Honourable Member of the European Parliament,
dear Mr Zijlstra,
Thank you for your letter regarding the potential costs of the digital euro project, which was passed on to me by Ms Aurore Lalucq, Chair of the Committee on Economic and Monetary Affairs, accompanied by a cover letter dated 9 October 2024.
In your letter, you raise the question of how the digital euro could be cheaper for merchants than private alternatives. I would like to highlight that international card schemes currently account for 64% of card payments in the euro area. These can be very costly for merchants, who collectively pay a significant amount each year to international card schemes. And the cost is mostly borne by smaller merchants, who can incur charges three to four times higher than larger companies. As a result, merchant associations strongly support the digital euro.
The Eurosystem would bear the costs of establishing the digital euro scheme and infrastructure, as it does for producing and issuing euro banknotes – which, like the digital euro, are a public good. This would allow acquirers to offer competitive tariffs to merchants. By providing a true alternative to international card schemes, the digital euro would also put European merchants in a stronger position to negotiate better conditions with other, currently dominant providers. The digital euro would thus help support a competitive European payments market, which at present tends to be dominated by a few non-European players. Without the digital euro, the market could become even more concentrated, potentially leading to even higher costs for merchants.
The European Commission’s draft legislative proposal for the digital euro currently includes safeguards for merchants by proposing a cap to their fees. As such, merchants would not pay higher fees for the digital euro than for a comparable digital means of payment. This prevents payment service providers from exploiting the mandatory acceptance of digital euro by merchants as legal tender.
In your letter, you also raised the question regarding the cost of the digital euro project. We are committed to keeping development and potential operational expenses as low as possible, while delivering a digital euro that brings value to consumers and merchants.
By reusing existing standards and building on established infrastructures as much as possible, market participants could integrate the digital euro in a cost-effective way. The Rulebook Development Group, where all stakeholders are represented, is taking this principle into account in its drafting of a single set of rules and standards for the digital euro.
The Eurosystem’s costs will depend on the components and related services that would need to be developed and our rigorous procurement process ensures that we can obtain the best value for money. At the start of this year, we initiated the process of selecting potential providers. We issued calls for applications to establish framework agreements for five digital euro components expected to be operated by providers outside the Eurosystem. Other components, such as payment settlement, would be sourced from within the Eurosystem. The calls for applications included ranges of estimated total value for the framework agreements with external providers, determined by the responses received in the ECB’s market research carried out in January 2023. These estimated costs not only cover the development of the component, but also their operation – a total period of ten years for three components, and 15 years for the remaining two. These ranges also include significant buffers to avoid new procurement processes having to start soon. We are currently assessing offers from potential providers, and will negotiate with them to finalise framework agreements. For the time being, the ECB has no financial commitment to these potential suppliers and only bears the administrative costs related to conducting the tender procedures. As per regular ECB practice, the outcome of the public tender procedure will be published on the ECB’s website, and we will inform all the relevant stakeholders, including the co-legislators.
Please note that the Eurosystem would not charge or benefit from any digital euro transaction fees. As mentioned above, the Eurosystem would only bear its own costs, as it does for the production and issuance of banknotes. In the case of banknotes, these costs are more than compensated by the generated seigniorage. We can expect a similar outcome for the digital euro, but this would ultimately depend on the actual amount of digital euro held by users. Any net profits generated by digital euro seigniorage would be distributed to the euro area national central banks, in line with Article 33.1 of the Statute of the ESCB.
It is important that the digital euro reflects its nature as a public good. Therefore, it would be free for basic use for consumers and cost-efficient for merchants. Mr Cipollone and I remain committed to engaging regularly with the European Parliament on this topic and more broadly on the digital euro. We appreciate all the work that the ECON Committee has done so far, and. Going forward, the ECB stands ready to provide continued technical support to co-legislators as needed.
 
Yours sincerely,
[Signed]
Christine Lagarde
Read original letter here.
 
