HM Treasury | 5 June 2021, London, United Kingdom
We, the Finance Ministers and Central Bank Governors of the G7, met virtually on 28 May 2021, and Finance Ministers met in London on 4-5 June 2021, joined by the Heads of the International Monetary Fund (IMF), World Bank Group, Organisation for Economic Cooperation and Development (OECD), Eurogroup, and (on 28 May) Financial Stability Board (FSB). We agreed concrete actions to address today’s historic challenges and as part of our renewed and urgent effort towards deeper multilateral economic cooperation.
Building a strong, sustainable, balanced and inclusive global economic recovery
1.We will continue to work together to ensure a strong, sustainable, balanced and inclusive global recovery that builds back better and greener from the Covid-19 pandemic, recognising the disproportionate impact of the pandemic on certain groups including women, youth and vulnerable populations. We commit to sustain policy support as long as necessary and invest to promote growth, create high-quality jobs and address climate change and inequalities. As our economies re-open, we will continue to take steps to limit the uneven impact of the crisis by targeting support to where it is needed most. Once the recovery is firmly established, we need to ensure the long-term sustainability of public finances to enable us to respond to future crises and address longer-term structural challenges, including for the benefit of future generations. Monetary policy will continue to support the economic recovery from the pandemic and ensure price stability, consistent with central bank mandates. We reaffirm our exchange rate commitments as elaborated in May 2017. We will work to build a safe, resilient and open global economic system.
2.The Covid-19 pandemic can only be overcome when it is brought under control everywhere. There is an overwhelming moral, scientific and economic case for ensuring equitable, safe, effective and affordable access to Covid-19 vaccines, therapeutics and diagnostics across the world. Accelerating the end of the pandemic would add trillions of dollars to global GDP. We have already provided significant support, including to all pillars of the ACT-Accelerator. We welcome increased financial commitments by some G7 members and look forward to further commitments to help close the funding gap. We welcome the World Bank’s efforts on global health and vaccines, and urge them to step up the use of their considerable convening and financial firepower to address financial and operational challenges to more timely vaccine access by developing countries, including through COVAX. We also ask the IMF to explore adapting existing facilities to support vaccine financing. We strongly encourage private sector actors, including the pharmaceutical industry, to step up their contributions to fighting the current pandemic.
Transformative effort to tackle climate change and biodiversity loss
3.We commit to a multi-year effort to deliver the significant structural change needed to meet our net zero commitments and environment objectives in a way that is positive for jobs, growth, competitiveness and fairness. We commit to properly embed climate change and biodiversity loss considerations into economic and financial decision-making, including addressing the macroeconomic impacts and the optimal use of the range of policy levers to price carbon.
4.We emphasise the need to green the global financial system so that financial decisions take climate considerations into account. This will help mobilise the trillions of dollars of private sector finance needed, and reinforce government policy to meet our net zero commitments. We support moving towards mandatory climate-related financial disclosures that provide consistent and decision-useful information for market participants and that are based on the Task Force on Climate-related Financial Disclosures (TCFD) framework, in line with domestic regulatory frameworks. Investors need high quality, comparable and reliable information on climate risks. We therefore agree on the need for a baseline global reporting standard for sustainability, which jurisdictions can further supplement. We welcome the International Financial Reporting Standards Foundation’s programme of work to develop this baseline standard under robust governance and public oversight, built from the TCFD framework and the work of sustainability standard-setters, involving them and a wider range of stakeholders closely to foster global best practice and accelerate convergence. We encourage further consultation on a final proposal leading to the establishment of an International Sustainability Standards Board ahead of COP26.
5.In addition, we recognise the growing demand for more information on the impact that firms have on the climate and the environment. We recognise that many jurisdictions and organisations are already developing impact reporting initiatives, including but not limited to reporting on net zero alignment and broader sustainability metrics. We will work closely together and with our international partners to determine the best approach to ensure global consistency.
6.We look forward to the establishment of the Taskforce on Nature-related Financial Disclosures and its recommendations. We welcome the Dasgupta Review on the Economics of Biodiversity and the related OECD Policy Guide on Biodiversity. More broadly, we welcome the continued commitments to tackle climate change by financial firms across the world, including through their active participation in the Glasgow Financial Alliance for Net Zero.
7.We recognise that climate change poses increasing physical and transition risks to regulated financial institutions and to financial stability, and that these risks have distinct characteristics we need to take into account. G7 authorities consider it important for financial firms to manage the financial risks of climate change using the same risk management standards as applied to other financial risks. G7 Central Banks will assess the financial stability risks posed by climate change, and will consider drawing on, as appropriate, scenarios published by the Network for Greening the Financial System. Central Banks will share learnings on taking climate-related risks into account in their own operations and balance sheets as appropriate, and look forward to discussing later in the year how they might make their own disclosures based on the recommendations of the TCFD. We fully support the FSB in developing an ambitious roadmap that identifies and addresses climate-related financial risks, including through steps to promote comparable disclosures, address data gaps, enhance vulnerabilities assessments and promote consistent regulatory and supervisory practices. We also support the Sustainable Finance Working Group in developing their G20 sustainable finance roadmap, with an initial climate focus.
8.International climate finance is critical for supporting developing countries’ climate change adaptation and mitigation efforts. We reaffirm the collective developed country goal to mobilise US$100 billion annually for developing countries from public and private sources, in the context of meaningful mitigation actions and transparency on implementation. We commit to increase and improve our climate finance contributions through to 2025, including increasing adaptation finance and finance for nature-based solutions. We welcome the commitments already made by some G7 countries to increase climate finance. We look forward to further commitments at the G7 Leaders’ Summit or ahead of COP26. We call on all the Multilateral Development Banks (MDBs) to set ambitious dates for Paris Alignment ahead of COP26, and welcome their work supporting client countries. We urge the MDBs to mobilise increased climate finance including from the private sector, and to increase their support for a clean energy transition, adaptation and resilience, and nature. We welcome the IMF’s increasingly critical role in supporting members’ management of climate risks and transitions to net zero, including through surveillance. We commit to including climate coverage within our countries’ IMF bilateral surveillance reports, and call on others to do the same.
9.Environmental crimes have a serious impact on the planet’s biodiversity, generate billions of dollars in illicit finance and enable corruption and transnational organised crime. We agree that beneficial ownership registries are an effective tool to tackle illicit finance. We are implementing and strengthening registries of company beneficial ownership information to provide timely, direct and efficient access for law enforcement and competent authorities to adequate, accurate and up-to-date information, including through central registries. We further note the benefits of making beneficial ownership information publicly available where possible. We call on all countries to fully implement the Financial Action Task Force (FATF) Standards and strengthen them.
