Today, the European Commission has proposed revisions of two sets of EU rules to enhance consumer rights in a world reshaped by digitalisation and the COVID-19 pandemic. The Commission is reinforcing its safety net for EU consumers, for example, by making sure that dangerous products are recalled from the market or that credit offers are presented to consumers in a clear way, easily readable on digital devices. The proposal updates both the existing General Product Safety Directive as well as the EU rules on consumer credit to safeguard consumers.
Věra Jourová, Vice-President for Values and Transparency, said: “Consumers face many challenges, especially in the digital world which revolutionised shopping, services or financial markets. This is why we are stepping up consumer protection on two fronts: we are making it easier for consumers to avoid risks related to having a credit and we are putting even stronger rules for product safety in place. It will also put more responsibility on market players and make it more difficult for bad actors to hide behind complicated legal jargon.”   
Didier Reynders, Commissioner for Justice, said: “The COVID-19 crisis has impacted consumers in multiple ways and many have faced financial difficulties. The digitalisation that has been accelerated by the pandemic, leads to a surge of online shopping and is profoundly changing the financial sector. It is our duty to safeguard consumers, in particular, the most vulnerable ones. With our revision of the existing EU rules on consumer credit and general product safety, that’s exactly what we do!”
Online sales have increased steadily in the last 20 years and in 2020, 71% of consumers shopped online, often buying new technology products. From wireless earplugs and air purifiers to gaming consoles – the market for technological gadgets is vast. The General Product Safety Regulation will address risks related to these new technology products, such as cybersecurity risks, and to online shopping by, introducing product safety rules for online marketplaces. It will ensure that all products reaching EU consumers, through online marketplaces or from the neighbourhood shop, are safe, whether coming from within the EU or from outside. The new Regulation will make certain that marketplaces fulfil their duties so that consumers do not end up with dangerous products in their hands.
The revision of the Consumer Credit Directive provides that information related to credits must be presented in a clear way, adapted to the digital devices so that consumers understand what they are signing up for. Furthermore, the Directive will improve rules with which creditworthiness, i.e. whether or not a consumer will be able to repay the credit, is assessed. This is to avoid the issue of over-indebtedness. The regulation will ask Member States to promote financial education and to ensure debt advice is made available to consumers.
Next steps
The Commission’s proposals will now be discussed by Council and Parliament.
Background
General Product Safety Regulation
The General Product Safety Directive, in force since 2001, ensures that only safe products are sold on the EU single market. However, too many unsafe products still circulate on the EU market, creating an uneven playing field for businesses and an important cost for society and consumers. In addition, the rules need to be updated to address challenges linked to new technologies and online sales.
Consumer Credit Directive Proposal
Directive 2008/48/EC on credit agreements for consumers established a harmonised EU framework for consumer credit and provided a solid framework for fair access to credit for European consumers. However, since its entering into force in 2008 the digitalisation has profoundly changed the decision-making process and the habits of consumers in general. The revision today aims to address these developments.
Both proposals are part of the New Consumer Agenda, launched last year, aiming to update the overall strategic framework of the EU consumer policy.
Compliments of the European Commission.
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The COVID-19 pandemic has exacerbated existing structural weaknesses in the corporate sector and capital markets. Without an effective policy response, the number of undercapitalised and underperforming firms will likely rise and remain high, while an increasing amount of productive resources will be tied up in non-viable companies, dragging down investment and economic growth, according to a new OECD report.
The Future of Corporate Governance in Capital Markets Following the COVID-19 Crisis says that substantial financial resources will be needed for investment both to support the recovery from the COVID-19 crisis and to further strengthen resilience to possible future shocks. Strengthening corporate governance policies and frameworks will help both existing and new companies access the capital they need.
“Good corporate governance and well-functioning capital markets play a crucial role in supporting the recovery of our economies coming out of the COVID-19 crisis,” OECD Secretary-General Mathias Cormann said, launching the report in Rome with Italy’s Minister of Economy and Finance, Daniele Franco. “They also help to make the business sector more dynamic, competitive and resilient to possible future shocks, including through more effective management of environmental, social and governance risks. The global reach and review of the G20/OECD Principles of Corporate Governance will be important in meeting these objectives.”
The bond market continued to be a significant source of capital for non-financial companies following the outbreak of the crisis, according to the report. In 2020, non-financial companies issued a historical amount of USD 2.9 trillion of corporate bond debt. As a result, the volume of outstanding corporate bond debt reached an all-time high in real terms of almost USD 15 trillion at the end of 2020.
The quality of the outstanding stock of corporate debt has been falling. Between 2018 and 2020, the portion of BBB rated bonds – the lowest investment grade rating – accounted for 52% of all investment grade issuance. Between 2000 and 2007, that share was just 39%. Globally, debt has also accumulated mainly in businesses with lower debt servicing capacity.
While the stock market provided record amounts of capital money to established companies in 2020, it has not provided sufficient support to new companies. Since 2005, more than 30,000 companies have delisted from stock markets globally, equivalent to 75% of all listed companies today. These delistings have not been matched by new listings, leading to a major reduction of publicly listed companies. As a result, significantly fewer companies are using public equity markets and a large portion of the money raised in 2020 went to fewer and larger companies.
A strong corporate governance framework is essential for a well-functioning capital market. To tackle challenges posed by the crisis, the report highlights four priorities for policy makers:

Adapt the corporate governance framework to address some of the weaknesses revealed by the pandemic, such as the management of health, supply chain and environmental risks, as well as issues related to audit quality, increased ownership concentration and complex company group structures.

Facilitate access to equity markets for sound businesses. This will help strengthen the balance sheets of viable corporations and the emergence of new business models that are essential for a sustainable recovery and long-term resilience.

Improve the management of environmental, social and governance risks, notably by developing comprehensive frameworks for producing consistent, comparable, and reliable climate-related disclosure.

Ensure insolvency frameworks support recovery and resilience. Fit-for-purpose insolvency regimes that are coherent across jurisdictions will be essential.

The Corporate Governance Factbook, also released today, highlights the extent to which the G20/OECD Principles of Corporate Governance influence the development of frameworks globally. For example, since the Principles were last updated in 2015, 90% of 50 jurisdictions, including all OECD, G20 and Financial Stability Board members, have amended either their company law or securities law, or both.
Contact:

Spencer Wilson, OECD Media Office | spencer.wilson@oecd.org |tel. + 33 1 45 24 81 18

Compliments of the OECD.
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Today, the Commission published EU guidelines to ensure the safe resumption of activities in the cultural and creative sectors across the EU. At a time when the epidemiological situation is improving and vaccination campaigns are speeding up, Member States are gradually reopening cultural venues and activities. Today’s guidelines aim to provide a coordinated approach in line with the specific national, regional and local conditions. They are expected to guide the design and implementation of measures and protocols in EU countries to cover both the safe reopening as well as the sustainable recovery in the cultural and creative sectors.
Vice-President for Promoting our European Way of Life, Margaritis Schinas, said: “Culture helped people cope with the impacts of lockdowns and social distancing. It is now our turn to accompany the sectors in their path to reopening. We need coordinated and tailor-made efforts across the EU to allow the culture world to safely and gradually resume its activities and be more prepared for future crises. The cultural and creative sectors are strong European assets and are important for Europe’s sustainable recovery, increased resilience of European society, and more generally, our European way of life.”
Commissioner for Innovation, Research, Culture, Education and Youth, Mariya Gabriel said: “The cultural and creative industries and sectors have paid a heavy toll since the beginning of the coronavirus outbreak. At the same time, the crisis highlighted their importance for our society and economy. With the increased vaccine uptake, gradual lifting of restrictions, including in the field of culture is taking place. The aim of these guidelines is to facilitate coordination of Member States’ measures at EU level. Simultaneously, a safe re-opening of cultural settings should go hand in hand with a range of actions to ensure the sustainable recovery and resilience of the entire sector.”
The EU guidelines are based on the expertise of the European Centre for Disease Prevention and Control (ECDC) and exchanges with the Health Security Committee. They take into account the different epidemiological situations in the Member States and their evolution. They provide the indicators and criteria (such as the viral circulation, the vaccination coverage, the use of protective measures, the use of tests and contact tracing), to be taken into account when planning the resumption of certain activities.
More specifically, the guidelines recommend the following measures and protocols:

The lifting of all restrictions should be strategic and gradual, with a restricted number of participants at the beginning to assess the epidemiological situation;
Cultural establishments should have a preparedness plan detailing protocols of actions when COVID-19 cases are detected;

Targeted information and/or ad-hoc training should be made available for all staff in cultural establishments to minimise risks of infection;

Vaccination of persons working in cultural settings should be promoted to ensure their and the public’s protection;
Participants can be asked proof of negative COVID-19 test and/or vaccination and/or COVID-19 diagnosis in order to be admitted to the venue. Depending on the local circulation of variants, this requirement can be extended to fully vaccinated individuals;
Establishments should ensure that the contact details of the audiences are available in case they are needed for contact tracing;
The establishment should put in place targeted protective measures: maintaining social distancing whenever possible, clean and accessible hand-washing facilities, appropriate ventilation, and frequent cleaning of surfaces. The use of facemasks by attendees is an important complementary measure.