Compliments of the European Central BankThe post ECB | Letter from the ECB President to Mr Auke Zijlstra, MEP, on the digital euro first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Contribution by Piero Cipollone, Member of the Executive Board of the ECB, to the Centre for European Reform’s annual economics conference on “A European path to higher economic growth”
Thank you for inviting me to discuss whether a “hot” economy can drive productivity growth.
A lot has been said recently about the structural reasons for the productivity gap between Europe and the United States, notably in Mario Draghi’s recent report.[1]
But this gap has worsened in the post-pandemic period, as productivity growth accelerated in the United States and stalled in the euro area (Chart 1). The hotter US economy largely explains this, whereas the euro area economy caught a cold as a result of the energy shock to which it was much more exposed.[2]
So today, I want to discuss how a strong recovery in productivity is critical for the euro area. Beyond its short-term benefit, it is also essential to avoiding a further erosion of the euro area’s economic potential. Monetary policy should take the medium and long-term effects of an excessively restrictive stance into account.[3]
The conditions for a cyclical recovery in euro area productivity
Earlier this year, I noted that unwinding supply shocks are creating an opportunity for recovery in the euro area economy, by making it possible to achieve lower inflation and higher growth simultaneously. I therefore argued for letting the recovery proceed by allowing for wages to rebound in the short term – thus recouping past real income losses. And I indicated that the improving inflation outlook should give us the confidence to dial back monetary policy restriction. This in turn would help the economy and productivity to pick up, with wages gradually moderating over the medium term to be consistent with trend productivity growth and our inflation target.[4]
So how far have we come on this path to a healthier economic environment?
Inflation
As expected, the unwinding of the energy shock has allowed headline inflation to continue its decline in recent months, falling to 2% in October (Chart 2). Although headline inflation will be bumpy in coming months because of energy base effects, we expect it to converge to 2% in the course of 2025.
Indicators of underlying inflation have also moderated somewhat (Chart 3).[5] Core inflation fell to 2.7% in October. Domestic inflation remains high, as services inflation tends to lag headline inflation, and is sustained by the wage catch-up in the short term. But the ECB’s measure of the Persistent and Common Component of Inflation (PCCI)[6], a more forward-looking indicator of underlying inflationary pressures that tends to be a better predictor of future inflation, stood at 2% in September, the last month for which this statistic is available.
This encouraging picture is further supported by market-based inflation expectations and fixings[7], which stand around 2% (Chart 4, left-hand panel). The option-implied risk-neutral distribution of average inflation over the next two years is now more balanced, around 2%, albeit assigning increasing probability to inflation rates below 2% (Chart 4, right-hand panel).
Wages
Lower inflation has contributed to a recovery in real income. This recovery has also been supported by the catch-up in wages, which has brought real wage developments more in line with those of productivity since the onset of the pandemic (Chart 5).
At the same time, unit labour costs growth has been buffered by lower unit profits and import prices. This has allowed the total supply deflator, which has provided a good early indicator of HICP inflation since the pandemic, to moderate to between 1.5% and 1.7% over the past year (Chart 6).
Moreover, the forward-looking wage tracker is consistent with a gradual moderation of wages in the coming year (Chart 7), in line with the outlook embedded in our projections, after rising further this year. This moderation should be supported by the gradual cooling down in labour market dynamics (Chart 8).
GDP growth
After several quarters of stagnation, euro area GDP growth has gradually increased, with annual GDP growth rising from 0.1% in the last quarter of 2023 to 0.9% in the third quarter of this year.
However, we are seeing contrasting signals.
First, domestic demand remained weak in the second quarter of 2024, as the small positive contribution of consumption was counterbalanced by a decline in investment (Chart 9). Initial indications suggest that consumption gathered pace in the third quarter, while investment contracted further.
Second, activity and economic sentiment have been very uneven across sectors, with manufacturing underperforming compared with services (Chart 10). This is also reflected in a reduction of inventories amid low capacity utilisation in the manufacturing sector, which has dragged down euro area growth over the past year (Chart 9).
These developments remain consistent with a gradual, consumption-led recovery, but this has not yet allowed for a turn in the investment cycle. Moreover, growth figures for the third quarter benefited from summer events such as the Olympics. Whether the recovery will firm up therefore remains to be confirmed and risks to economic growth are tilted to the downside.
Implications for productivity growth
The overall picture of a gradual and heterogenous recovery amid a resilient labour market also implies a slow cyclical recovery in labour productivity, with uneven developments across sectors (Chart 11).
This suggests that some factors have been slowing the upturn in consumption and holding back investment, delaying a cyclical recovery in productivity.
Risks to a cyclical recovery in euro area productivity
Three aspects warrant particular attention: households’ saving behaviour, the impact of monetary policy restriction and uncertainty associated with global economic policy.
Saving behaviour
Let me start with the first aspect. In recent quarters, households have allocated a portion of their increased real income to restoring their financial buffers or deleveraging. The saving ratio has increased, as household spending has not kept up with growth in real disposable income (Chart 12, left-hand panel). Empirical estimates suggest that high interest rates and a loss in households’ real net wealth have been key factors in this development (Chart 12, right-hand panel).
The effect is heterogenous across the household income distribution. Lower-income households – who are spending more relative to their income (Chart 13) – have accumulated almost no excess savings since the onset of the pandemic compared to the pre-pandemic trend (Chart 14).[8] Because of budget constraints, these households had to reduce their savings more than others in response to the energy price spike (Chart 15). They also had to rely more heavily on consumer loans, despite rising interest rates, to avoid reducing essential consumption.[9] This points to the need for lower-income households to deleverage and shore up their balance sheets as real income improves.
Conversely, higher-income households, who are more likely to be net savers, have benefited from higher interest rates. In the first half of this year, euro area non-labour income, such as net interest receipts and dividends, rose by 4.1%, which is more than twice the increase seen in 2015-19.
A tentative signal of a possible change in households’ recent saving behaviour is that recent data from the Consumer Expectations Survey are pointing to a decline in savings (Chart 12, left-hand panel). At the same time, the data confirm there is heterogeneity across the household income distribution (Chart 16, left-hand panel). Survey responses also indicate that households with an adjustable-rate mortgage already experienced an increase in their interest payments and a corresponding drop in their saving rate in the last two years, while those with fixed-rate mortgages increased their saving rate (Chart 16, right-hand panel).
Monetary policy restriction