Continued Support to Low-Income and Vulnerable Countries
10.The IMF estimates that, between now and 2025, low income countries will need around US$200 billion to step up the response to the pandemic and build external buffers and an additional US$250 billion in investment spending to resume and accelerate their income convergence with advanced economies. We remain committed to supporting the poorest and most vulnerable countries as they address health and economic challenges associated with Covid-19. We strongly support the new general allocation of Special Drawing Rights (SDRs) of US$650 billion to help meet the long-term global need for reserve assets. We urge the implementation of this allocation by the end of August 2021, accompanied by transparency and accountability measures including updated IMF guidance on how countries can appropriately use an SDR allocation.
11.G7 countries are actively considering voluntarily channelling a proportion of their allocated SDRs to significantly magnify the impact of this general allocation. We encourage the IMF to work quickly with all relevant stakeholders to explore a menu of options for channelling SDRs to further support health needs, including vaccinations, and help enable greener, more robust economic recoveries in the most affected countries. We will work to scale up financing to the Poverty Reduction and Growth Trust and welcome the IMF’s review of concessional financing and policies to strengthen its capacity to support low income countries.
12.Tackling debt vulnerabilities and promoting debt transparency, including through regular debtor and creditor data reconciliation, is essential to unlocking sustainable and inclusive growth in developing countries. We reiterate our commitment to implement the G20 and Paris Club Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative and call on all official bilateral creditors to do the same. We welcome the establishment of the Creditor Committee for Chad, and look forward to swift and successful debt treatments for this and future cases. The private sector is expected to provide at least as favourable debt treatment in line with the Common Framework. We commit to publish our own creditor portfolios on a loan-by-loan basis for future direct lending by the end of 2021, and urge all other G20 members to do the same, and to undertake the self-assessment in line with the G20’s Operational Guidelines for Sustainable Financing.
13.We encourage the private sector to adhere to the Institute of International Finance’s Voluntary Principles for Debt Transparency and to submit information on their sovereign lending to the OECD transparency data portal once operationalised this year. We welcome the establishment of a G7 Private Sector Working Group to bring together the International Financial Institutions (IFIs), market and legal profession participants and country experts to explore possible enhancements to the contractual approach.
14.We welcome Sudan’s steady progress towards the Heavily Indebted Poor Countries (HIPC) decision point, putting it on a path to clear its historic debts and re-engage with IFIs. We have worked with international partners to agree on an ambitious financing package to clear the full amount of Sudan’s arrears to the IMF, with G7 members pledging our share of IMF internal resources as well as providing grant financing as needed and bridging loans for the African Development Bank, the World Bank and the IMF. The G7 commits to providing Sudan with comprehensive debt relief upon reaching the HIPC Completion Point and we encourage other creditors to do the same.
15.All avenues should be explored to enable MDBs to efficiently and effectively use their resources. We support the G20’s ongoing work on MDB balance sheet optimisation, and see considerable merit in further analysis to review MDBs’ capital adequacy frameworks to potentially unlock additional financing, while preserving credit ratings and respecting preferred creditor treatment, development mandates and governance. We welcome advancing IDA replenishment by one year and look forward to its ambitious conclusion by December 2021 to support recovery in low income countries. We call on IDA to further use its balance sheet to unlock additional resources for IDA countries in a sustainable manner.
Shaping a Safe and Prosperous Future for All
16.We strongly support the efforts underway through the G20/OECD Inclusive Framework to address the tax challenges arising from globalisation and the digitalisation of the economy and to adopt a global minimum tax. We commit to reaching an equitable solution on the allocation of taxing rights, with market countries awarded taxing rights on at least 20% of profit exceeding a 10% margin for the largest and most profitable multinational enterprises. We will provide for appropriate coordination between the application of the new international tax rules and the removal of all Digital Services Taxes, and other relevant similar measures, on all companies. We also commit to a global minimum tax of at least 15% on a country by country basis. We agree on the importance of progressing agreement in parallel on both Pillars and look forward to reaching an agreement at the July meeting of G20 Finance Ministers and Central Bank Governors.
17.Innovation in digital money and payments has the potential to bring significant benefits but also raise public policy and regulatory issues. G7 Central Banks have been exploring the opportunities, challenges as well as the monetary and financial stability implications of Central Bank Digital Currencies (CBDCs) and we commit to work together, as Finance Ministries and Central Banks, within our respective mandates, on their wider public policy implications. We note that any CBDCs, as a form of central bank money, could act as both a liquid, safe settlement asset and as an anchor for the payments system. Our objective is to ensure that CBDCs are grounded in long-standing public sector commitments to transparency, the rule of law and sound economic governance. CBDCs should be resilient and energy-efficient; support innovation, competition, inclusion, and could enhance cross-border payments; they should operate within appropriate privacy frameworks and minimise spillovers. We will work towards common principles and publish conclusions later in the year.
18.We reiterate that no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory, and oversight requirements through appropriate design and by adhering to applicable standards. We are committed to international cooperation to ensure common standards, including by supporting international standard setting bodies in reviewing existing regulatory standards, and emphasise the importance of addressing any identified gaps. We support the FSB’s ongoing work in reviewing regulatory, supervisory and oversight challenges to the implementation of its High Level Recommendations for global stablecoin arrangements. We continue to support the ambitious implementation of the G20 Roadmap to enhance cross–border payments and welcome the publication of the FSB consultation on Targets for Addressing the Four Challenges of Cross-border Payments.
19.Global implementation of the FATF Standards for combatting money laundering, terrorist financing and proliferation financing remains uneven. We recognise the role of the nine FATF-Style Regional Bodies (FSRBs) in assessing and supporting implementation of the FATF Standards around the world. We commit to provide additional expertise and funding to support the FSRB’s assessment programmes by at least US$17 million and 46 assessors over 2021-24. We call on the G20 and all FATF members, the IMF and the World Bank to increase their support.
20.It is vital to continue learning lessons from Covid-19 and ensure we are better prepared for future pandemics. We look forward to the Pandemic Preparedness Partnership’s Report to G7 Leaders and the G20 High Level Independent Panel’s findings, and will consider their recommendations, particularly on financing mechanisms. Recognising the urgent need to avoid a repeat of the Covid-19 crisis, we commit to work together, and with relevant international partners, to improve international coordination and accountability between global health and finance policy makers. We will work together with our health colleagues in the second half of this year, including with industry, to explore proposals for strengthening market incentives for antibiotic drug development to help tackle antimicrobial resistance – the “silent pandemic”. We must act now to secure the health and economic prosperity of our citizens and that of future generations.
Copyright by the Crown | Compliments of HM Treasury

