Speech | 22 September 2021 | Brussels | “Check against delivery”
Good afternoon, thank you Valdis for that introduction.
When we look back over 5 years when Solvency II came into being, back then it was really a major change in the European rulebook for insurers, aligning prudential rules with state-of-the-art risk management practices.
And Solvency II is a global leader, so we can be proud of our achievements in that regard.
Because Solvency II has provided a solid base for the single market in insurance, letting insurance companies operate across the EU and of course protecting consumers and businesses.
So again with some confidence: we are very happy with the way Solvency II has worked and today we’re looking at how to improve it further in this review.
I want to thank EIOPA for their work in implementing Solvency II and in particular their contribution to our review.
So today we have a chance to make improvements where needed, for example simpler rules for smaller and less risky insurers.
Public authorities will be better equipped to protect consumers and maintain financial stability.
And we want to make sure the insurance sector is more resilient so that it can weather future crises.
The economic and political context is evolving.
We have been through a major health crisis with serious economic consequences and we are now looking towards the recovery.
We also have a renewed and important focus on the Capital Markets Union and ensuring the single market for capital really works.
That means that this review of Solvency II is adjusting some rules to allow insurers invest for the recovery and for long-term, sustainable growth.
And we have the European Green Deal: where we are fighting climate change, while also helping our economies and societies to adapt.
Our mission is to allow businesses get more access to funding, beyond bank loans, and to build up our Capital Markets Union.
As Valdis has said, insurers are major institutional investors in the EU, and we believe they can play an even bigger role.
In the first few years after entry into force, this review will release several tens of billions of euros of capital for the insurance sector – allowing insurers to invest that money in the economy.
And with this package, we will make it less costly for insurers to invest, when such investments are made with a long-term perspective.
We will also improve the framework so that market volatility does not result in short-sighted investment decisions. Our businesses need long-term, stable capital funding.
However, as Valdis said, we should not forget that Solvency II needs to remain fit for the low-yield environment.
So today’s package will ensure that Solvency II better reflects the risks insurers are exposed to both in capital requirements and the rules on the calculation of insurers’ obligations towards policyholders.
We have ensured that the overall impact is not unduly burdensome. The review is well balanced in terms of capital requirements at EU level. Overall, insurers’ capacity to invest will increase.
The insurance sector also is vital for the European Green Deal.
Firstly in terms of providing sustainable investment with a long-term perspective to tackle climate change.
And secondly about adapting to the changes that are already happening.
I think this summer’s tragic events in Germany, Belgium and Greece remind us that the impact of climate change is already with us, and we need to be better prepared.
We will require insurers to fully take into account the risk of climate change in their investment and underwriting activities.
We will also ask EIOPA to assess whether a differentiated prudential treatment is justified, and whether natural catastrophe risk is still being properly addressed in view of climate science.
Beyond helping the insurance sector make its rightful contribution to our political goals, we want to make EU rules work better for insurers.
We will simplify Solvency II rules wherever possible, without putting at risk consumer protection.
More concretely, we will ensure that more small domestic insurers are exempted from Solvency II, so they are subject to simpler national regimes.
And we have introduced a simpler regime for firms that have a relatively low risk profile.
In addition, we have also identified some loopholes in the supervision of cross-border business, with some failures of insurers hurting EU citizens in several Member States.
So today’s package will close gaps in cross-border supervision.
In particular, EIOPA will have a stronger role, and there will be clearer responsibilities for the different authorities in charge of supervising cross-border insurers.
We are also introducing a recovery and resolution framework for insurers.
The new regime will help ensure a better outcome for policyholders should their insurers fail, while minimising the impact on the economy, the financial system and European taxpayers.
So in closing, I want to highlight the importance of the insurance sector, already identified by Valdis.
Insurance and insurance companies allow households and businesses to prepare for a rainy day.
While at a broader level the sector can help us recover from the crisis, and build up the Capital Markets Union and support the European Green Deal.
It is important that we get the rules right: we think they are already good, and now we want to make them better.
We are now counting on the support of the European Parliament and Member States. And I look forward to working with them.
Thank you.
Compliments of the European Commission.
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The European Union and the United States announced today the Global Methane Pledge, an initiative to reduce global methane emissions to be launched at the UN Climate Change Conference (COP 26) in November in Glasgow. President Biden and European Commission President Ursula von der Leyen urged countries at the US-led Major Economies Forum on Energy and Climate (MEF) to join the Pledge and welcomed those that have already signaled their support.
Methane is a potent greenhouse gas and, according to the latest report of the Intergovernmental Panel on Climate Change, accounts for about half of the 1.0 degrees Celsius net rise in global average temperature since the pre-industrial era. Rapidly reducing methane emissions is complementary to action on carbon dioxide and other greenhouse gases, and is regarded as the single most effective strategy to reduce global warming in the near term and keep the goal of limiting warming to 1.5 degrees Celsius within reach.
Countries joining the Global Methane Pledge commit to a collective goal of reducing global methane emissions by at least 30 percent from 2020 levels by 2030 and moving towards using best available inventory methodologies to quantify methane emissions, with a particular focus on high emission sources. Delivering on the Pledge would reduce warming by at least 0.2 degrees Celsius by 2050. Countries have widely varying methane emissions profiles and reduction potential, but all can contribute to achieving the collective global goal through additional domestic methane reduction and international cooperative actions. Major sources of methane emissions include oil and gas, coal, agriculture, and landfills. These sectors have different starting points and varying potential for short-term methane abatement with the greatest potential for targeted mitigation by 2030 in the energy sector.
Methane abatement delivers additional important benefits, including improved public health and agricultural productivity.  According to the Global Methane Assessment from the Climate and Clean Air Coalition (CCAC) and the United Nations Environmental Programme (UNEP), achieving the 2030 goal can prevent over 200,000 premature deaths, hundreds of thousands of asthma-related emergency room visits, and over 20 million tons of crop losses a year by 2030 by reducing ground-level ozone pollution caused in part by methane.
The European Union and eight countries have already indicated their support for the Global Methane Pledge. These countries include six of the top 15 methane emitters globally and together account for over one-fifth of global methane emissions and nearly half of the global economy.
The European Union has been taking steps to reduce its methane emissions for almost three decades. The European Commission strategy adopted in 1996 helped reduce methane emissions from landfilling by almost a half. Under the European Green Deal, and to support the European Union’s commitment to climate neutrality by 2050, the European Union adopted in October 2020 a strategy to reduce methane emissions in all key sectors covering energy, agriculture and waste. The reduction of methane emissions in the current decade is an important part of the European Union’s ambition for reductions in greenhouse-gas emissions by at least 55% by 2030. This year, the European Commission will propose legislation to measure, report and verify methane emission, put limits on venting and flaring, and impose requirements to detect leaks, and repair them.  The European Commission is also working to accelerate the uptake of mitigation technologies through the wider deployment of ‘carbon farming’ in European Union Member States and through their Common Agricultural Policy Strategic Plans, and to promote biomethane production from agricultural waste and residues. Finally, the European Commission is supporting the United Nations Environmental Programme (UNEP) in establishing an independent International Methane Emissions Observatory (IMEO) to address the global data gap and transparency in this area, including through a financial contribution. IMEO will play an important role in creating a sound scientific basis for methane emissions calculations and delivering the Global Methane Pledge in this regard.
The United States is pursuing significant methane reductions on multiple fronts. In response to an Executive Order that President Biden issued on the first day of his Presidency, the Environmental Protection Agency (EPA) is promulgating new regulations to curtail methane emissions from the oil and gas industry. In parallel, the EPA has taken steps to implement stronger pollution standards for landfills and the Department of Transportation’s Pipeline Hazardous Materials and Safety Administration is continuing to take steps that will reduce methane leakage from pipelines and related facilities. At the President’s urging and in partnership with US farmers and ranchers, the US Department of Agriculture is working to significantly expand the voluntary adoption of climate-smart agriculture practices that will reduce methane emissions from key agriculture sources by incentivizing the deployment of improved manure management systems, anaerobic digesters, new livestock feeds, composting and other practices. The US Congress is considering supplemental funding that would support many of these efforts. Among the proposals before the Congress, for example, is a major initiative to plug and remediate orphaned and abandoned oil, gas, and coal wells and mines, which would significantly reduce methane emissions. In addition, the United States continues to support collaborative international methane mitigation efforts, especially through its leadership of the Global Methane Initiative and CCAC.
The European Union and eight countries have already indicated their support for the Global Methane Pledge:

Argentina
Ghana
Indonesia
Iraq
Italy
Mexico
United Kingdom
United States

The United States, the European Union and other early supporters will continue to enlist additional countries to join the Global Methane Pledge pending its formal launch at COP 26.
Compliments of the European Commission.
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1 Introduction
Targeted longer-term refinancing operations (TLTROs) play a key role in preserving favourable bank financing conditions for households and firms, thereby contributing to inflation reaching the ECB’s target of 2% in the medium term. The operations are part of a broad set of complementary policy instruments, which include asset purchases, negative interest rates and forward guidance.[1] Since their inception in 2014, TLTROs have supported the transmission of monetary policy by incentivising lending through their targeting feature and by providing a reduction in bank funding cost, which has been instrumental in avoiding a deterioration in lending conditions that would have otherwise occurred. The third series of the TLTROs (TLTRO III) was introduced in early 2019. The initial announcement of TLTRO III in March 2019 reassured markets about the extension of the pre-existing TLTRO II. The operations were intended to stave off “congestion effects” in bank funding markets that would have otherwise materialised because of the need to replace expiring TLTRO II funds. The operations were recalibrated in September 2019 to preserve favourable bank lending conditions, ensure the smooth functioning of the monetary policy transmission mechanism and therefore further support the accommodative stance of monetary policy. From the start of the coronavirus (COVID-19) crisis, the recalibration of this tool was, thanks to its design and the role of the euro area banking system in the monetary policy transmission mechanism, an integral part of the ECB’s policy response to ensure favourable borrowing conditions for firms and households during the pandemic.
TLTRO III provided ample liquidity at attractive rates to address the emergency liquidity needs of households and firms induced by the pandemic. The ECB’s monetary policy response to the COVID-19 crisis involved two main tools. First, asset purchases supported favourable financing conditions for the real economy in times of heightened uncertainty, both through an additional envelope under the regular asset purchase programme (APP) and via the launch of the pandemic emergency purchase programme (PEPP). Second, the recalibration of the existing TLTRO III operations helped banks secure funding at favourable terms to support access to credit for firms and households.[2] The Governing Council’s decisions of 12 March[3] and 30 April[4] 2020 have secured the transmission of monetary policy via banks at times of elevated uncertainty and high liquidity needs by expanding banks’ borrowing allowance under TLTRO III from 30% to 50% of the eligible loan book (providing an additional leeway of approximately €1.2 trillion) and reducing the interest rate applied on these operations to a rate as low as -1% until June 2021 for banks fulfilling the lending requirements. These decisions also enlarged the set of assets eligible to collateralise the borrowing under TLTRO III and enhanced banks’ flexibility of repayment options and participation modalities across operations. The Governing Council’s decisions of 10 December 2020[5] further widened the borrowing allowance to 55% and prolonged the period in which banks could secure a rate as low as -1% to June 2022, subject to additional lending requirements until the end of 2021. This served to shelter borrowing conditions from the ripple effects of the pandemic.
The magnitude of the pandemic shock, the broad-based policy response and the attractive design of TLTROs (after the various recalibrations) resulted in one of the largest liquidity injections by the ECB directly into the euro area banking sector, bringing the total uptake to €2.2 trillion as of June 2021, thereby providing substantial support to the euro area throughout the entire pandemic period. The monetary policy response to buffer the impact of the pandemic on borrowing was complemented by policy support from other policy domains, ranging from microprudential and macroprudential policy via capital relief measures, to fiscal policy via extensive use of government guarantees and moratoria. The favourability of TLTRO conditions, together with the broadened eligibility of assets that could be pledged as collateral (see Box 1), the capital space and loan demand reinforced by other policies, enabled euro area banks to participate widely in the TLTRO III programme, leading to the largest participation in Eurosystem refinancing operations so far. The overall take-up exceeded €1.5 trillion after the June 2020 operation and subsequent operations brought it up to €2.2 trillion as of June 2021 (Chart 1). This article studies how, and by how much, this targeted longer-term central bank funding has affected bank lending conditions.
CONTINUE READING HERE
Compliments of the European Central Bank.
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Report to the Board of Executive Directors
WASHINGTON, September 16, 2021—The World Bank Group today released the following statement on behalf of the Bank’s Board of Executive Directors:
“The World Bank’s Board of Executive Directors today authorized the release of “Investigation of Data Irregularities in Doing Business 2018 and Doing Business 2020 – Investigation Findings and Report to the Board of Executive Directors,” an independent external review of the facts and circumstances around previously reported data irregularities in the 2018 and 2020 Doing Business reports.” 
Compliments of the World Bank.
Washington, DC: Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), issued the following statement on the Report on Investigation of Data Irregularities in Doing Business 2018 and Doing Business 2020:
“I disagree fundamentally with the findings and interpretations of the Investigation of Data Irregularities as it relates to my role in the World Bank’s Doing Business report of 2018. I have already had an initial briefing with the IMF’s Executive Board on this matter.”
Compliments of the IMF.