This brings me to the second aspect: the effects of monetary policy restriction. After the sharpest monetary policy tightening in the ECB’s history – ten consecutive hikes that raised our policy rate by 450 basis points between July 2022 and September 2023 – followed by a period of holding rates steady, we have gradually dialled back restriction since June. Markets expect us to continue bringing rates down to a neutral level, within the range of natural rate estimates (Chart 17).[10]
However, it will take some time for the dialling back of monetary policy restriction to transmit to lending rates and loan demand. Lending rates have only just started to decline for new loans and stabilise for outstanding amounts (Chart 18). Lending to firms remains weak, while lending to households has shown signs of improvement from a low level (Chart 19).
The further transmission of our less restrictive stance will also depend on confidence that we will gradually but surely lower our policy rates further toward neutral levels. While the direction is clear, we are following a meeting-by-meeting approach, enabling us to adjust the pace and extent of rate cuts depending on our assessment of incoming data.
Dialling back monetary policy restriction should support investment. It should also provide relief to households, especially at the bottom of the wealth distribution[11], and thus boost the consumption-led recovery, supporting the positive effects from rising labour income.
At the same time, the path towards a neutral stance should also take into account that credit supply to firms is still very weak, amid tight credit conditions and signs of deteriorating bank asset quality due to an increase in underperforming and non-performing loans. In addition, the incipient recovery in lending to households has to be balanced against the high level of credit application rejections and signs of higher default rates on consumer loans. Moreover, bank lending conditions in the coming months could be further influenced by reduced liquidity in the system as the central bank balance sheet continues to shrink.
Risks from global policy developments
Let me now turn to the third key aspect: risks from global policy developments. Recent global political developments increase risks of disruption to the cyclical recovery of productivity in the euro area and have implications for how far we can support this recovery with our monetary policy, given the possible effects on inflation.
The prospect of higher trade tariffs being implemented by the United States could significantly weigh on activity, especially in manufacturing, because of the impact on euro area confidence, exports and investment. Moreover, political uncertainty in some euro area countries – which reduces the predictability of fiscal and economic policy – could weigh on consumer confidence and firms’ investment decisions. In countries with higher fiscal deficits, this could also increase Ricardian effects, where the support to economic activity from a loose fiscal stance is blunted by the expectation that fiscal policy will need to be tightened in the future.
These developments could in turn put downward pressure on euro area inflation, as a result of the impact on demand, global confidence, and the likely reorientation of third-country exports away from the US and to the euro area, which would weigh on import prices. However, these disinflationary effects could be countervailed by the depreciation of the euro exchange rate and tariff retaliation, which would increase the prices of imported goods.
An increase in US oil production, combined with the negative effects of tariffs on global activity and thus oil demand, could push oil prices down. This would counterbalance upward risks to oil prices arising from current geopolitical conflicts.
Implications for the euro area’s economic potential
Overall, this paints a picture of nascent recovery that is still fragile.
While there is some uncertainty around estimates of the level of the neutral rate given their wide range (Chart 17), downward risks to inflation have been increasing and risks to the economic outlook are tilted to the downside.
A risk management approach also needs to consider the medium to long-term negative consequences we would incur if our monetary policy proved to be out of step with the evolving balance of risks and thus remained too restrictive for too long.
It could be self-defeating to tolerate an economy running persistently below potential as an insurance against possible future inflationary shocks. Such a tactic could lower potential growth, thereby weakening the economy’s resilience to both demand and supply shocks.
Three key elements need to be considered when assessing the costs of running an economy cold – in other words, below its potential – for a long time. These are the effects on capital accumulation, human capital and structural reforms.
Consider capital accumulation.
Investment has been stagnating, or even declining, in the euro area in recent quarters, adding a cyclical shortfall to the existing structural gap with respect to the United States (Chart 20). This is likely to weigh on productivity growth given the role of capital accumulation (Chart 21).
While the weak productivity growth seen since the pandemic is potentially a short-lived phenomenon reflecting firms’ response to a temporary change in the relative prices of labour, capital and energy, the long-run trend may be permanently scarred by the current slow or declining pace of capital accumulation. The absence of investment growth not only reduces labour productivity by hampering capital deepening, but is also likely to weigh on total factor productivity growth by reducing the adoption and production of new technologies.[12]
Excessive restriction could also have implications for human capital.
Demographic trends and increased obsolescence of skills caused by technological transformation imply a shortage of deployable human capital. Under these conditions, any slack in the labour market and further underinvestment in adequately equipping the workforce would lead to a further loss of scarce resources that should instead be fully mobilised, not least to enable workers to update their skill sets and increase their employability in the light of fast-changing labour demand.
Finally, excessive restriction could have implications for our ability to address the structural dimension of the productivity gap. Structural reforms are hard to implement, as they imply costs for those that are displaced.[13] Their implementation is thus easier when the economy is running at potential, as confirmed by the literature.[14] This indeed creates room for public finance to reduce the risk that some end up worse-off as a result of the reforms, facilitating a Pareto efficient outcome. And it is easier to reallocate capital and labour when they are in high demand.
In summary, imposing more restriction than necessary on the economy in the short term could have transitory and also permanent costs, as it could exercise significant negative influence on total factor productivity dynamics via weak capital accumulation[15], depletion of human capital and a slower pace in implementing structural reforms. This would reduce economic potential, and thus affect the speed limit of the economy – that is, the level at which GDP growth becomes inflationary.
Conclusion
Let me conclude.
In the euro area, labour productivity tends to be strongly affected by the business cycle.[16] For productivity growth to rebound fully, we need the nascent signs of economic recovery to firm up.
The unwinding of the energy shock and the associated decline in inflation have allowed us to start dialling back monetary restriction. This should support investment and reinforce the effect of rising real incomes on consumption, especially for lower-income households.
The current balance of risks suggests that we can and should reduce further the current level of monetary policy restriction. The pace and extent of this reduction will depend on the incoming data.
A cyclical recovery in productivity would support the disinflationary process in the euro area and reduce the risk of permanent scars on the euro area’s economic potential. So we should not be more restrictive than what is necessary to ensure the timely convergence of inflation to our 2% target.
We do not want an overheated economy. But we do want to see our economy reach the right temperature, which would certainly be hotter than it has been recently.
Thank you for your attention.