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The G7 on the 5 June 2021 agreed to back an historic international agreement on global tax reform which delivers on the Chancellor’s promise for big international companies to start paying their fair share.
G7 Finance Ministers during their meeting in London came together to tackle the tax challenges that arise from the global digital economy. Following years of discussions, finance ministers agreed to reforms which will see multinationals pay their fair share of tax in the countries they do business. They also agreed to the principle of a global minimum rate that ensures multinationals pay tax of at least 15% in each country they operate in.
Ensuring markets play their part in the transition to net zero, the group also followed the UK’s lead by giving a commitment to make it mandatory for firms to report the climate impact of their investment decisions – and concrete steps to crack down on environmental criminals.
The UK’s Chancellor of the Exchequer Rishi Sunak said: “These seismic tax reforms are something the UK has been pushing for and a huge prize for the British taxpayer – creating a fairer tax system fit for the 21st century. This is a truly historic agreement and I’m proud the G7 has shown collective leadership at this crucial time in our global economic recovery.”
Global Tax Reform:
During the meeting, Finance Ministers agreed the principles of an ambitious two Pillar global solution to tackle the tax challenges arising from an increasingly globalised and digital global economy.
Under Pillar One of this historic agreement, the largest and most profitable multinationals will be required to pay tax in the countries where they operate – and not just where they have their headquarters.
The rules would apply to global firms with at least a 10% profit margin – and would see 20% of any profit above the 10% margin reallocated and then subjected to tax in the countries they operate.
The fairer system will mean the UK will raise more tax revenue from large multinationals and help pay for public services here in the UK.
Under Pillar Two, the G7 also agreed to the principle of at least 15% global minimum corporation tax operated on a country by country basis, creating a more level playing field for UK firms and cracking down on tax avoidance.
Discussions on the two Pillars have been ongoing for many years – with the Chancellor making securing a global agreement a key priority of the UK’s G7 Presidency. The agreement will now be discussed in further detail at the G20 Financial Ministers & Central Bank Governors meeting in July.
Improving climate disclosures:
Finance Ministers also accelerated action on environmental issues, following in the UK’s footsteps by committing for the first time to properly embed climate change and biodiversity loss considerations into economic and financial decision-making.
Six years since the Task Force on Climate-Related Financial Disclosures (TCFD) was created, the UK was instrumental in getting G7 countries to move towards making climate disclosures mandatory across their respective economies. It comes just over six months after the UK led the way by being the first country in the world to commit to do so in November 2020.
This is a major step towards ensuring the global financial system plays its part transition to net zero, as investors better understand how firms are managing climate risks and can allocate finance accordingly.
A coordinated G7 approach is crucial to avoid inconsistent information across markets and extra red tape, so the Finance Ministers also backed work by the International Financial Reporting Standards Foundation to develop a baseline global standard for high-quality, granular sustainability reporting, built from the TCFD framework and work of sustainability standard-setters.
Supporting nature and tackling environmental crime:
In support of the UK’s work to foster a nature-positive economy, the Finance Ministers welcomed the imminent launch of a taskforce on nature-related financial disclosures – to mirror the TCFD – and agreed to crack down on the proceeds of environmental crimes by introducing and strengthening central company beneficial ownership registries. The UK was one of the first countries in the world to introduce a public beneficial ownership registry in 2016.
Making beneficial ownership public through these registries help law enforcement trace ill-gotten gains that are laundered through complex company structures, identify who ultimately owns or controls the company and bring the criminals to justice. And the increased transparency will also protect the UK and the rest of the G7 from other criminal threats – like corruption, fraud and terrorist financing.
Support for vulnerable countries:
The G7 also committed to continue supporting the poorest and most vulnerable countries as they address health and economic challenges associated with COVID. Building on their milestone backing of $650bn general allocation of Special Drawing Rights (SDRs) earlier this year, Finance Ministers and Central Bank Governors called for swift implementation by the end of August.
G7 countries also agreed to actively consider voluntarily channelling a proportion of their allocated SDRs to support further health needs, including vaccinations and help enable greener, more robust economic recoveries in the most affected countries.
Tackling debt vulnerabilities and promoting debt transparency is essential in unlocking sustainable and inclusive growth in developing countries. The G7 also committed to publishing the detail of new lending on a loan-by-loan basis and hope the G7 leading the way on debt transparency will pave the way for G20 nations and private sector creditors to do the same.
The G7 also welcomed the World Bank’s efforts on global health and vaccines, and urged them to use their financial firepower to help poor countries obtain vaccines, including through COVAX. The G7 also called on the IMF to ramp up its efforts to finance vaccines, and agreed that private sector, including the pharmaceutical industry, to play their parts more too.
In recognition of need to continue learning lessons from Covid-19, and being prepared for future pandemics, Finance Ministers also agreed to develop new proposals to unlock the market incentives for producing antibiotics to prevent anti-microbial resistance. Finance Ministers agreed that they must act now to secure the health and economic prosperity of citizens across the G7 and that of future generations.
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05/06/2021 – OECD Secretary-General Mathias Cormann welcomed today’s ground-breaking agreement by G7 Finance Ministers on key elements of international tax reform designed to address the tax challenges of the digitalisation and the globalisation of the economy.
“Governments around the world need to be able to raise the necessary revenue to fund the essential public services and support that their populations require and expect, in a way that is efficient, least distorting and also fair and equitable”, said Mr. Cormann.
“The combined effect of the globalisation and the digitalisation of our economies has caused distortions and inequities which can only be effectively addressed through a multilaterally agreed solution. “Today’s consensus among the G7 Finance Ministers, including on a minimum level of global taxation, is a landmark step toward the global consensus necessary to reform the international tax system.
“There is important work left to do. But this decision adds important momentum to the coming discussions among the 139 member countries and jurisdictions of the OECD/G20 Inclusive Framework on BEPS, where we continue to seek a final agreement ensuring that multinational companies pay their fair share everywhere.”
Working with over 100 countries, the OECD is a global policy forum that promotes policies to improve the economic and social well-being of people around the world.
Compliments of the OECD
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Speech by Christine Lagarde, President of the ECB, on the occasion of the awarding of the Prix Turgot 2021, Paris |
It is a great pleasure to be here once again in Bercy, which brings back so many memories. I am very grateful to Jean-Claude Trichet and the Cercle Turgot for bestowing this prize on me. It is an honour to join such an illustrious group of recipients.
Anne-Robert, Jacques Turgot himself said that “the whole mass of humanity … marches constantly, though slowly, toward greater perfection”. When I reflect on my career as a policymaker in Paris, Washington and Frankfurt, these words resonate with me greatly.
History never moves in a straight line. Day-to-day, it can be hard to perceive any direction at all. But I do believe that, in retrospect, we can make out a clear path towards progress.
After two decades working in the private sector, I have held public office throughout two decades of crises – a period when Europe has been severely put to the test. But each crisis has taught us a valuable lesson – and we have had the humility to learn.
It is thanks to those past lessons that we have been able to respond to the pandemic effectively. The sum of our crisis experience – as painful as it may have been at the time – has helped us to avert what would have been the greatest crisis of them all.
There are three lessons from the past crises that I would like to reflect on today. First, the importance of effective financial regulation for sustainable growth. Then, the importance of credible commitment in times of great uncertainty. And lastly, the importance of proper policy alignment.
The importance of financial regulation
The first lesson came by way of the great financial crisis, which was already brewing in 2007, just a few months after I took office here, and unfolded in 2008. This crisis laid bare many issues, but perhaps most relevant is what it showed us about why we needed effective financial regulation.
Before the crisis, some saw a trade-off between effective financial regulation and an innovative financial sector that supported growth. The belief was that keeping the financial sector reined in tightly would come at the cost of less innovation and slower growth of lending to the economy.
That notion was shattered very quickly when the financial crisis plunged us into a deep recession. It became clear that the lack of regulation did not really support lending over the longer term. In fact, banks were forced to start rebuilding capital in the middle of a slump, which amplified the credit crunch facing the economy and prolonged the recovery from the crisis.