A range of actions to ensure the sustainable recovery of the entire sector should accompany the reopening of cultural venues. Actions at EU level complement those taken by Member States and by the sectors.
Member States are invited to take full advantage of the Recovery and Resilience Facility to invest broadly in the sectors and increase their capacity to adapt to new trends and emerge from the crisis.
The Commission has substantially increased its financial support to the cultural and creative sectors, with almost €2.5 billion from Creative Europe, and close to €2 billion from Horizon Europe dedicated to cultural, creative and inclusive projects from 2021 to 2027.
In autumn 2021, the Commission will publish an online guide on EU funding for culture, covering all existing EU funds that Member States and the sector can use.
Background
The wide-ranging restrictions, set in place since the outbreak of the COVID-19 pandemic to protect the health of citizens, have resulted in severe economic difficulties for a large proportion of the sectors, particularly for activities based on venues and visits as confirmed by the 2021 Annual Single Market Report. For example, cinema operators in the EU report a 70% drop in box office sales in 2020, music venues report a 76% drop in attendance (64% in revenues) and museums lost revenues up to 75-80% (in popular touristic regions). The crisis is expected to have a lasting impact on the entire value chain with collection of royalties for authors and performers also affected.
Since the onset of the pandemic, the Commission has taken several measures to address the consequences of the pandemic on the creative and cultural sectors, by complementing and supporting Member States’ actions. Measures range from additional flexibility in the implementation of existing programmes, and the setting-up of the Temporary Framework for state aid measures to additional funding under Creative Europe and Erasmus+ in 2020. In May 2020, the Commission also launched, in cooperation with the sector, a dedicated platform, Creatives Unite, to help artists, performers and others working in the cultural and creative sectors share information and initiatives to respond to the coronavirus crisis, and exchange ideas for a sustainable reopening.
Compliments of the European Commission.
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EU ambassadors today confirmed a provisional agreement reached between the Council presidency and the Parliament on a new directive harmonising rules for credit servicers and credit purchasers of non-performing loans issued by credit institutions.
The aim of the new rules is to support the development of the secondary market for non-performing loans in the EU in order to allow banks to clean their balance sheets of ‘bad loans’, while ensuring that the sale does not affect the rights of borrowers.

Efficient lending opportunities for our businesses and households are important for economic recovery in Europe. Making sure that credit institutions clean their balance sheets of non-performing loans will ensure better access to funding for citizens and entrepreneurs.
João Leão, Portugalʼs Minister for Finance

A bank loan is generally considered non-performing when more than 90 days pass without the borrower paying the agreed instalments or interests, or when it becomes unlikely that the borrower will reimburse it. Efficient management of non-performing loans is particularly important in the aftermath of the COVID-19 crisis to reduce risks in banks’ balance sheets and enable banks to focus on lending to businesses and citizens, thus supporting economic recovery in the EU.
The directive standardises the rules for credit servicers and credit purchasers across the EU and facilitates the sales of non-performing loans, including across national borders, while ensuring that borrowers’ rights are not hampered in the process. A designated authority in the home member state will authorise and supervise credit servicers, in close cooperation with the authorities of other member states.
The Council presidency and the Parliament’s negotiators have reached a provisional agreement on the following main issues discussed during the negotiations:

authorising credit servicing activities, to ensure borrowers are treated fairly and diligently
forbearance measures, to take into account the rights and interests of consumers before starting enforcement proceedings

Next steps
The Parliament and the Council are expected to adopt the directive after legal-linguistic revision. After it is signed and published in the Official Journal of the EU, the text will be transposed into national law within 24 months of the date of entry into force.
Compliments of the European Council and Council of the European Union.
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Speech by Christine Lagarde, President of the ECB, at the Brussels Economic Forum 2021 | Frankfurt am Main, 29 June 2021 |