Annexes

Draghi, M. (2024), The future of European Competitiveness, September.
Dias da Silva, A., Di Casola, P., Gomez-Salvador, R. and Mohr, M. (2024), “Labour productivity growth in the euro area and the United States: short and long-term developments”, Economic Bulletin, Issue 6, ECB.
Jordà, Ò., Singh, S.R. and Taylor, A. M. (2024), “The Long-Run Effects of Monetary Policy”, paper presented at the ECB Conference on Monetary Policy 2024.
Cipollone, P. (2024), “The confidence to act: monetary policy and the role of wages during the disinflation process”, speech at an event organised by the House of the Euro and the Centre for European Reform, 27 March.
Underlying inflation is the persistent component of inflation, signalling where headline inflation will settle in the medium term after temporary factors have vanished. See Lane, P. (2024), “Underlying inflation: an update”, speech at the Inflation: Drivers and Dynamics Conference 2024 organised by the Federal Reserve Bank of Cleveland and the ECB, 24 October.
Bańbura, M. and Bobeica, E. (2020), “PCCI – a data-rich measure of underlying inflation in the euro area”, Statistics Paper Series, ECB, No 38, October.
Inflation fixings are swap contracts linked to specific monthly releases in euro area year-on-year HICP inflation excluding tobacco.
That is, they had accumulated fewer savings since the onset of the pandemic compared with what would have been expected based on the 2015-19 trend.
See Kouvavas, O. and Tsiortas, A. (2024), “Consumer credit: Who’s applying for loans now?”, The ECB Blog, ECB, 15 May. Despite rising interest rates, the share of consumers who applied for credit has increased from a low of 12.6% in July 2022 to roughly 17% at the beginning of 2024. This increased demand has mainly come from households with lower income, while the share of the top 20% of income earners who applied for credit has been steadily decreasing. Low-income households are in particular applying for consumer credit, which saw a 4.7 percentage point increase, significantly more than for mortgage applications.
The neutral (or natural) rate of interest is the real interest rate level that contemporaneously brings output into line with its potential and stabilises inflation at the central bank’s target in the absence of transitory shocks or nominal rigidities. See Brand, C., Bielecki, M. and Penalver, A. (eds.) (2018), “The natural rate of interest: estimates, drivers, and challenges to monetary policy”, Occasional Paper Series, No 217, ECB, December.
Recent ECB research indeed indicates that a restrictive monetary policy reduces the consumption of less wealthy households much more than that of their wealthier counterparts. See Bobasu, A., Dobrew, M. and Repel, A. (2024), “Heterogeneous effects of monetary tightening in response to energy price shocks”, Research Bulletin, No 123, ECB, October.
See Anzoategui, D., Comin, D., Gertler, M. and Martinez, J. (2019), “Endogenous technology adoption and R&D as sources of business cycle persistence”, American Economic Journal: Macroeconomics, Vol. 11, pp. 67-110. The authors provide evidence that productivity-enhancing investment such as research and development is highly procyclical, in the context of the US economy. See also Fiori, G. and Scoccianti, F. (2021), “Aggregate Dynamics and Microeconomic Heterogeneity: The Role of Vintage Technology”, Bank of Italy Occasional Paper, No 651, 23 November.
IMF (2024), “Understanding the Social Acceptability of Structural Reforms”, World Economic Outlook, Chapter 3, October.
Campos, N.F., De Grauwe, P. and Ji, Y. (forthcoming), “Structural Reforms and Economic Performance: The Experience of Advanced Economies”, Journal of Economic Literature. The authors find that the timing of the implementation of the reforms is very important for their effectiveness: reforms that are implemented during recessions appear to be less effective than those implemented during economic upturns. See also Bordon, A.R., Ebeke, C.H. and Shirono, K. (2016), “When Do Structural Reforms Work? On the Role of the Business Cycle and Macroeconomic Policies”, IMF Working Paper, No. 2016/062, 15 March. The paper finds that supportive macroeconomic policies increase the effect of labour and product market reforms, consistent with the view that some structural reforms are best initiated in conjunction with supportive fiscal or monetary policy.
Moran, P. and Queralto, A. (2018), “Innovation, productivity, and monetary policy”, Journal of Monetary Economics, Vol. 93, pp. 24-41. The paper establishes a link between total factor productivity growth and monetary policy, via the latter’s impact on firms’ technology innovation and adoption activity.
Arce, O. and Sondermann, D. (2024), “Low for long? Reasons for the recent decline in productivity”, The ECB Blog, ECB, 6 May.