Europe learnt the lesson. It undertook a swathe of regulatory reforms targeted at banks and non-banks alike. Since 2011, European banks have nearly doubled their core capital ratios to over 14%.[1] We also saw the creation of European banking supervision to give us a broad European view of risks to financial stability.
This meant that, when the pandemic hit, the financial sector could play a fundamentally different role. Instead of being a source of instability, banks could be mobilised to enhance our response to the pandemic, rapidly funnelling liquidity to the economy. From March to May last year, bank lending to companies in the euro area rose by almost €250 billion, the largest jump on record in a three-month period.
The increase in bank capital before the crisis meant that supervisors could free up €120 billion of additional capital for new lending. And thanks to European banking supervision this decision was taken quickly and collectively, rather than in a drawn-out negotiation between multiple national supervisors. This joint European action also averted the risk of stigma that we had previously feared.
What the financial crisis taught us, essentially, is that there is no trade-off between effective regulation and supporting growth. A robust financial sector is an asset during a crisis. And our experience during the pandemic has proven the wisdom of this lesson beyond doubt.
The importance of credible commitment
But the financial crisis also had a more profound impact on Europe, morphing into the euro area sovereign debt crisis. I had a unique perspective on this event, witnessing its start when I was a finance minister and seeing it continue to unfold during my time as IMF Managing Director. This crisis produced the second lesson I would like to highlight, which was possibly easier to see when one was looking from the outside.
It was clear early on that our monetary union was lacking a full set of institutions and needed to be strengthened. We became painfully aware that the euro area was particularly vulnerable to self-fulfilling panics. What became evident is that the perceived commitment of policymakers was a crucial variable in effective policymaking.
Initially, we perhaps underestimated how important those perceptions are. It took time to realise that, in a period of high uncertainty, being seen as fully committed could shift financial markets between polar opposites – from working against us to working with us.
That is why the crisis abated very quickly in 2012 when – within a few months – the Heads of State or Government agreed to launch the banking union and the ECB acted to remove unwarranted fears in financial markets. It became clear that our commitment to the euro was beyond doubt. The euro is, of course, irreversible.
The lesson was also that, in times of crisis, the most important signal for policymakers is their determination to act. And this lesson was absolutely crucial when the pandemic hit us last year.
Recognising the risk of self-fulfilling cycles, the ECB reacted quickly and forcefully by launching the pandemic emergency purchase programme. The message we sent was clear: there are no limits to our commitment to the euro. And that message holds true today.
Equally important was the response by governments. The decision to launch Next Generation EU (NGEU) was a clear demonstration of European unity that broke with the past in many ways. Its size of €750 billion; its structure, which benefits most those worst hit by the pandemic; and its funding via European common debt – all represented a watershed.
As a result, I believe that the intrinsic fragility of the euro area has now declined. Europe has proven that it will come together and take decisive action when needed. This is what the euro crisis taught us about how crises must be managed: they require the commitment of all policymakers for the benefit of all Europeans.
The importance of policy alignment
The euro crisis in turn led to a third, more slow-moving crisis. Europe slipped into a period of what I termed at the time “lowflation”: a persistent low-growth, low-inflation environment. This gave rise to the third lesson I want to underline: the importance of a balanced policy mix.
When inflation is low and interest rates fall towards zero, the optimal policy mix changes. Monetary policy becomes more effective in lifting demand when fiscal policy reinforces it.
In the mid-2010s, however, the euro area saw the opposite happen. Monetary easing was met by a premature and uncoordinated fiscal tightening. Between 2013 and 2018, fiscal policy tightened by around 2.5 percentage points of GDP, while in the United States it loosened by around 0.8 percentage points. This contributed to the slower recovery and weaker price pressures we experienced.
Many observers, myself included, were already highlighting this inconsistency before the pandemic.[2] But the crisis, by its very nature, forced us to take a much-needed change of direction.
Fiscal policies had to step in to offset lost private sector income, because monetary policy could not target the sectors most in need of help. And we have now seen how powerful this can be: in the fourth quarter of last year, compensation of employees in the euro area fell by more than 2%, but real household income actually rose by 0.6% thanks to powerful government transfers.
In parallel, monetary policy has continued to deliver the financing conditions necessary for all sectors of the economy to respond to the crisis, making a superior policy mix possible.
Strong policy support will continue to provide a bridge over the pandemic and well into the economic recovery. The ECB is committed to preserving favourable financing conditions throughout this period. On the fiscal front, the European Commission expects the euro area fiscal stance to loosen by 2.5 percentage points of GDP this year.[3]
Better policy alignment has also extended to supply-side policies. With hindsight, one of the lessons of the last decade is that structural reforms should not focus exclusively on increasing “competitiveness” – defined as lowering costs and boosting exports. They should also focus on raising productivity and modernising our economies.
But what is unique about NGEU is that it combines funding for investment with future-oriented structural reforms focused on making our economies greener and more digital. This combination is critical to ensure that the crisis does not leave lasting scars. The number of people who will need to find a different job by 2030 has risen by 25% in advanced economies due to the pandemic.[4]
We know that strong recoveries are key for people to move into new jobs quickly[5], and the focus of NGEU on productive investment should provide a sustained boost to growth. Green spending is estimated to have a multiplier two to seven times higher than non-green projects.[6]
At the same time, targeted structural reforms should help ensure that freed-up resources are redirected to green and digital activities, and that demand flows towards the jobs and sectors of the future.
The 22 recovery and resilience plans that have been presented to the Commission so far look encouraging. All of the largest economies are planning to dedicate at least 20% of their spending to digitalisation and around 40% to the energy transition and green infrastructure.[7]
Conclusion
Martin Luther King Jr. famously said that “the arc of the moral universe is long, but it bends towards justice”. I believe that we can say something similar about the arc of progress.
Europe moves forward in stops and starts. It often learns lessons the hard way. But its arc bends towards a stronger and more united Europe for all citizens. The common currency reflects this continued progress, with support for the euro at its highest level on record at 80%, up from 66% a decade ago.[8]
This should give us hope as we look to the future. And it should give us confidence that, even when Europe may seem divided or lacking in direction, there is a thread guiding us forwards.
Over my career, I have had the privilege to watch this process unfold up close, to share in its highs and lows. I have been lucky enough to see it from three different perspectives – national, European and global. And I am honoured to continue working to take Europe forwards.
I am very pleased to see the contributions of the European Central Bank recognised through my acceptance of this prize.
Thank you.
Compliments of the European Central Bank.
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Today, the EU has submitted its proposal seeking the commitment of World Trade Organization (WTO) members for a multilateral trade action plan to expand the production of COVID-19 vaccines and treatments, and ensure universal and fair access. With this proposal to the WTO, divided in two communications, the EU underlines the WTO’s central role in the response to the COVID-19 pandemic and urges fellow WTO members to agree on a set of commitments, including on intellectual property rights.
President von der Leyen said: “The EU has actively shown solidarity with the world since the beginning of the pandemic. The European Union authorized exports of around half of the total amount of vaccines produced in Europe. Our immediate, urgent goal is to ensure equitable access for low – and middle-income countries, to share vaccines wider and faster. And we continue to help ramping up production. The EU proposes concrete short and medium term solutions to ensure universal access at affordable prices. I am looking forward to discuss with the G7 leaders next week how to achieve this goal. Beyond the current crisis, it is important to ensure global preparedness for future pandemics: diversifying manufacturing so that it is not centralised only in a handful of countries and strengthening the resilience of the healthcare infrastructure in least developed countries”.
Executive Vice-President and Commissioner for Trade Valdis Dombrovskis said: “The pandemic is still with us and there can be no room for complacency. We need to urgently concentrate on proposals that accelerate the equitable distribution of COVID-19 vaccines worldwide. In this respect, a strong multilateral trade response could deliver a huge boost in the fight against COVID-19. In reality, the main problem at this moment relates to the lack of sufficient manufacturing capacity to rapidly produce the required quantities. The objective must be to ensure that any available and adequate manufacturing capacity anywhere in the world is used for the COVID-19 vaccines production.”
More on the EU’s proposal
The EU calls on governments to:

Ensure that COVID-19 vaccines, treatments and their components can cross borders freely;
encourage producers to expand their production, while ensuring that those countries most in need of vaccines receive them at an affordable price, and;
facilitate the use of compulsory licensing within the WTO’s existing Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The TRIPS Agreement already provides this flexibility, which is a legitimate tool during the pandemic that can be used swiftly where needed

The first element aims to limit the use of export restrictions and keep supply chains open. Vaccine-producing countries should be ready to export a fair share of their domestic production. Supply chains are highly interconnected and should not be disrupted. In addition, the EU considers that supplies to the COVAX Facility should never be restricted, and no measures should limit trade in inputs necessary for the production of COVID-19 vaccines and treatments.
The second element calls on governments to strongly encourage and support vaccine manufacturers and developers to expand production and ensure the affordable supply of vaccines to low- and middle-income countries. Such actions could include licensing agreements, the sharing of expertise, tiered pricing including non-profit sales to low-income countries, contract manufacturing and new investments in manufacturing facilities in developing countries. The EU expects all vaccine producers and developers to make concrete pledges that increase supplies to vulnerable developing countries. In this regard, the EU welcomes the commitment of companies such as BioNTech and Pfizer, Johnson & Johnson and Moderna, which have already committed to delivering 1.3 billion doses this year to low-income countries at no profit and to middle-income countries at lower cost.
The third element, on intellectual property, sets out that voluntary licences are the most effective instrument to facilitate the expansion of production and sharing of expertise. Where voluntary cooperation fails, compulsory licences, whereby a government grants a targeted licence allowing a willing producer to make a vaccine without the consent of a patent holder, are a legitimate tool in the context of a pandemic. The EU considers that all WTO members should be ready to:

agree that the COVID-19 pandemic is an exceptional circumstance of national emergency, and that the requirement to negotiate with the rights’ holder may be legitimately waived where needed;
support manufacturers that are ready to produce vaccines and/or treatments at affordable prices under a compulsory licence so that the level of remuneration paid by the manufacturer to the patent holder reflects such affordable prices;
agree that the compulsory licence could cover any exports destined to countries that lack manufacturing capacity, including via the COVAX facility.

The EU is also tabling a dedicated communication on intellectual property to the WTO body in charge of implementing the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Council). Here, the EU provides more detail and clarity on each of the three points on intellectual property and links them with the specific provisions in the TRIPS Agreement. As regards the broad waiver proposed by a number of WTO members, the European Commission, while ready to discuss any option that helps end the pandemic as soon as possible, is not convinced that this would provide the best immediate response to reach the objective of the widest and timely distribution of COVID-19 vaccines that the world urgently needs. Today’s proposals aim at achieving that objective in a swift and effective manner*.
Modified on June, 4th, 2021.
Compliments of the European Commission.
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The Commission today proposed a framework for a European Digital Identity which will be available to all EU citizens, residents, and businesses in the EU. Citizens will be able to prove their identity and share electronic documents from their European Digital Identity wallets with the click of a button on their phone. They will be able to access online services with their national digital identification, which will be recognised throughout Europe. Very large platforms will be required to accept the use of European Digital Identity wallets upon request of the user, for example to prove their age. Use of the European Digital Identity wallet will always be at the choice of the user.
Margrethe Vestager, Executive Vice-President for a Europe Fit for the Digital Age said: “The European digital identity will enable us to do in any Member State as we do at home without any extra cost and fewer hurdles. Be that renting a flat or opening a bank account outside of our home country. And do this in a way that is secure and transparent. So that we will decide how much information we wish to share about ourselves, with whom and for what purpose. This is a unique opportunity to take us all further into experiencing what it means to live in Europe, and to be European.”
Commissioner for Internal Market Thierry Breton said: “EU citizens not only expect a high level of security but also convenience whether they are dealing with national administrations such as to submit a tax return or to enroll at a European university where they need official identification. The European Digital Identity wallets offer a new possibility for them to store and use data for all sorts of services, from checking in at the airport to renting a car. It is about giving a choice to consumers, a European choice. Our European companies, large and small, will also benefit from this digital identity, they will be able to offer a wide range of new services since the proposal offers a solution for secure and trusted identification services.”
The European Digital Identity framework
Under the new Regulation, Member States will offer citizens and businesses digital wallets that will be able to link their national digital identities with proof of other personal attributes (e.g. driving licence, diplomas, bank account). These wallets may be provided by public authorities or by private entities, provided they are recognised by a Member State.
The new European Digital Identity Wallets will enable all Europeans to access services online without having to use private identification methods or unnecessarily sharing personal data. With this solution they will have full control of the data they share.
The European Digital Identity will be:

Available to anyone who wants to use it: Any EU citizen, resident, and business in the Union who would like to make use of the European Digital Identity will be able to do so.