Thank you for inviting me to speak to you today.
The economist Rudi Dornbusch once said that “in economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”
That describes the situation we face today very well. The pandemic has accelerated pre-existing trends at a pace we could never have imagined. There are possibilities for our economy in 2022 which seemed at least a decade away in 2019.
Companies have digitised their activities 20 to 25 times faster than they had previously thought possible. One in every five workdays are expected to move to the home after the pandemic ends, compared with just one in every 20 before. And the call for greener lifestyles has become thunderous. Having accepted tough restrictions to fight the pandemic, 70% of Europeans are now in favour of stricter government measures to fight climate change.
Europe has long wanted to shift towards a more sustainable, more productive economy – and we now have the very real opportunity to do so. If we capitalise on this moment, the pandemic could accelerate labour productivity growth by around 1% a year by 2024 – more than double the rate achieved after the great financial crisis.
So how can we capitalise on this opportunity?
During the pandemic, we have mainly been acting to preserve the economy, which was the necessary thing to do. Compensation of employees fell by 3.5% in 2020 compared with 2019, but household real disposable income only declined by 0.3% – mainly because government transfers compensated for the loss of income.
But as the pandemic passes, we need to shift the focus from preserving the economy to transforming it. This will require us to redirect spending by both public and private sectors towards the green and digital sectors of the future. Specifically, we need to see investment of around €330 billion every year by 2030 to achieve Europe’s climate and energy targets, and around €125 billion every year to carry out the digital transformation.
The NextGenerationEU (NGEU) programme will help channel public investment towards transformative sectors. But it is currently less clear whether the private financial sector can do the same. Fragmentation across national financial markets in Europe might constrain our ability to finance future investments in sufficient volume.
This is why I have argued that we need to add another element to our post-pandemic recovery plan, which is to match NGEU with what I have termed a green capital markets union (CMU) – a truly green European capital market that transcends national borders.
I see three reasons why this makes sense.
First, capital markets are particularly well-suited to direct financing towards future-oriented sectors like green and digital.
Though banks have an important role to play, capital markets are better able to finance projects with a defined purpose, directly linking investors to the impact they intend to achieve. They can provide more innovative investment vehicles. And they are better at drawing retail investors towards supporting transformative activities.
Green capital markets would not only help the climate transition, but also the digital transformation of our economy. Green and digital investments are often two sides of the same coin. For instance, digital technologies such as smart urban mobility, precision agriculture and sustainable supply chains are critical to the green transition.
The second rationale for Green CMU is that Europe already has a head start as the home of green capital markets. We can build on this solid foundation.
Europe is the location of choice for global green bond issuance, with around 60% of all green senior unsecured bonds issued in 2020 originating here. And the market is growing rapidly – the outstanding volume of green bonds issued in the EU has grown almost eightfold since 2015.
In addition, the euro has taken the lead as the global currency of green finance. Last year, around half of all green bonds issued globally were in euro. There is great scope for this role to grow once the green transition takes off worldwide and we see a generational transfer of wealth to millennials, who are bound to be concerned about the future.
Third, Green CMU is an area where we have the potential to make rapid progress, since it does not face the same challenges as conventional capital markets.
The European Commission is working towards completing a fully fledged CMU, but it will take time, in part because capital markets have developed nationally. That means we first have to open up and harmonise those markets in order to integrate them further.
But the green bond market does not face these same barriers. In fact, it has already achieved greater pan-European scale than the conventional bond market. Holdings of green bonds within the EU have, on average, half the home bias of conventional bonds.
So we have a real opportunity to build a genuinely European capital market from the outset. That’s why, in my view, specific initiatives under the CMU action plan should be fast-tracked – even if they are only applied to sustainable finance for now.
We need proper European supervision of green financial products with official EU seals, such as the forthcoming EU Green Bond Standard. We need harmonised tax treatment of investments in sustainable finance products to prevent green investments fragmenting along national lines. And we need further convergence in the efficiency of national insolvency frameworks, which may even entail carving out special procedures for green finance.
If we succeed, it would not only accelerate the transformation of our economy, but also act as an engine for the CMU project generally, testing and putting in place some of the measures that are needed to advance wider capital market integration.
This double dividend is, to my mind, too good an opportunity to pass up. Institutional change in Europe often takes longer than we expect. But let’s show that, once we are committed, this change can happen faster than we ever thought possible.