 
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(Translated from Spanish)
Opening remarks
Madam President, ladies and gentlemen,
Allow me to use Spanish to address you in this session that is as important as what will happen in our relations with the United States after the election of President [Donald J.] Trump. An election that is not fortuitous, but rather demonstrates a profound political and cultural transformation in American society.
[It demonstrates] a new relationship with politics, even a new relationship with the truth, because the truth seems to be excessively malleable. What is happening in the United States should not leave us indifferent because our two societies have [an] enormous porosity, and enormous relations between them. What has happened in the United States has a lot to do with the sociopolitical dynamics on the European continent.
There would be much to talk about the reasons for this election, but you do not want to have a sociological or sociopolitical debate about why Americans have voted for someone they already know. It is not the first time they have voted for him. And this time, more people voted for him.
You want to debate – and I think it is very pertinent – ​​how this is going to affect the world, what geopolitical consequences it is going to have. I can tell you that it is going to have many geopolitical consequences; that this election, this decision of the American voters, is going to mark the development of the world as it will be for our grandchildren.
The next ten years will undoubtedly be marked by what Trump is going to do and what consequences it will have, but we are not here to speculate either. It is not the first time that someone promises something to be elected and then does not do it or even does something else. Therefore, I will not dedicate myself to speculating what President Trump can do, but I will tell you that we have to be prepared for what may happen. Calmly, vigilantly, but without giving the impression that we are paralyzed, like a deer in the night in front of the powerful headlights of a car that it meets on the road.
We must not show that we are frightened or divided – although in reality we certainly are, because the reception of President Trump’s victory has not been the same in one capital as in another.
In any case, this will have profound consequences for our bilateral relations as well. Trump talks about imposing 10% customs duties on all European products. If such a thing were to happen, it would certainly affect our competitiveness.
He also talks about imposing 60% customs duties on Chinese products. This, in a globalised market, would also affect us because Chinese products that would not go to the United States could come to Europe.
He also talks about massively expelling immigrants, which, apart from the moral and human issues, would also have an inflationary effect, which would increase interest rates in response from the US central bank and that has geoeconomic effects on all of us.
But you want to talk not about geoeconomics, but about geopolitics. Speaking of geopolitics, there are three areas on which you should focus your attention in this debate, which I will follow with great interest because it may probably be the last for me: the first is undoubtedly what can happen in Ukraine; the second is the Middle East; the third is the relationship with China and Taiwan.
All three are based on three key words: security, trade and technology. And I am going to concentrate on the first, on security, which is the core of my portfolio, of my competences – security and defence. Within this security dynamic, allow me to focus my attention and yours on Ukraine, because I have just returned from Kyiv.
I have just returned from Ukraine, where I spent three days visiting military training centres, visiting fortifications, visiting drone factories, visiting the places where Russia exercised its terror. I have had conversations with all the Ukrainian officials, with President Zelenskyy, with his military commanders. And, of course, they are worried about what decision the next American administration might take. They ask us what our reaction will be when, probably, [the new administration] – at least that is what [Trump] has said during the election campaign – makes its military support to Ukraine conditional from January.
I think that the European response cannot be anything other than to continue to maintain our commitments to that country, to Ukraine, to its people, and to continue to provide them with the support they need to continue to defend themselves. That will require resources. The relationship between American and European aid to Ukraine plays in our favour. We help Ukraine more – taking into account all forms of aid – than the United States. In the military dimension, the United States provides approximately 25% more than us, in military terms 25% more.
Replacing the United States would therefore represent a considerable financial and industrial effort, which would force us to ask ourselves again questions that we have already discussed. [For example,] what to do with the frozen funds of Russia, whose profits we have decided to take to help finance the Ukrainian defense industry and which, however, would not be sufficient. We would enter fully into a nuclear issue, debated and unresolved, but which will surely be put on the table: What is it: what to do, not with the profits from capital, but with capital itself.
The military situation is not easy, with high casualties on both sides, but we must avoid a diplomatic solution that marginalizes Ukraine and that in the process marginalizes us as well. An agreement between Trump’s United States and Putin’s Russia – bypassing Ukraine and the European Union to put a ceasefire on the table, postponing political discussions until later – is something that Ukraine rejects and that we must also reject. Nothing should be decided without the participation and agreement of Ukraine, which is paying the highest price for this war.
Of course, we must try to end it as soon as possible, but the way it ends matters. How it ends matters. Perhaps for some it doesn’t matter. Perhaps for some it is enough that it ends without knowing how and with what consequences, but I think that the European Union cannot help but care. What is more, it cares a lot about the way it knows, which can only be in a fair and sustainable way.
That brings me to another consideration, and I take advantage of these circumstances to say it. Trump’s election should serve to make us clearly aware of the need to strengthen our security, to take our destiny into our own hands, as they say now. But it is the same thing that was said in 2017, when Trump was first elected. The same words: “We must take our destiny into our own hands,” said [German] Chancellor Angela Merkel, 10 or 7 years ago.
We say the same thing today, but what has happened in these 7 years? For example, Germany’s military spending was 1.15% of GDP and recently it was 1.3% of GDP; [it has gone] from 1.15% to 1.3%. You can’t say that that is taking our destiny into our own hands, right? Now we are saying the same thing again and I hope that this time it is true.
Let me tell you something, the European Union is not an economic Union, or it is not just an economic Union. Of course, it is not about saying that on one side there is the North Atlantic Treaty Organization (NATO) to ensure security, and on the other side there is the European Union to deal with economic issues. No.
Since the Maastricht Treaty, the European Union has had the will and ambition to develop a common security and defence policy. The Union has military responsibilities, which do not end with the production of weapons for NATO armies. That would be a clear regression from what we have done over the last five years with the Strategic Compass and [with] everything we have put in place to ensure that the European Union also has a military role.
Not incompatible with NATO; not alternative, but complementary. ‘But complementary’ does not mean that it does not exist. Of course it does. No, it is true that on the one hand NATO deals with security and on the other hand we Europeans deal with the production of munitions. We have a Strategic Compass, approved by all the [member] countries, which must be followed, applied and developed in the next mandate.
The situation in the Middle East will also change. Surely this [new] American administration will not put the same weight that President [Joe] Biden and my friend [Secretary of State Antony] Blinken have put into trying to find a ceasefire. There will certainly be more permissiveness with regard to the expansionist tendencies of the Netanyahu government, less security for the Palestinians.
On China, we will see, to begin with, trade problems, and certainly a more belligerent attitude when it comes to the major technological and commercial issues, but I do not want to go on any longer. Thank you very much for your attention.
Link to video: https://audiovisual.ec.europa.eu/en/video/I-263518
 
Closing remarks
Thank you, Madam President, thank you ladies and gentlemen, Members of Parliament, for this set of points of view.
I have listened attentively to this long debate with a very large number [of participants], more than 50 interventions – which I believe only you and I, Madam President, have listened to all of them for reasons of our position. Obviously I don’t think there is any other Member who has seen fit to follow the debate beyond his own intervention.
That does not detract from the value of a debate that I have the honour of closing and, of course, please allow me a couple of minutes more so because this will surely be my last intervention in the Plenary.
We talk about the United States, but it is not the same United States under [US President Donald J.] Trump as it was under [former US President Barack] Obama. We talk about Spain, but it is not the same Spain under Franco as it was under [former Spanish Prime Minister Felipe] González.
We talk about Israel, but it is not the same Israel under [Israeli Prime Minister Benjamin] Netanyahu as it is under [former Israeli Prime Minister Shimon] Pérez. They are the same States, but with different governments.
We would do well to talk about governments, which, in the end, it is true, in some cases – only in some cases – represent the will of their citizens. And this, of course, is the case of the United States. It was not Franco’s Spain, but it is undoubtedly Trump’s United States.
The United States has chosen. It has chosen with full knowledge of the facts because it has already chosen once. They have chosen him again and we have to face a situation that is not the end of the world, certainly not, but it is the beginning of a different world than it could have been, had the Americans made another choice.
We do not know how President Trump will act, but we can guess that he will not increase military aid to Ukraine, right? He will rather decrease it.
Can we reasonably think that he will decrease it or even drastically reduce it? It seems more reasonable [to think so] than the opposite. That puts us in a position where we have to assume a responsibility that we have proclaimed to help a country defend itself from the aggressor.
I know that there are different points of view on this, but history will judge us on whether we have helped Ukraine defend itself or whether we have let it slip. Can we think that Trump will prevent the colonization of the West Bank? Not at all, rather he will push it forward. Can we think that he will try to contain the brutal and disproportionate reaction against the Palestinians? No, we cannot think so, quite the contrary.
Can we think that he will make it easier for lies not to be used as an electoral argument? Not at all, judging by experience. Can we expect that he will fight climate change? Not at all, right? Quite the opposite, it is, as some of you have said, a purely ideological problem. Can we think that he will ensure the security of Europeans? [It is still a] question mark. Can you put your hand in the fire to ensure that the security of Europeans will be guaranteed through NATO with a president like Trump? Can you think that he will guarantee freedom to Ukrainians or rather that he will sit down to dinner with Putin, with Ukraine on the menu? That is rather what will happen.
Well, that is what we have to take into account. This debate has been very interesting, you have all asked for action, but what action are you talking about? Surely not the same one. In some cases, I agree with the action you are asking for. In other cases, not really.
I think that the action that I would like to continue developing is the same one that we started [a few years ago]. Going faster, for example, in the application of the Strategic Compass, which allows us Europeans to equip ourselves with autonomous defense capabilities.
That does not mean that NATO is not the ultimate guarantee of our security. As long as the president of the United States wants it to be, and it remains to be seen. [It does not mean] that we [do not] continue working to increase military capabilities, because Europe is not just an economic union, it is a political union that has responsibilities in its defense as well.
It is not just about producing weapons and ammunition – [it is] that too, but not only that. We cannot outsource our security indefinitely. We have to assume our historical and strategic responsibility.
I think that is what Europeans have to do in the face of the question that President Trump represents, which in some cases is not a question. Some of you think what he proposes is excellent, others are worried. I am among those who are concerned.
They are concerned about an unbridled trade war, they are concerned about the expulsion of tens of thousands of migrants, they are concerned about the abandonment of Ukraine. They are concerned about the continued sacrifice of Palestinian rights, they are concerned about entering into a conflict that will destabilise the world.
It is not the end of the world, it is the beginning of a different world. Yes, the Americans have made their choice and we have to respond to it, knowing that our relationship with the United States, with the people, the American economy is very great. Millions of jobs in Europe depend on the trade relationship with the United States. Our prosperity is linked to theirs and the fight for freedom and democracy too.
For this, ladies and gentlemen, I thank you for having been able to participate in this debate. I thank you for the attention – and the criticism – that I have received over the last 5 years and I hope that you continue to work for a more united, stronger Europe, capable of facing the challenges of the world.
Thank you very much.
Read original text here.
 