Widely useable: The European Digital Identity wallets will be useable widely as a way either to identify users or to prove certain personal attributes, for the purpose of access to public and private digital services across the Union.

Users in control of their data: The European Digital Identity wallets will enable people to choose which aspects of their identity, data and certificates they share with third parties, and to keep track of such sharing. User control ensures that only information that needs to be shared will be shared.

To make it a reality as soon as possible, the proposal is accompanied by a Recommendation. The Commission invites Member States to establish a common toolbox by September 2022 and to start the necessary preparatory work immediately. This toolbox should include the technical architecture, standards and guidelines for best practices.
Next Steps
In parallel to the legislative process, the Commission will work with Member States and the private sector on technical aspects of the European Digital Identity. Through the Digital Europe Programme, the Commission will support the implementation of the European Digital Identity framework, and many Member States have foreseen projects for the implementation of the e-government solutions, including the European Digital Identity in their national plans under the Recovery and Resilience Facility.
Background
The Commission’s 2030 Digital Compass sets out a number of targets and milestones which the European Digital Identity will help achieve. For example, by 2030, all key public services should be available online, all citizens will have access to electronic medical records; and 80% citizens should use an eID solution.
For this initiative, the Commission builds on the existing cross-border legal framework for trusted digital identities, the European electronic identification and trust services initiative (eIDAS Regulation). Adopted in 2014, it provides the basis for cross-border electronic identification, authentication and website certification within the EU. Already about 60% of Europeans can benefit from the current system.
However, there is no requirement for Member States to develop a national digital ID and to make it interoperable with the ones of other Member States, which leads to high discrepancies between countries. The current proposal will address these shortcomings by improving the effectiveness of the framework and extending its benefits to the private sector and to mobile use.
Compliments of the European Commission.
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On June 2, the European Commission is presenting a new Strategy to make the largest free travel area in the world – the Schengen area – stronger and more resilient.
The Schengen area is home to more than 420 million people across 26 countries. The removal of internal border controls between Schengen States is an integral part of the European way of life: almost 1.7 million people reside in one Schengen State and work in another. People have built their lives around the freedoms offered by the Schengen area, with 3.5 million people crossing between Schengen States every day.
The free flow of people, goods and services is at the heart of the European Union and is key for Europe’s recovery following the coronavirus crisis. With today’s Strategy, the Commission takes stock of the challenges faced by the Schengen area in recent years, and sets out a path forward that maintains the benefits of Schengen. Common action is needed at Union level for Member States to cope with today’s challenges.
Underpinning the well-functioning of the Schengen area are three pillars: effective management of the EU’s external borders, strengthening internal measures to compensate for the absence of internal border controls, in particular on police cooperation, security and migration management, and ensuring robust preparedness and governance, including the completion of Schengen. To foster mutual trust in the implementation of the Schengen rules, the Commission is also presenting today a proposal to revise the Schengen evaluation and monitoring mechanism.
President of the European Commission, Ursula von der Leyen, said: “The freedom to move, live and work in different Member States is a freedom Europeans hold dearly. One of the greatest achievements of the EU, different crises and challenges have shown us that we cannot take Schengen for granted. Today, we are presenting a way forward that makes sure that Schengen can bear the test of time, one that will ensure the free flow of people, goods and services whatever the circumstances to rebuild our economies and for us to emerge stronger together.”
Vice-President for Promoting our European Way of Life, Margaritis Schinas, said: “Unfettered movement within the Schengen area is essential to our European way of life. Schengen is a well-oiled machine but like any machine, to stand the test of time, its foundations need to be constantly shored up and strengthened. Today we are setting out a new way forward that ensures the security and mobility of EU citizens while boosting Schengen’s resilience to challenges. Of course, Schengen is not complete without all our Member States. A more inclusive Schengen will be a stronger and more secure Schengen.”
Commissioner for Home Affairs, Ylva Johansson, said: “With today’s Schengen Strategy, we will be stronger outwards to be freer inwards. State-of-the-art IT systems will improve external border management while enhanced police cooperation and common migration management will help reinforce the Schengen area without border checks. Today’s Strategy will foster the trust and governance to allow us to better anticipate, prepare and react and I am committed to making sure all Member States play their part.”
The Strategy aims to:

Ensure effective management of the EU’s external borders, through the ongoing roll out of the European Border and Coast Guard standing corps; making information systems for border and migration management interoperable by 2023; and an upcoming proposal on making visa applications and travel documents digital. The Commission is also calling on co-legislators to quickly adopt the New Pact on Migration and Asylum proposal on screening of people crossing without authorisation.

Reinforce the Schengen area internally, as close cooperation between Member States on preventing and fighting security threats is crucial to sustain and compensate for the absence of controls at internal borders. New initiatives will include an EU Police Cooperation Code; the upgrade of the ‘Prüm’ framework for exchanging information on DNA, fingerprints and vehicle registration; and expanding the use of advance passenger information to intra-Schengen flights. The New Pact on Migration and Asylum, once adopted, will also establish a common approach to managing migration, an important element for the well-functioning of the Schengen area.

Improve preparedness and governance: The Commission is proposing today to revise the Schengen evaluation and monitoring mechanism (more below). It will also convene regular Schengen Forums to foster political dialogue on addressing common challenges, based on annual reports on the State of Schengen. Later this year, the Commission will propose to revise the Schengen Borders Code to boost Schengen’s resilience to serious threats by ensuring close coordination and introducing the necessary safeguards so that reintroducing internal border checks remains a measure of last resort. The Commission will also present a contingency plan allowing the reactivation of the successful Green Lanes system for uninterrupted freight traffic in case of future crises. Finally, the Commission will launch a dialogue with Member States to address long-lasting reintroductions of controls at internal borders.