Compliments of the European Central Bank.
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New Value-Added Tax (VAT) rules for online shopping enter into force later this week* as part of efforts to ensure a more level playing field for all businesses, to simplify cross-border e-commerce and to introduce greater transparency for EU shoppers when it comes to pricing and consumer choice.
The EU’s VAT system was last updated in 1993 and has not kept pace with the rise in cross-border e-commerce that has transformed the retail sector in recent years. The Coronavirus pandemic has also further accelerated the boom in online retail, and again underlined the need for reform to ensure that the VAT due on online sales gets paid to the country of the consumer. The new rules also respond to the need to simplify life for shoppers and traders alike.
The new rules come into force on 1 July and will affect online sellers and marketplaces/platforms both inside and outside the EU, postal operators and couriers, customs and tax administrations, as well as consumers.
What is changing?
As of 1 July 2021, a number of changes will be introduced to the way that VAT is charged on online sales, whether consumers buy from traders within or outside the EU:

Under the current system, goods imported into the EU valued at less than €22 by non-EU companies are exempt from VAT. As of Thursday, this exemption is lifted so that VAT is charged on all goods entering the EU – just like for goods sold by EU businesses. Studies and experience have shown that this exemption is being abused, with unscrupulous sellers from outside the EU mislabelling consignments of goods, e.g. smartphones, in order to benefit from the exemption. This loophole allows these companies to undercut their EU competitors and costs EU treasuries an estimated €7 billion a year in fraud, leading to a bigger tax burden for other taxpayers.

Currently, e-commerce sellers need to have a VAT registration in each Member State in which they have a turnover above a certain overall threshold, which varies from country to country. From 1 July, these different thresholds will be replaced by one common EU threshold of €10,000 above which the VAT must be paid in the Member State where the goods are delivered. To simplify life for these companies and to make it much easier for them to sell into other Member States, online sellers may now register for an electronic portal called the ‘One Stop Shop’ where they can take care of all of their VAT obligations for their sales across the whole of the EU. This €10,000 threshold is already applicable for electronic services sold online since 2019.

Rather than grappling with complicated procedures in other countries, they can register in their own Member State and in their own language. Once registered, the online retailer can notify and pay VAT in the One Stop Shop for all of their EU sales via a quarterly declaration. The One Stop Shop will take care of transmitting the VAT to the respective Member State.

In the same vein, the introduction of an Import One Stop Shop for non-EU sellers will allow them to register easily for VAT in the EU, and will ensure that the correct amount of VAT makes its way to the Member State in which it is finally due. For consumers, this means a lot more transparency: when you buy from a non-EU seller or platform registered in the One Stop Shop, VAT should be part of the price you pay to the seller. That means no more calls from customs or courier services asking for an extra payment when the goods arrive in your home country, because the VAT has already been paid.

Already, businesses outside the EU have been registering in large numbers for the Import One Stop Shop, including the biggest global online marketplaces.
Background
Current EU VAT rules were last updated in 1993 – long before the digital age – and are ill-suited to the needs of businesses, consumers and administrations in an era of cross-border internet shopping. In the meantime, the online shopping boom has transformed retail across the world, and has accelerated even further during the pandemic.
While the new rules represent a big change in the way EU online businesses deal with their VAT needs, it will bring untold benefits when it comes to ease of doing business, cutting down on fraud and improving the consumer experience for online shoppers in the EU.
A similar ‘Mini One Stop Shop’ for VAT has already been running successfully since 2015 for cross-border sales of electronic services. Its extension to online sales of goods will offer even more advantages for online retailers and consumers in the EU. Similar reforms have been put in place and are working well in other jurisdictions such as Norway, Australia and New Zealand.
For more information
Full details including advice and factsheets for businesses and consumers, are available on our dedicated website.
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The EU Commission has today adopted two adequacy decisions for the United Kingdom – one under the General Data Protection Regulation (GDPR) and the other for the Law Enforcement Directive. Personal data can now flow freely from the European Union to the United Kingdom where it benefits from an essentially equivalent level of protection to that guaranteed under EU law. The adequacy decisions also facilitate the correct implementation of the EU-UK Trade and Cooperation Agreement, which foresees the exchange of personal information, for example for cooperation on judicial matters. Both adequacy decisions include strong safeguards in case of future divergence such as a ‘sunset clause’, which limits the duration of adequacy to four years.
Věra Jourová, Vice-President for Values and Transparency, said: “The UK has left the EU but today its legal regime of protecting personal data is as it was. Because of this, we are adopting these adequacy decisions today. At the same time, we have listened very carefully to the concerns expressed by the Parliament, the Members States and the European Data Protection Board, in particular on the possibility of future divergence from our standards in the UK’s privacy framework. We are talking here about a fundamental right of EU citizens that we have a duty to protect. This is why we have significant safeguards and if anything changes on the UK side, we will intervene”.
Didier Reynders, Commissioner for Justice, said: “After months of careful assessments, today we can give EU citizens certainty that their personal data will be protected when it is transferred to the UK. This is an essential component of our new relationship with the UK. It is important for smooth trade and the effective fight against crime. The Commission will be closely monitoring how the UK system evolves in the future and we have reinforced our decisions to allow for this and for an intervention if needed. The EU has the highest standards when it comes to personal data protection and these must not be compromised when personal data is transferred abroad.”
Key elements of the adequacy decisions