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The rapid adoption of AI in finance means that authorities should address information gaps for monitoring, assess the adequacy of current policy frameworks and enhance supervisory and regulatory capabilities.
This report revisits the 2017 FSB report on AI and machine learning in financial services by taking stock of recent advancements, exploring use cases in the financial sector and drivers of adoption, as well as new potential benefits and AI-related financial sector vulnerabilities.
In the past few years, technological advancements and increased computational power have led to an uptake in AI adoption by financial firms and supervisors. AI offers benefits such as increased operational efficiency, regulatory compliance, financial product customisation and advanced analytics. With the advent of generative AI (GenAI) and large language models, the range of use cases has become more diverse.
While AI offers benefits like improved operational efficiency, regulatory compliance, personalised financial products, and advanced data analytics, it may also potentially amplify certain financial sector vulnerabilities. AI-related vulnerabilities that stand out for their potential to increase systemic risk include: (i) third-party dependencies and service provider concentration; (ii) market correlations; (iii) cyber risks; and (iv) model risk, data quality and governance. GenAI also increases the potential for financial fraud and disinformation in financial markets. Misaligned AI systems that are not calibrated to operate within legal, regulatory, and ethical boundaries can also engage in behaviour that harms financial stability. And from a longer-term perspective, AI uptake could also drive changes in market structure, macroeconomic conditions and energy use that could have implications for financial markets and institutions.
While existing regulatory and supervisory frameworks address many of the vulnerabilities associated with AI adoption, more work may be needed to ensure that these frameworks are sufficient. The report calls for national financial authorities and international bodies to enhance monitoring of AI developments, assess whether financial policy frameworks are adequate, and enhance their regulatory and supervisory capabilities including by using AI-powered tools.
 
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U.S Customs and Border Protection has published its first Isotopic Testing Guidance document, which can be accessed on the CBP website using the following link – https://www.cbp.gov/document/publications/isotopic-testing-guide [cbp.gov]. The Guidance  explains CBP’s perception of the role of isotopic testing in supply chain traceability and sets out recommended isotopic testing standards.
As explained in the Guidance, isotopic testing is a scientific method that identifies the atomic structure of naturally occurring materials, or a “fingerprint” of the material, affected by local environmental conditions. When that “fingerprint” is compared to a library of like materials from various geographic areas, isotopic testing can indicate whether the raw material being tested is consistent with the claimed geographic origin.
Although supply chain traceability has always been important, post implementation of the Uyghur Forced Labor Prevention Act (“UFLPA”), an importer’s ability to fully trace the raw materials and inputs used to fabricate its imported goods has become crucial in accessing the U.S. market. The need for traceability is most pronounced in demonstrating the absence of forced labor, but the ability to substantiate origin can be equally relevant in showing that a shipment is not subject to China 301 duties or antidumping/countervailing duties, among other things. Although not a silver bullet, isotopic testing is one tool importers may want to consider in managing risk in their supply chains.
 