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By Kristalina Georgieva, IMF Managing Director | Launch event for “Investment Funds and Financial Stability” paper |
Good morning. I am very pleased that we are joined today by some of the world’s leading voices on financial stability and investment funds. I am also very proud of our latest contribution to this policy discussion from the IMF’s Monetary and Capital Markets Department.
To illustrate the importance of our new report, we need to go back to the height of the crisis in March of 2020. We were facing the biggest economic shock in our lifetimes.
But we did not face another Global Financial Crisis last year—not only because of the extraordinary monetary and fiscal measures, but also because countries had worked together after the Global Financial Crisis to strengthen the resilience of the banking sector, to ensure that banks have more reliable liquidity and capital cushions.
Last year’s experience was less encouraging for the investment fund sector—because the crisis exposed fundamental vulnerabilities that could affect global financial stability.
Many investment funds were heavily affected by the financial market turmoil; and the initial shock was amplified by rapid fund outflows and rapid sales of assets as liquidity suddenly dried up in key markets. The so-called “dash-for-cash” extended across borders—which triggered significant capital outflows from emerging and developing markets.
Today, the global economic recovery is underway—but there is also growing uncertainty, including rising concerns over stretched asset valuations. It is, therefore, not surprising that policymakers and regulators are keeping a close eye on investment funds.
Over the past two decades, non-bank financial institutions have come to play such a key role that they now hold about 50 percent of global financial assets. This benefits everything from entrepreneurs growing their businesses, to families buying their first home, to saving for retirement.
These investment funds are vital engines of prosperity. They come in all shapes and sizes, such as money-market funds and open-end mutual funds—and they are subject to a range of investor protection and market conduct regulations. But we also know that many funds have ventured into higher-risk investments—such as high-yield debt and real estate—which leaves them more exposed to liquidity pressures in times of distress.
This in turn demands greater vigilance to ensure that critical parts of the financial system do not freeze up when they are needed most.
So, our key message today is this: if we are to safeguard financial stability at the national and global levels, we need to boost the resilience of investment funds.
What can policymakers do?
One priority is to further strengthen risk management, especially liquidity risk management. Our new report shows how this can be achieved with a combination of liquidity management tools.
The key is that these tools can be deployed sequentially—as needed—depending on the intensity of pressures facing a particular fund. It means that funds would no longer have to rely on so-called redemption fees and gates linked to regulatory thresholds—which was problematic last year.
These measures would benefit all investment funds, but especially those holding less-liquid assets. We also believe that there is room for more prescriptive regulatory approaches in this critical area.
Here we can draw on the lessons learned in the banking sector. We saw a significant strengthening of risk management in banks, largely because of stronger regulatory frameworks put in place after the Global Financial Crisis.
This approach has served us well—and it’s even more important now. Just think of the risk of financial spillovers that could hit emerging and developing economies.
Again, this is an area where investment funds play a central role. Over the past decade, we have seen almost $1 trillion in foreign investment in emerging market sovereign debt—with investment funds accounting for about two thirds of these vital capital flows.
In our report, we provide specific proposals on how to mitigate capital-flow volatility, how to better manage cross-border fund flows in times of crisis.
These are important measures, but we need to go further. Even as some countries strengthen their policies and step up investment fund reforms, we must continue to be vigilant about those who try to game the system. Fighting regulatory arbitrage across borders remains critical.
That is why we need strong international cooperation. It lies at the heart of the ongoing reform process led by the Financial Stability Board. And it’s reflected in the joint efforts of national supervisory authorities and central banks, the International Organization of Securities Commissions and other standard setting bodies, and International Financial Institutions such as the IMF.
Policymakers worked together to make banks safer after the Global Financial Crisis—now we must do the same for investments funds. We know that financial stability risks remain elevated, and asset prices are stretched, so speed is of the essence when it comes to these reforms. Financial risks take time to build, but conditions can shift quickly and pose new and unforeseen challenges to the financial sector, as we saw during the turmoil last year.
Given the vital role of investment funds in fostering growth and safeguarding financial stability, we need to take the right actions now to boost their resilience.
With that, I look forward to hearing your views on this critical issue.
Thank you very much.
Compliments of the IMF.
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Today, the European Commission is launching the European Health Emergency preparedness and Response Authority (HERA) to prevent, detect, and rapidly respond to health emergencies. HERA will anticipate threats and potential health crises, through intelligence gathering and building the necessary response capacities. When an emergency hits, HERA will ensure the development, production and distribution of medicines, vaccines and other medical countermeasures – such as gloves and masks – that were often lacking during the first phase of the coronavirus response. HERA is a key pillar of the European Health Union announced by President von der Leyen in her 2020 State of the Union address and will fill a gap in the EU’s health emergency response and preparedness.