The UK’s data protection system continues to be based on the same rules that were applicable when the UK was a Member State of the EU. The UK has fully incorporated the principles, rights and obligations of the GDPR and the Law Enforcement Directive into its post-Brexit legal system.
With respect to access to personal data by public authorities in the UK, notably for national security reasons, the UK system provides for strong safeguards. In particular, the collection of data by intelligence authorities is, in principle, subject to prior authorisation by an independent judicial body. Any measure needs to be necessary and proportionate to what it intends to achieve. Any person who believes they have been the subject of unlawful surveillance may bring an action before the Investigatory Powers Tribunal. The UK is also subject to the jurisdiction of the European Court of Human Rights and it must adhere to the European Convention of Human Rights as well as to the Council of Europe Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data, which is the only binding international treaty in the area of data protection. These international commitments are an essential elements of the legal framework assessed in the two adequacy decisions.
For the first time, the adequacy decisions include a so-called ‘sunset clause’, which strictly limits their duration. This means that the decisions will automatically expire four years after their entry into force. After that period, the adequacy findings might be renewed, however, only if the UK continues to ensure an adequate level of data protection. During these four years, the Commission will continue to monitor the legal situation in the UK and could intervene at any point, if the UK deviates from the level of protection currently in place. Should the Commission decide to renew the adequacy finding, the adoption process would start again.
Transfers for the purposes of UK immigration control are excluded from the scope of the adequacy decision adopted under the GDPR in order to reflect a recent judgment of the England and Wales Court of Appeal on the validity and interpretation of certain restrictions of data protection rights in this area. The Commission will reassess the need for this exclusion once the situation has been remedied under UK law.