Enlarge the Schengen area: Schengen’s future must be marked by the expansion to those EU Member States that are not yet part of the Schengen area. This is both a legitimate expectation and a legal obligation for those countries evaluated as ready for accession.

A revised evaluation mechanism for enhanced trust
To foster common trust in the implementation of the Schengen rules and make sure any deficiencies are identified and remedied quickly, the Commission is proposing today to revise the Schengen evaluation and monitoring mechanism. Changes include accelerating the evaluation process as well as a fast-track procedure in case of significant deficiencies that could put Schengen as a whole at risk. There will also be more political focus on Schengen evaluations as their results will be included in the annual report on the State of Schengen and discussed with the European Parliament and the Council. The revised mechanism includes enhanced monitoring for the respect of fundamental rights.
Background
36 years ago, 5 Member States agreed to remove border controls between themselves. Today, the Schengen area without controls at internal borders is home to over 420 million people in 26 European States. The Schengen area is composed of all EU countries except Bulgaria, Romania, Croatia, Cyprus and Ireland. It also includes four non-EU countries: Iceland, Norway, Switzerland and Liechtenstein.
Schengen rules require an update to adapt them to evolving challenges. To build a more resilient Schengen area, President von der Leyen announced in her State of the Union address in September last year that the Commission would put forward a new strategy for the future of Schengen.
This Strategy is based on extensive consultations with Members of the European Parliament and Home Affairs Ministers meeting within the Schengen Forum in November 2020 and May 2021.
Compliments of the European Commission.
The post EU Commission | Towards a stronger and more resilient Schengen area first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Statement by the European Commission on Swiss decision to terminate IFA negotiations

The Swiss Federal Council took the decision to terminate the negotiations of the EU-Swiss Institutional Framework Agreement.
We take note of this unilateral decision of the Swiss Government.
We regret this decision, given the progress that has been made over the last years to make the Institutional Framework Agreement a reality.
The EU-Swiss Institutional Framework Agreement was intended as the foundation to enhance and develop EU-Swiss bilateral relations for the future. Its core purpose was to ensure that anyone operating in the EU Single Market, to which Switzerland has significant access, faces the same conditions. That is fundamentally a matter of fairness and legal certainty. Privileged access to the Single Market must mean abiding by the same rules and obligations.
This is why, back in 2019, the EU insisted that this agreement was so essential for the conclusion of possible future agreements regarding Swiss further participation to the Single Market, and also an essential element for deciding upon further progress towards mutually beneficial market access. This agreement would have allowed for a consolidation of the bilateral approach and ensured its sustainability and further development.
Without this agreement, this modernisation of our relationship will not be possible and our bilateral agreements will inevitably age: 50 years have passed since the entry into force of the Free Trade Agreement, 20 years since the bilateral I and II agreements. Already today, they are not up to speed for what the EU and Swiss relationship should and could be.
We will now analyse carefully the impact of this announcement.
For more information
Factsheet on EU-Swiss relations
Factsheet ‘What if there is no Institutional Framework Agreement’

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OECD Ministers have endorsed a new initiative to promote safe international travel during the COVID-19 pandemic at the OECD’s annual Ministerial meeting in Paris.
The Initiative involves a safe travel blueprint and a temporary international cross-sectoral forum for knowledge sharing. The forum will allow governments and stakeholders to share information in real time on plans and approaches facilitating travel. The blueprint promotes greater certainty, safety and security in travel as reopening takes place. It builds on existing initiatives and aims to increase interoperability amongst travel regimes. It will be used by countries on a voluntary basis.
International air passenger transport dropped around 75% in 2020 and international tourism fell by around 80%. For the average OECD country, pre-pandemic, international tourism contributed 4.4% of GDP, 6.9% of employment, and 21.5% of service exports, but with much higher shares for some countries, including Greece, Iceland, Mexico, Portugal and Spain. The halt in international travel and tourism is having a dramatic knock-on impact on the entire, interlinked global economy.
“The OECD is in a unique position to help countries coordinate international action in the context of reopening global travel,” said OECD Secretary-General Angel Gurría at the Ministerial meeting in Paris. “This initiative will help reduce uncertainty and complexity and enable countries to prepare more effectively for a return to safe international travel and tourism.”
Without an international framework for travel policies, a patchwork of national and regional rules, inconsistent with each other, will continue to be confusing and costly for travellers and transport and tourism companies, discouraging travel due to the uncertainty and complexity. It could also increase the incidence of use of fraudulent certificates and so undermine the ability of authorities to mitigate public health risks.
The OECD Blueprint, initiated by Spain, supports and complements existing international initiatives, such as the European Union’s proposed ‘Digital COVID-19 Certificate’, by taking a principles-based approach to ensuring that they are compatible with each other, and adopted in a consistent way across a range of countries.
The Blueprint is a flexible and voluntary set of guidelines not a legal text. It consists of a traffic-light system to classify risks; guidance on how vaccination should be certified for travel to those countries that decide to take vaccination status into account; protocols for testing travellers in different circumstances; and principles to be followed in generating electronic certificates for travel that ensure privacy protection and security and promote interoperability among systems.
Countries that use the OECD Blueprint may do so unilaterally or in bilateral or multilateral agreements, or through mechanisms provided in other bodies, such as, in particular the ICAO Public Health Corridor arrangement.
Read the document and the Q&A for more information.
Contact:

OECD Media Office | news.contact@oecd.org | + 33 1 45 24 97 00

Compliments of the OECD.
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