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Multilateral development banks (MDBs) today issued a joint statement at COP29 in Baku outlining financial support and other measures for countries to achieve ambitious climate outcomes.
MDBs estimate that by 2030, their annual collective climate financing for low- and middle-income countries will reach USD 120 billion, including USD 42 billion for adaptation, and MDBs aim to mobilize USD 65 billion from the private sector.
For high-income countries, this annual collective climate financing is projected to reach USD 50 billion, including USD 7 billion for adaptation, and MDBs aim to mobilize USD 65 billion from the private sector.
MDBs significantly exceeded their ambitious 2025 climate finance projections set in 2019, with a 25% increase in direct climate finance and mobilization for climate efforts doubling over the past year.
“It is clear we must stay the course. The green energy revolution is underway, and communities and businesses have understood that ambitious climate action is not only the right thing to do but the smart thing to do. The family of multilateral development banks is walking the talk: with our collective commitment here at COP29 to global climate action over the next five years. This also involves increasing the impact of the projects we finance – helping countries around the world to meet their climate goals and adapt to the effects of climate change,” said EIB President Nadia Calviño.
“While the scale of MDBs’ financial commitments is essential, MDBs’ most significant impact comes from our ability to drive transformative change,” the statement said. “As emphasized by the Group of Heads of MDBs in the recent Viewpoint Note: MDBs Working as a System for Impact and Scale, we MDBs are focused on amplifying our catalytic effect by enhancing the results and impact of our financing, deepening engagement with countries through platforms, supporting clients’ climate ambitions, and increasing private sector mobilization.”
“Rallying to the call for urgent climate action, MDBs recognize the central importance of establishing a New Collective Quantified Goal on Climate Finance (NCQG) at COP 29 in Baku. A robust and ambitious NCQG is essential for achieving the goals of the Paris Agreement, and we urge Parties to reach a strong conclusion on this objective,” the statement said.
Recognizing that quality and systemic impact must be informed by climate results, the MDBs released the Common Approach to Measuring Climate Results: Update on Indicators. The common approach, issued in April, is the first shared framework to define, measure, and link global progress on climate mitigation and adaptation with the climate results of MDB activities.
The MDBs also published their Country Platforms for Climate Action – MDB Statement of Common Understanding and Way Forward, reaffirming their joint support for efforts to foster collaboration between host countries, MDBs, donors, and the private sector. Based on country demand, MDBs will build on successful examples to support the launch of new platforms, while deepening collaboration with partners including the International Monetary Fund.
The statement was issued by the African Development Bank Group, the Asian Development Bank, the Asian Infrastructure Investment Bank, the Council of Europe Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank, the Islamic Development Bank, the New Development Bank, and the World Bank Group.
EIB at COP29
Find an overview of EIB activities at COP29 on our website. The EIB has a pavilion in the side event area of the blue zone and is running a series of events on numerous topics. You will find the full agenda here. You are welcome to join to watch the sessions either live or later at your convenience. In addition, the EIB shares a pavilion with the group of multilateral development banks. You will find the full agenda here.
Background information
The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.
The EIB Group has been transforming itself into the climate bank through more than a decade of progress and substantial investment, tied to several milestones: the world’s first green bonds in 2007, our first Climate Strategy in 2015 in the wake of COP21 in Paris, our new Energy Lending Policy in 2019 (ending support for fossil fuel energy projects), and then in 2020 the Climate Bank Roadmap.

 In 2023, EIB Group green finance reached nearly €50 billion, more than double the amount of green finance provided in 2019, when European countries asked the EIB to strengthen its role as the climate bank.
 In 2021, the EIB became the first MDB to align our financial activities with the Paris Agreement.
With its Climate Bank Roadmap the EIB Group is on track to support €1 trillion of investment in climate action and environmental sustainability through the critical decade, 2021-2030.
The EIB has committed to increase investment in climate action and environmental sustainability to more than 50% of annual EIB lending by 2025 – last year that was exceeded with 60%.
In August 2024, the EIB passed the €100 billion mark of Climate Awareness Bonds and Sustainable Awareness Bonds  issuance. This makes the EIB the world’s largest issuer of green bonds as well as assured sustainable bonds with dedicated use of proceeds among multilateral development banks. To meet the needs of a broad investor base, the EIB has issued these bonds in 23 currencies, a market record.

EIB Global is the EIB Group’s specialised arm dedicated to operations outside the European Union, and a key partner of the European Union’s Global Gateway strategy. We aim to support at least €100 billion of investment by the end of 2027, around one-third of the overall target of Global Gateway. Within Team Europe, EIB Global fosters strong, focused partnerships alongside fellow development finance institutions and civil society. EIB Global brings the EIB Group closer to local communities, companies and institutions through our offices across the world.
 
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A significant gap in policy ambition exists between globally agreed temperature goals and the emissions reductions of national climate targets, according to a new report on countries covered by the OECD’s International Programme for Action on Climate (IPAC).
According to the 4th edition of the Climate Action Monitor, Nationally Determined Contributions (NDCs) currently commit to a collective reduction in greenhouse gas emissions of only 14% by 2030, compared to 2022 levels, in countries covered by IPAC which produce over 80% of global GHG emissions. This is well short of the estimated 43% global emission reduction needed to limit global warming to 1.5° Paris Agreement goal according to the Intergovernmental Panel on Climate Change (IPCC).

The report also points to the risk that net-zero targets may not be fulfilled, noting that most current commitments lack a legal basis on which to be enforced. As of August 2024, 110 countries have pledged a net-zero target for 2050 and beyond, covering about 88% of global GHG emissions. However, only 27 countries and the EU, representing 16% of global GHG emissions, have enshrined these targets into law.
“Our 2024 Climate Action Monitor underscores the growing impact of climate-related hazards and confirms that countries’ emission reduction pledges are not consistent with the Paris Agreement temperature goals,” OECD Secretary-General Mathias Cormann said. “Making real progress on the net-zero transition requires more ambitious mitigation targets and effective implementation”.
The report also highlights the recent slowdown in countries’ climate policy action across the countries that produce nearly two thirds of total greenhouse gas emissions. Based on the Climate Actions and Policies Measurement Framework (CAPMF), which tracks both the number of adopted national climate policies and their stringency, national climate mitigation action only expanded by 1% and 2% in 2022 and 2023 respectively, compared to an average of 10% per year between 2010-21. This trend suggests that there could be a significant implementation gap where even the current modest GHG emissions reduction targets may not be achieved by 2030.
With 2024 on track to set new records for global warming, the detrimental effects of rising temperatures, changing rain patterns and other climate-related hazards are being seen on food systems, with croplands increasingly exposed to agricultural droughts. Many countries have observed a notable decline in soil moisture levels on croplands during 2019-23 when compared to the reference period of 1981-2010, highlighting the urgent need for adaptation strategies to enhance resilience in farming practices. Heatwaves, wildfires, floods, and hurricanes have raged across the globe, destroying lives and livelihoods and the population exposed to extreme temperatures is growing rapidly. During the same period, the countries covered in the report experienced on average an additional 30 days of above-average temperatures compared to the baseline period.
 