Background
On 19 February, the Commission published two draft adequacy decisions and launched the procedure for their adoption. Over the past months, the Commission has carefully assessed the UK’s law and practice on personal data protection, including the rules on access to data by public authorities in the UK. The Commission has been in close contact with the European Data Protection Board, which gave its opinion on 13 April, the European Parliament and the Member States. Following this in-depth process, the European Commission requested the green light on the adequacy decisions from Member States’ representatives in the so-called comitology procedure. The adoption of the decisions today, following the agreement from Member States’ representatives, is the last step in the procedure. The two adequacy decisions enter into force today.
The EU-UK Trade and Cooperation Agreement (TCA) includes a commitment by the EU and UK to uphold high levels of data protection standards. The TCA also provides that any transfer of data to be carried out in the context of its implementation has to comply with the data protection requirements of the transferring party (for the EU, the requirements of the GDPR and the Law Enforcement Directive). The adoption of the two unilateral and autonomous adequacy decisions is an important element to ensure the proper application and functioning of the TCA. The TCA provides for a conditional interim regime under which data can flow freely from the EU to the UK.  This interim period expires on 30 June 2021.
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The results show that large banks continue to have strong capital levels and could continue lending to households and businesses during a severe recession.
The Federal Reserve Board on Thursday released the results of its annual bank stress tests, which showed that large banks continue to have strong capital levels and could continue lending to households and businesses during a severe recession.
“Over the past year, the Federal Reserve has run three stress tests with several different hypothetical recessions and all have confirmed that the banking system is strongly positioned to support the ongoing recovery,” said Vice Chair for Supervision Randal K. Quarles.
All 23 large banks tested remained well above their risk-based minimum capital requirements and as laid out previously by the Board, the additional restrictions put in place during the COVID event will end. All large banks will be subject to the normal restrictions of the Board’s stress capital buffer, or SCB, framework.
The SCB framework was finalized last year and maintains strong capital requirements in the aggregate for large banks with an increase in requirements for the largest and most complex banks. It sets capital requirements via the stress tests, and as a result, banks are required to hold enough capital to survive a severe recession. If a bank does not stay above its capital requirements, which include the SCB, it is subject to automatic restrictions on capital distributions and discretionary bonus payments.
The Board’s stress tests help ensure that large banks can support the economy during economic downturns. The tests evaluate the resilience of large banks by estimating their losses, revenue, and capital levels—which provide a cushion against losses—under hypothetical scenarios over nine future quarters.
This year’s hypothetical scenario includes a severe global recession with substantial stress in commercial real estate and corporate debt markets. The unemployment rate rises by 4 percentage points to a peak of 10-3/4 percent. Gross domestic product falls 4 percent from the fourth quarter of 2020 through the third quarter of 2022. And asset prices decline sharply, with a 55 percent decline in equity prices.
Under that scenario, the 23 large banks would collectively lose more than $470 billion, with nearly $160 billion losses from commercial real estate and corporate loans. However, their capital ratios would decline to 10.6 percent, still more than double their minimum requirements.
Also on Thursday, the Board corrected an error with the results for BNP Paribas USA from the June and December 2020 stress tests. As a result, the projected pre-provision net revenue, projected pre-tax net income, and projected capital ratios were corrected.
For media inquiries, call 202-452-2955.
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The webinar looked at the state of digital transformation in European regions, taking stock of the latest research showing an increasing digital divide across European regions and urban-rural communities. Invited speakers shared their views on how public authorities at all levels can facilitate the digital transition of small and medium enterprises (SMEs), showcasing some best practices and collaboration initiatives from the European Entrepreneurial Regions.
In the opening session, Mr Ivan Štefanec, Member of the European Parliament and President of SME Europe, identified three topics crucial for accelerating the digital transition of SMEs – the need to work on the digital infrastructure, digital skills and the legal framework for the digital economy.
Ms Outi Slotboom from the European Commission’s DG GROW provided some facts and figures explaining why small businesses tend to lag behind in digital transition. She indicated that EU programmes and instruments had to be designed in a way to address diverse needs of SMEs – addressing advanced companies with more sophisticated digital solutions and, on the other hand, providing more basic forms of support for traditional companies.
Mr Eddy Van Hijum, member of the CoR and rapporteur on the SME Strategy, said that European programmes should strike a balance between supporting R&D and innovation of front runners in advanced technologies and providing more conventional support for the application of proven digital technologies in smaller businesses and family firms in various sectors. Mr Van Hijum highlighted the importance of involving local and regional authorities in the development and implementation of national recovery plans, also in their parts related to digitalisation.
The first panel session of the webinar was dedicated to the presentation of preliminary results of the study run by the European Committee of the Regions ECON commission on ‘The state of digital transformation at regional level and COVID-19 induced changes to economy and business models, and their consequences for regions’. Representatives of the Formit Foundation (MsSimona Cavallini) and Eurochambres (Mr Christoph Riedmann) revealed concerns over the growing territorial digital divide in Europe. The final report, expected to be published by mid-July, proposes a framework for measuring digital preparedness in regions, identifies the specific contextual conditions which are needed to favour the digital transformation of SMEs and analyses the type of support local and regional authorities may provide. The study builds on a survey responded by 87 entities (LRAs, chambers of commerce, etc.) from 21 EU countries and further illustrations through 8 in-depth case studies.
Reacting to the study results, Mr Dan Dalton from Allied for Start-ups, said that the pandemic has emphasised the importance of digitalisation in the economy and created new market opportunities for start-ups across Europe. He stressed the importance of public financing to be used as a framework to unlock private investment and to address market failures, such as digital infrastructure in rural areas.
The second panel session provided an opportunity to look in a greater detail into regional instruments supporting digitalisation of SMEs, building on the collaboration and best practices in the European Entrepreneurial Regions (EER).
The session started with a presentation by Ms Anne-Marie Sassen from the European Commission’s DG CONNECT, focussing on ways how EU instruments such as Digital Innovation Hubs (DIHs), clusters and industry alliances can foster digital transition of SMEs. Ms Sassen has particularly highlighted the ongoing pre-selection process for EDIHs , explaining the added value of promoting networking of EDIHs, clusters and Europe Enterprise Network offices to offer a seamless service to SMEs on the ground.
Mr Vincent Duchêne from the Idea Consult, partner in the ongoing collaboration project of the EER regions, presented a framework of the EER regions’ collaboration in the area of digital transition. The main focus of the cooperation in this area is currently on the future collaboration between EDIHs.
Further presentations from representatives of the North Brabant (EER 2013), Lower Austria (EER 2017) and Silesia (EER 2021-22) delivered an insight into some best practices for supporting SMEs by regional authorities, using available EU programmes. Speakers highlighted the key objectives and benefits resulting from cross-regional cooperation on digitalisation.
In the conclusion, Mr Michael Murphy, President of the CoR ECON commission, said that,in order to meet the objectives of Europe’s Digital Decade, public authorities in the EU need a multi-level, collaborative and inclusive approach to promote digital transition and digital cohesion in the EU, wisely using the resources of the MFF and the Recovery and Resilience Facility . Mr Murphy said that the digital adoption and catch-up of existing SMEs should be among the top priorities in the new EU digital programmes.
​​​​​​​​​The final report of the CoR/Eurochambres on ‘The state of digital transformation at regional level and COVID-19 induced changes to economy and business models, and their consequences for regions’ will be published by mid-July and you will receive a link by e-mail.
Compliments of the European Committee of the Regions.
The post Making digital transition work for all SMEs first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