Before crises: preparedness
Before a health crisis, in the “preparedness phase”, HERA will work closely with other EU and national health agencies, industry and international partners to improve the EU’s readiness for health emergencies.
HERA will carry out threat assessments and intelligence gathering, develop models to forecast an outbreak and, by early 2022, identify and act on at least three high impact threats and address possible gaps in medical countermeasures.
HERA will also support research and innovation for the development for new medical countermeasures, including through Union-wide clinical trial networks and platforms for the rapid sharing of data.
In addition, HERA will address market challenges and boost industrial capacity. Building on the work done by the Task Force for Industrial Scale up of COVID-19 vaccines, HERA will establish a close dialogue with industry, a long-term strategy for manufacturing capacity and targeted investment, and address supply chain bottlenecks for medical countermeasures.
The authority will promote procurement and tackle challenges related to their availability and distribution and increase stockpiling capacity to avoid shortages and bottlenecks in logistics.
HERA will also strengthen knowledge and skills on all aspects of medical countermeasures in Member States.
During a health crisis: emergency response
In case a public health emergency at EU level is declared, HERA can quickly switch to emergency operations, including swift decision making and the activation of emergency measures, under the steer of a high-level Health Crisis Board. It will activate emergency funding and launch mechanisms for monitoring, new targeted development, procurement and purchase of medical countermeasures and raw materials.
The EU FAB facilities, a network of ever warm production capacities for vaccines and medicines manufacturing, will be set in motion to make available reserved surge manufacturing capacities, as well as emergency research and innovation plans in dialogue with Member States.
The EU production of medical countermeasures will be boosted and an inventory will be established of production facilities, raw materials, consumables, equipment and infrastructure in order to have a clear overview of EU capacities.
Resources
HERA activities will rely on a budget of €6 billion from the current Multiannual Financial Framework for the period 2022-2027, part of which will come from the NextGenerationEU top-up.
Other EU programmes such as the Recovery and Resilience Facility, REACT-EU, Cohesion Funds and the InvestEU Progamme inside the EU, and the Neighbourhood, Development and International Cooperation Instrument outside the EU, will also contribute to support the resilience of health systems. Together with the above €6 billion the total support will thus amount to almost €30 billion under the next financing period and even more if we consider investments at national level and in the private sector.
Next steps
To ensure a swift launch and building on the HERA incubator launched in February 2021, HERA will be set up as an internal Commission structure. It will be fully operational early 2022. Its functioning will be reviewed and adapted on an annual basis until 2025, when a full review will be carried out.
The proposed Council Regulation on a framework of measures related to medical countermeasures in the event of a public health emergency at Union level will be discussed and adopted by the Council.
In the next days, the Commission will publish a Prior Information Notice to provide advance information to vaccine and therapeutics manufacturers about the EU FAB call for competition, planned for early 2022.
Members of the College said:
President of the European Commission, Ursula von der Leyen, stated: “HERA is another building block of a stronger Health Union and a major step forward for our crisis preparedness. With HERA, we will make sure we have the medical equipment we need to protect our citizens from future health threats. HERA will be able to make swift decisions to safeguard supplies. This is what I promised back in 2020, and this is what we deliver.”
Vice-President for Promoting the European Way of Life, Margaritis Schinas, said: “HERA has a clear mission: ensuring the availability, access and distribution of medical countermeasures in the Union. HERA is the EU’s response for both anticipating and managing emergencies. HERA will have the clout and budget to work with industry, medical experts, researchers and our global partners to make sure critical equipment, medicines and vaccines are swiftly available when and as necessary. We now know: To fight the COVID-19 pandemic and future health emergencies, cooperation is the only way forward.”
Stella Kyriakides, Commissioner for Health and Food Safety, said: “HERA is a crucial centerpiece of a strong European Health Union. With HERA we will be able to anticipate threats through horizon scanning, coordinate our actions to respond in a timely fashion through the development, procurement, and distribution of critical medical countermeasures at EU level. It is a unique health security structure allowing us to be ahead of the curve. Health security is becoming a collective endeavor in the EU. After almost two years of a devastating pandemic, HERA is a symbol of the mindset-shift on health policy that we should all rally behind – it is when we act together that we are stronger and able to make a real difference for the health security of our citizens.”
Mariya Gabriel, Commissioner for Innovation, Research, Culture, Education and Youth, said: “Medical counter-measures are key to combat health threats. The Commission has been at the forefront of tackling the pandemic but more must be done to ensure that we are better prepared for the next crisis. Research and innovation will be a central piece in HERA, as the new authority sets out to promote and support the development of medical technologies and their production.”
