and Social Rights, said: “The SURE instrument has proven to be both innovative and indispensable. It is a shining example of a Europe that protects and works for people. The report published today states that making finance available to Member States through SURE helped avoid up to 1.5 million more people entering unemployment in 2020. SURE helped to stem this flow. Now, we must act equally resolutely and quickly to put in place active labour market policies for a job-rich recovery in the changing labour market.”
Paolo Gentiloni, Commissioner for Economy said: “This second report on the impact of SURE confirms the value of this unprecedented instrument of solidarity. The figures speak for themselves: 1.5 million fewer unemployed, 31 million workers and 2.5 million firms supported, and more than €8 billion in interest savings. I am proud of the European success story that is SURE: a success story upon which we must build!”
Background
The Commission proposed the SURE Regulation on 2 April 2020, as part of the EU’s initial response to the pandemic. It was adopted by the Council on 19 May 2020, and became available after all Member States signed the guarantee agreements on 22 September 2020. The first disbursement took place five weeks after SURE became available.
Today’s report is the second report on SURE addressed to the Council, the European Parliament, the Economic and Financial Committee (EFC) and the Employment Committee (EMCO). Under Article 14 of the SURE Regulation, the Commission is legally required to issue such a report within 6 months of the day that the instrument became available. The first report was published on 22 March 2021. Subsequent reports will follow every six months for as long as SURE remains available.
The Commission is issuing social bonds to finance the SURE instrument and using the proceeds to provide back-to-back loans to beneficiary Member States. Further information on these bonds, along with a full overview of the funds raised under each issuance and the beneficiary Member States, is available online here.
Compliments of the European Commission
The post SURE: Report confirms instrument’s success in protecting jobs and incomes first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Speech | 22 September 2021 | Brussels | “Check against delivery”
Ladies and gentlemen,
For fifty years, the EU has supported vulnerable developing countries by giving them preferential access to the EU market.
This has been a shining example of how trade policy can stimulate growth, create jobs and help to eradicate poverty.
By removing import duties, we have helped these countries to diversify their economies, develop sustainably and play a fuller part in the global economy. And this without harming EU industry.
So, we know this preferential system as the Generalised Scheme of Preferences – or GSP.
It has encouraged countries to improve human and labour rights, the environment and good governance. Today, it covers 67 countries – and almost one and a half billion workers.
The scheme has certainly proven its worth over the years.
EU imports from GSP beneficiaries increased by 25% between 2014 and 2019, compared with a 16% rise in imports from all third countries.
And this was particularly the case for the least developed countries that have benefitted from the most generous preferences.
But it’s not only about economic development.
It’s about more sustainable development too.
For example, Sri Lanka committed to fully eliminating child labour by 2022. It was able to reduce this to 1% of the child population in 2019, partly thanks to its new ‘Child Labour Free Zones’.
And Bolivia raised the minimum working age to the internationally accepted standard of 14 years.
Now, we want to build on the success of the GSP scheme and take it further – especially since the current set-up will expire by the end of 2023.
There is no need to overhaul the scheme, as we did 10 years ago. But we will do some fine-tuning, to respond better to the changing needs and challenges of beneficiary countries – and to bring the scheme closer in line with our trade sustainability principles.
We plan to keep the current structure with its three market access arrangements:

for low and lower-middle income countries, there is the standard GSP;
GSP+ for vulnerable countries, based on sustainable development and good governance commitments; and
Everything But Arms for least developed countries.

Today’s proposal aims to reinforce the scheme’s social, environmental and climate aspects, reduce poverty and increase export opportunities for developing countries.
We do this in a number of ways.
For example, by better focusing preferences on less competitive products and countries so that the EU trade advantages go to the countries that need them most.
Then, by expanding the list of international conventions and agreements with which countries must comply to receive those advantages. At present, there are 27.
We propose adding six more conventions on human and labour rights, rights of people with disabilities, rights of the child, and transnational organised crime, for example. And we are replacing the Kyoto Protocol with the Paris agreement on climate change.
And by updating the system of withdrawing GSP preferences to include environmental and good governance conventions if a country is breaching international standards.
If the violation is especially severe, we will activate an urgent procedure to withdraw preferences more quickly. In doing so, we will also assess the socio-economic impacts of withdrawing the preferences on the country concerned.
It is also important that we maintain a transparent system of monitoring the sustainable development commitments taken by the beneficiaries. Here, the recently created Single Entry Points for complaints can play an important role.
Finally, we are retaining safeguards to make sure that imports do not harm EU industry, and also improve their functioning.
We launched the GSP scheme all those years ago to help developing countries sell more of their products in developed countries and build up their own industry.
It remains a key element of the EU’s trade and development policies. It has stood the test of time – very well. It shows how trade can contribute to integrating low-income countries into the world economy, creating decent jobs and reducing poverty.
We are continuing it – because it works.
And by updating its focus, we will help to advance sustainable development across the world, boost global trade and help those most in need. Thank you.
The post Remarks by Executive Vice-President and Commissioner for Trade, Valdis Dombrovskis, at the press conference on the new EU Generalised Scheme of Preferences first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.