EU carbon sinks will de facto raise 2030 emissions reduction target to 57%
Greenhouse gas budget must guide 2040-target
New independent EU scientific body to monitor progress

The new EU Climate Law increases the EU’s 2030 emissions reductions target from 40% to at least 55%. With the contribution from new carbon sinks it could raise to 57%.
Parliament endorsed the Climate Law, agreed informally with member states in April, with 442 votes to 203 and 51 abstentions. It transforms the European Green Deal’s political commitment to EU climate neutrality by 2050 into a binding obligation. It gives European citizens and businesses the legal certainty and predictability they need to plan for this transition. After 2050, the EU will aim for negative emissions.
Stepping up ambition in 2030
The new EU Climate Law increases the EU’s target for reduction of greenhouse gas (GHG) emissions by 2030 from 40% to at least 55%, compared to 1990 levels. Additionally, an upcoming proposal from the Commission on the LULUCF Regulation to regulate GHG emissions and removals from land use, land use change and forestry, will increase EU carbon sinks and will hence de facto increase the 2030 EU’s target to 57%.
Greenhouse gas budget must guide upcoming 2040 target
The Commission will make a proposal for a 2040 target at the latest six months after the first global review in 2023 foreseen in the Paris Agreement. In line with Parliament’s proposal, the Commission will publish the maximum amount of GHG emissions estimated the EU can emit until 2050 without endangering the EU’s commitments under the Agreement. This so-called ‘GHG budget’ will be one of the criteria to define the EU’s revised 2040 target.
By 30 September 2023, and every five years thereafter, the Commission will assess the collective progress made by all EU countries, as well as the consistency of national measures, towards the EU’s goal of becoming climate neutral by 2050.
European Scientific Advisory Board on Climate Change
Given the importance of independent scientific advice, and on the basis of a proposal from Parliament, a European Scientific Advisory Board on Climate Change will be set-up to monitor progress and to assess whether European policy is consistent with these objectives.
Quote
Parliament rapporteur Jytte Guteland (S&D, Sweden) said: “I am proud that we finally have a climate law. We confirmed a net emissions reductions target of at least 55%, closer to 57% by 2030 according to our agreement with the Commission. I would have preferred to go even further, but this is a good deal based on science that will make a big difference. The EU must now reduce emissions more in the next decade than it has in the previous three decades combined, and we have new and more ambitious targets that can inspire more countries to step up.”
Next steps
The deal is expected to be approved by the Council shortly. The Regulation will then be published in the Official Journal and enter into force 20 days later. The Commission plans to present a series of proposals on 14 July 2021 in order for the EU to be able to reach the more ambitious 2030-target.
Background
Parliament has played an important role in pushing for more ambitious EU climate legislation and declared a climate emergency on 28 November 2019.
Compliments of the European Parliament.
The post EU Climate Law: MEPs confirm deal on climate neutrality by 2050 first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.