Thierry Breton, Commissioner for the Internal Market, said: “With HERA, we draw the lessons learned from the crisis: we cannot ensure our citizens’ health without industrial capacity in the EU and well-functioning supply chains. We succeeded in upgrading COVID-19 vaccine production in record time, for Europe and the rest of the world. But we need to be better prepared for future health crises. HERA will establish new, adaptable production capacities and secure supply chains to help Europe react fast when needed.”
Compliments of the European Commission.
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Europe’s economy is growing again after COVID-19 caused its worst-ever recession, helped by swift and powerful policy action by European governments and institutions to cushion the shock.
Returning to pre-pandemic levels will not be enough. The crisis has raised new challenges and compounded some existing weaknesses, such as regional inequalities. Implementing reforms to boost growth potential, with macroeconomic policies supportive until the recovery is firmly established and while continuing to strengthen Europe’s economic architecture, will be key for a stronger and sustainable recovery, according to two new OECD reports.
The latest OECD Economic Surveys of the European Union and of the Euro Area warn against withdrawing fiscal and monetary support prematurely and argue for providing clarity on the future evolution of these policies depending on the progression of the recovery. They suggest the euro area can live with inflation running a little above its 2% objective for a limited period. Next Generation EU (NGEU) recovery funds should be invested swiftly to foster growth and jobs, support the green and digital transitions and reduce territorial inequalities. In parallel, reforms to Europe’s economic architecture should continue to help optimise the strength and the quality of the recovery across the EU and Euro Area, notably by revisiting fiscal rules and finalising the banking union.
“Europe’s leaders have done very well in managing the economic shock triggered by COVID-19, drawing on lessons learned from the 2008 crisis and undertaking bold policy measures, including using common borrowing for the first time. As part of the recovery plans, it is now time to tackle both longstanding and newer but developing structural challenges in a way that puts the EU and euro area on a stronger foundation and trajectory for the future,” OECD Secretary-General Mathias Cormann said. “With the right reforms, Europe can and will emerge stronger from the pandemic and play a lead role in building a strong and sustainable global economy.”
Europe’s recovery is expected to maintain momentum in the second half of 2021 and remain robust in 2022 despite more moderate GDP growth. The recovery remains uneven however and new variants of the virus could still pose a threat, particularly for countries lagging behind in vaccination rates. The Surveys project GDP growth above 4% in the EU and euro area in 2021 and 2022 after drops of over 6% in 2020. Euro area inflation is projected to remain below 2% over the medium term, despite a temporary spike. Updated projections will be released in the OECD’s Interim Economic Outlook on 21 September.
Given the uncertain climate, the Surveys welcome the decision to maintain the EU Growth and Stability Pact’s escape clause until the end of 2022. The European Central Bank’s recent definition of a more symmetric inflation objective of 2% was also a positive step, and monetary policy should remain accommodative until inflation reaches that objective in a sustainable fashion. This could be consistent with allowing for a temporary period of inflation above 2% before a policy change.
The NGEU funds will be key to bolstering the recovery and to improving Europe’s growth potential, fostering the digital transition and driving greener growth as the European Green Deal is implemented. Boosting industrial innovation, digital technology, renewable energy and cross-border infrastructure such as interconnected electricity grids and electric vehicle charging points should be a priority. The funds’ success will require a swift implementation of national recovery and resilience plans, using EU grants to add value to economic activity and to complement, rather than replace, national funding for public investment, and being vigilant on governance. To make public and private investment work in tandem, barriers to private investment must be reduced, for example by simplifying licensing procedures.
It is important to avoid COVID-19 leaving a legacy of wider regional divides and income inequalities as the crisis has hit some countries, regions and sectors harder than others. Income gaps were already large – with living standards in those regions home to the richest 20% of the EU population almost three times larger than in regions home to the poorest 20%. Central and Eastern European countries, the least prosperous upon joining the EU, have been converging towards average EU living standards, though often facing widening gaps between large cities and rural areas.
The EU Survey recommends doing more to exploit cross-country and cross-regional cooperation in innovation, digitalisation and transport to help poorer regions improve their productive specialisation. Cohesion and rural development policies need to be more efficient and more targeted. EU budget tools, including the Common Agricultural Policy, should be used in a way that avoids propping up inefficient firms or activities – for instance through uncompetitive grants or procurement contracts – and is geared towards upgrading regions to higher-value activities.
As importantly, Europe needs long due improvements to its economic architecture in order to thrive. Current fiscal rules are too complex, too difficult to follow and too hard to enforce. A revision of the rules should aim to increase a sense of ownership by countries, reduce complexity and allow space for pressing challenges such as climate. The euro area would also benefit from higher fiscal integration, and efforts should be made to set up a common fiscal stabilisation capacity for shocks too large to be handled at national level. The Euro Area Survey also insists on increasing cross-border labour mobility, deepening the Capital Markets Union and completing the Banking Union, including setting up a common European deposit-insurance scheme.
Contact:

Catherine Bremer, OECD Media Office | catherine.bremer@oecd.org | +33 1 45 24 80 97

Compliments of the OECD – a member of the EACCNY.
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What is the Path to the Digital Decade?
The Path to the Digital Decade is the Commission’s proposal to support the digital transformation in Europe by 2030. This initiative will embrace the accelerating trends and growing needs of digitalisation, which were also underlined by the pandemic. The Path is based on addressing the gaps in Europe’s digital capacities, while directing common actions and large-scale investments to reap the benefits brought by digitalisation.
It is based on a Compass with four cardinal points: digital skills, digital infrastructure, digital business, and digital public services. Specific targets have been set for each of the areas to usher in the Digital Decade in Europe by 2030. The Commission and the Member States will define Union-level and national trajectories towards the targets in the period leading up to 2030. The trajectories will help the Commission monitor progress annually and address deviations and inefficiencies together with the Member States.
A successful digital transformation will place Europe at the forefront of the global trends, underpinning its competitiveness and shaping universal standards. More so, digital technologies are the key enabler for attaining the sustainability goals of the European Green Deal.
How will the Commission work with Member States to ensure progress towards the Digital Decade targets?
The Commission and the Member States will work closely together to reach the Digital Decade targets and objectives. Initially, soon after the entry into force of the Decision establishing the Path to the Digital Decade, they will develop together projected EU trajectories for each of the targets. The trajectories will help to assess progress towards the targets.
Member States should then include their national trajectories in the national strategic roadmaps, along with any current or planned policies or instruments the Member States intend to use. Not all of the Digital Decade targets require identical efforts across all Member States. Instead, some of the targets require a degree of targeted effort of some Member States and the different potential of Member States to contribute to the Union level targets will be taken into account.
Each year the Commission will publish the report on the ‘State of the Digital Decade’. In the five months following the publication of the report, the Commission and the Member States will closely cooperate to identify areas where progress is insufficient and agree on measures to ensure that the targets are achieved. At this point, Member States may adjust their strategic national roadmaps to reflect the recommendations outlined in the report and may propose additional corrective actions and/or projects such as multi-country projects.
The Decision provides a set of tools to ensure that actions taken by Member states are sufficient to allow progress towards the Digital Decade targets. These tools include a peer review, Commission recommendations, possible further actions at EU level, as well as targeted dialogue.
What will the report on the ‘State of the Digital Decade’ include?
The report will serve as a yearly assessment of the digital transformation in Europe. In the report, the Commission will notably evaluate the progress towards the digital targets. The report will compare measured progress to the projected trajectories for each target, as well as provide recommendations for further actions to accelerate the attainment of the targets, including joint commitments and multi-country projects.
In particular, the report will:

Identify the areas where further action is needed;
Analyse investment or other resource gaps and highlight the actions needed to increase the EU’s digital sovereignty; and
Assess the implementation of relevant regulatory proposals and the actions undertaken at EU and Member States level.

The report will also be an opportunity to inform about the level of adherence to the Digital Principles to be set out in the upcoming Declaration.
How are the report on the ‘State of the Digital Decade’ and its recommendations to Member States related to the European Semester?  
The Commission should submit to the European Parliament and the Council an annual report on the ‘State of the Digital Decade’. The report will include the Digital Economy and Society Index (DESI), containing the data underpinning the digital aspects in the European semester and an overview and analysis of the digital transformation in the EU. It will also evaluate the progress made towards the objectives and targets of the Digital Decade for the period towards 2030. Consequently, the report on the ‘State of the Digital Decade’ should feed into the European Semester, including aspects relative to the Recovery and Resilience Facility.
What are multi-country projects?
Multi-country projects are large-scale projects facilitating the achievement of the targets for digital transformation of the Union. They channel coordinated investments between the EU, at least three Member States and, where appropriate, other public or private stakeholders.
Through scaled-up and targeted investments in the digital sector, multi-country projects develop and deploy pan-European leading-edge capacities in strategic technological areas, thus leading to a more competitive and resilient European economy.
Do you have examples of multi-country projects?
The Commission has identified initial key areas where cooperation among Member States is necessary to reach the Digital Decade targets:

European Common Data Infrastructure and Services;
Endow the EU with the next generation of low power trusted processors;
Pan-European deployment of 5G corridors;
Acquiring supercomputers and quantum computers, connected with the EuroHPC Joint Undertaking;
Developing and deploying ultra-secure quantum and space-based communication infrastructures;
Deploying a network of Security Operations Centres, as part of the EU Cybersecurity Strategy;
Connected Public Administration;
European Blockchain Services Infrastructure;
European Digital Innovation Hubs;
High-tech partnerships for digital skills through the Pact for Skills;
Other projects, which become necessary to the achievement of the objectives of the Path to the Digital Decade over time due to emerging social, economic or environmental developments.

The annual report on the ‘State of Digital Decade’ will provide the necessary information on developments and identified gaps in Europe’s digital transformation, and update the list of multi-country projects.
What are the benefits of multi-country projects?

Multi-country projects can:

Enable big projects that one single Member State could not develop on its own;
Pool resources to achieve economies of scale and increase impact;
Reduce the digital divide between Member States;
Support an interconnected, interoperable and secure Digital Single Market;
Build ecosystems of excellence important enough to attract and retain talent;
Implement flagship initiatives for which cooperation among Member States is important.

What financial resources will be used to fund multi-country projects? 
Multi-country projects should be able to attract and combine, in an efficient manner, various sources of Union and Member States’ funding – something which Member States could not do on their own.
Depending on the needs of the specific multi-country projects, funds from a centrally managed Union programme may be combined with resources committed by Member States, including contributions from the Recovery and Resilience Facility, the Digital Europe Programme, the Connecting Europe Facility, the InvestEU Programme, Horizon Europe, as well as the European Regional Development and the Cohesion funds.
Member States can contribute to multi-country projects from their regional or national budgets. The European Investment Bank (EIB) and other entities, whether public or private, may contribute to multi-country projects where appropriate. When financial resources are State aid measures, state aid rules apply.
How will multi-country projects be coordinated?
The Commission, acting as multi-country project accelerator, will coordinate the setup of multi-country projects.
In the first step of that coordination, the Commission will be responsible for assessing the viability of proposed multi-country projects and publishing related calls for expression of interest addressed to all Member States.
Based on this, in the second step of coordination, the Commission will explore and advise on the possibilities for implementation of the multi-country project with the participating Member States. This includes guidance regarding strategic aspects of the multi-country projects’ implementation, the choice of funding sources and of the implementation mechanism.
The Commission will also support the implementation of multi-country projects by providing, as needed, technical assistance services, expertise, and the exchange of best practice.
Do State aid rules apply?
Yes. The procedures set out in this proposal are without prejudice to the normal State aid procedures, which need to be followed as for any other measure if it entails State aid. State aid control prevents crowding out of private investment, boosts leverage of these investments, prevents waste of public resources and limits distortions of competition. State aid rules also ensure that subsidy races are avoided within the internal market. 
What is a European Digital Infrastructure Consortium?
A European Digital Infrastructure Consortium is a new instrument proposed by the European Commission to help speed up and simplify the setup and implementation of multi-country projects, where other existing legal frameworks may not be appropriate.
A minimum of three Member States wishing to go ahead with a multi-country project and who want to use a European Digital Infrastructure Consortium to do so, will submit an application to the Commission.
Following the examination of Member States’ application the Commission will, if it concludes that all requirements provided for in the decision are satisfied, adopt a decision establishing the European Digital Infrastructure Consortium. Each consortium will have its own legal personality, governing body, statutes, and seat in a participating Member State.
Why invest public resources where private sector investment would work as well?
Multi-country projects using public support will be designed to target and address areas with sub-optimal investment situations, without duplicating or crowding out private financing and thus providing a clear European added value.
Compliments of the European Commission.
The post State of the Union: Path to the Digital Decade – Questions and Answers first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Today, the Commission proposed a Path to the Digital Decade, a concrete plan to achieve the digital transformation of our society and economy by 2030. The proposed Path to the Digital Decade will translate the EUʼs digital ambitions for 2030 into a concrete delivery mechanism. It will set up a governance framework based on an annual cooperation mechanism with Member States to reach the 2030 Digital Decade targets at Union level in the areas of digital skills, digital infrastructures, digitalisation of businesses and public services. It also aims to identify and implement large-scale digital projects involving the Commission and the Member States.
The pandemic highlighted the central role that digital technology plays in building a sustainable and prosperous future. In particular, the crisis exposed a divide between digitally apt businesses and those yet to adopt digital solutions, and highlighted the gap between well-connected urban, rural and remote areas. Digitalisation offers many new opportunities on the European marketplace, where more than 500,000 vacancies for cybersecurity and data experts remained unfilled in 2020. In line with European values, the Path to the Digital Decade should reinforce our digital leadership and promote human centred and sustainable digital policies empowering citizens and businesses.
Margrethe Vestager, Executive Vice-President for ‘A Europe Fit for the Digital Age’, said: “The European vision for a digital future is one where technology empowers people. So today we propose a concrete plan to achieve the digital transformation. For a future where innovation works for businesses and for our societies. We aim to set up a governance framework based on an annual cooperation mechanism to reach targets in the areas of digital skills, digital infrastructures, digitalisation of businesses and public services.”
Thierry Breton, Commissioner for the Internal Market, said: “Europe is determined to lead in the global technological race. Setting ourselves 2030 targets was an important step, but now we need to deliver. We must ensure that Europe is not in a position of great dependence in the years to come. Otherwise, we will remain too exposed to the ups and downs of the world, and miss out on economic growth and job creation. I believe in a Europe that leads on the markets of the future, not one that is a mere subcontractor.”
Path to the Digital Decade
Building on the 2030 Digital Compass, in which the Commission laid out the vision for a successful digital transformation of Europe’s economy and society by the end of the decade, the Commission now introduces a robust governance framework to reach the digital targets in the form of a Path to the Digital Decade.
Digital progress in the Member States has been very uneven in the last years. The trend shows that the countries progressing at a slow pace five years ago, have continued to progress slowly until now. With this new Path to the Digital Decade, there will be structured cooperation to work collectively towards the agreed objectives, while recognising different starting points among Member States.
Specifically, the Commission proposes to engage in an annual cooperation mechanism with Member States that will consist of:

A structured, transparent and shared monitoring system based on the Digital Economy and Society Index (DESI) to measure progress towards each of the 2030 targets; including key performance indicators (KPIs);
An annual report on the ‘State of the Digital Decade’, in which the Commission will evaluate progress and provide recommendations for actions;
Multiannual digital decade strategic roadmaps for each Member State, in which they will outline adopted or planned policies and measures in support of the 2030 targets;
A structured annual framework to discuss and address areas of insufficient progress through recommendations and joint commitments between the Commission and the Member States;
A mechanism to support the implementation of multi-country projects.

Progress monitoring and the report on the ‘State of the Digital Decade’
To ensure Europe is moving swiftly towards the Digital Decade objectives, the proposed governance framework foresees a progress monitoring system based on an enhanced Digital Economy and Society Index (DESI). The Commission would first develop projected EU trajectories for each target together with the Member States, which would in turn propose national strategic roadmaps to attain them. Each year, the Commission will submit a report on the ‘State of the Digital Decade’ to the European Parliament and the Council of the European Union with the aim to:

Present measured digital performance against the projected trajectories;
Make targeted recommendations to Member States for reaching the 2030 targets, taking national circumstances into account.

The Commission shall review the targets by 2026 to take stock of technological, economic and societal developments.
Multi-country projects
Multi-country projects are large-scale projects that would contribute to achieving the targets for Europe’s digital transformation by 2030 – projects that no single Member State could develop on its own. Such projects will allow Member States to come together and pool resources to build digital capacities in areas that are fundamental for enhancing Europe’s digital sovereignty and for fuelling Europe’s recovery.
The Commission has identified an initial list of multi-country projects, which includes several areas for investment: data infrastructure, low-power processors, 5G communication, high-performance computing, secure quantum communication, public administration, blockchain, digital innovation hubs, and investing in people’s digital skills.
Different targets will accelerate the process of digitalisation and will lead to greater resilience and technological sovereignty by bringing more specialists in the market to work in digital fields, or incentivising various industries to develop digital technologies in Europe.
The annual Report on the ‘State of the Digital Decade’ will provide the necessary information to account for developments and identified gaps in Europe’s digital transformation, and update the list of multi-country projects.
Multi-country projects should pool investments from EU funding resources, including from the Recovery and Resilience Facility, as well as from the Member States. Other public and private entities may invest in the projects where appropriate.
The Commission, acting as the multi-country projects accelerator, will help Member States in the identification of their interests in multi-country projects, give guidance on implementation mechanisms and provide assistance in the implementation, in order to ensure wide participation and successful delivery.
The programme provides for a new legal structure, the European Digital Infrastructure Consortium (EDIC), enabling the swift and flexible set-up and implementation of multi-country projects.
Background
The 2030 Digital Compass of March 2021, upon which today’s proposal builds, outlined the European way for the digitalised economy and society, and proposed a set of concrete digital targets in the areas of skills, infrastructures, businesses and public services.
The proposed Path to the Digital Decade is supported by the results of several consultations in which citizens, businesses, public administrations, Member States, industry and organisations shared their views on what is needed for a successful European digital transformation. Moreover, its implementation, including the design of follow-up initiatives, would be supported by discussions in the online forum dedicated to the Digital Compass.
In parallel, the Commission is working on finalising the proposal for a joint ‘Declaration on Digital Principles’ by the European Parliament, the Council and the Commission to ensure European values and rights are reflected in the digital space. This will ensure that everyone can enjoy the benefits of digital opportunities, such as universal access to the internet, algorithms that respect people and a secure and trusted online environment. The annual report on the ‘State of the Digital Decade’ will evaluate the implementation of Digital Principles.
For More Information

State of the Union Address by President von der Leyen

Questions & Answers – State of the Union: Path to the Digital Decade

Factsheet – Path to the Digital Decade

Presentation – Path to the Digital Decade
Proposal for a Decision establishing a Path to the Digital Decade
Staff working document
Digital Compass

Compliments of the European Commission.
The post State of the Union: EU Commission proposes a Path to the Digital Decade to deliver the EU’s digital transformation by 2030 first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.