Note to Editors:
The fourth edition of the Climate Action Monitor is a deliverable of the Net Zero+ International Programme for Action on Climate (IPAC), which provides foundational data and metrics to assess country progress towards net-zero greenhouse gas emissions and the Paris Agreement goals. IPAC examines key trends and developments while assessing the progress of countries’ climate policies, complementing and supporting the monitoring frameworks of the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement.
IPAC data underpins numerous climate initiatives at the OECD, including the Inclusive Forum on Carbon Mitigation Approaches. Making progress towards the net-zero challenge not only demands ambitious mitigation targets and effective implementation, but also dealing with the barriers and opportunities presented by the policy landscape and ensuring that the transition is resilient to changing circumstances.
IPAC covers the following countries: all OECD countries, OECD partner countries (Brazil, People’s Republic of China, India, Indonesia, South Africa), prospective members (Argentina, Bulgaria, Croatia, Peru, Romania), Saudi Arabia, Malta and the EU.
Countries that have enshrined net-zero targets in law: Australia, Austria, Canada, Chile, Colombia, Denmark, Fiji, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Japan, Korea, Liechtenstein, Luxembourg, Maldives, New Zealand, Nigeria, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, and the EU.
The Climate Actions and Policies Measurement Framework (CAPMF) is a climate mitigation database developed by the OECD that measures governments’ climate policy action both in terms of policy adoption and stringency. It consistently tracks 56 key climate policies based on 130 policy variables from 1990 to 2023 for all OECD and OECD partners countries except the United States, which jointly account for nearly two thirds of global greenhouse gas emissions.

 
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NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. The report shows total household debt increased by $147 billion (0.8%) in Q3 2024, to $17.94 trillion. The report is based on data from the New York Fed’s nationally representative Consumer Credit Panel. It includes a one-page summary of key takeaways and their supporting data points.
The New York Fed also issued an accompanying Liberty Street Economics blog post examining the evolution in aggregate debt to income ratios and what that suggests about Americans’ ability to manage their debt obligations.
“Although household balances continue to rise in nominal terms, growth in income has outpaced debt,” said Donghoon Lee, Economic Research Advisor at the New York Fed. “Still, elevated delinquency rates reveal stress for many households, even amid some moderation in delinquency trends this quarter.”
Mortgage balances increased by $75 billion from the previous quarter and reached $12.59 trillion at the end of September. HELOC balances increased by $7 billion, representing the tenth consecutive quarterly increase since Q1 2022, and stood at $387 billion. Credit card balances increased by $24 billion to $1.17 trillion. Auto loan balances saw a $18 billion increase and stood at $1.64 trillion. Other balances, which include retail cards and other consumer loans, were effectively flat, with a $2 billion increase. Student loan balances grew by $21 billion, and now stand at $1.61 trillion.
The pace of mortgage originations increased slightly from the pace observed in the previous four quarters, with $448 billion of newly originated mortgages in Q3. Aggregate limits on credit card accounts increased modestly by $63 billion, representing a 1.3% increase from the previous quarter. Limits on HELOC increased by $9 billion, the tenth consecutive quarterly increase.
Aggregate delinquency rates edged up from the previous quarter, with 3.5% of outstanding debt in some stage of delinquency. Delinquency transition rates were mixed. Credit card delinquency rates improved, with 8.8% of balances transitioning to delinquency compared to 9.1% in the previous quarter.  Early delinquency transitions for auto loans and mortgages worsened slightly, rising by 0.2 and 0.3 percentage points respectively. About 126,000 consumers had a bankruptcy notation added to their credit reports this quarter, a small decline from the previous quarter.
Household Debt and Credit Developments as of Q3 2024

CATEGORY
QUARTERLY CHANGE * (BILLIONS $)
ANNUAL CHANGE** (BILLIONS $)
TOTAL AS OF Q3 2024 (TRILLIONS $)

MORTGAGE DEBT
(+) $75
(+) $580
$12.594

HOME EQUITY LINE OF CREDIT
(+) $7
(+) $38
$0.387

STUDENT DEBT
(+) $21
(+) $7
$1.606

AUTO DEBT
(+) $18
(+) $49
$1.644

CREDIT CARD DEBT
(+) $24
(+) $87
$1.166

OTHER
(+) $2
(+) 17
$0.546

TOTAL DEBT
(+) $147
(+) $778
$17.943

*Change from Q2 2024 to Q3 2024
** Change from Q3 2023 to Q3 2024
Flow into Serious Delinquency (90 days or more delinquent)

CATEGORY1

Q3 2023
Q3 2024

MORTGAGE DEBT
0.72%
1.08%

HOME EQUITY LINE OF CREDIT
0.41%
0.43%

STUDENT LOAN DEBT
0.77%
0.77%

AUTO LOAN DEBT
2.53%
2.90%

CREDIT CARD DEBT
5.78%
7.10%

OTHER
4.96%
5.50%

ALL
1.28%
1.68%

 
About the Report
The Federal Reserve Bank of New York’s Household Debt and Credit Report provides unique data and insight into the credit conditions and activity of U.S. consumers. Based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data, the report provides a quarterly snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, auto loans, and delinquencies. The report aims to help community groups, small businesses, state and local governments, and the public to better understand, monitor, and respond to trends in borrowing and indebtedness at the household level. Sections of the report are presented as interactive graphs on the New York Fed’s Household Debt and Credit Report webpage and the full report is available for download.
 
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Complacency in fighting climate change and preserving biodiversity is endangering our economic survival. The longer we wait, the higher the costs will be. Christine Lagarde, President of the European Central Bank, warns of the growing gap between the commitments made and the investment needed.
We’ve all heard it time and again: either we tackle climate change and safeguard nature, or we face the steep price of our inaction. And that price is rising by the day. Just consider the recent flooding in Spain, the droughts in the Amazon basin or the storms in North America. These events are horrific in and of themselves, but they are also ruining the foundations of our economies and, ultimately, the basis of our economic survival.
Tackling the climate and nature crises demands urgent investment in three areas: climate change mitigation, adaptation and disaster relief. In other words: we must curb climate change to the greatest extent possible, prepare ourselves for what we cannot avoid and help those who are hardest hit. All of this is vital — and all of it is costly. But so far, we have mobilised only a fraction of the funding we need.
To stay on track to meet Paris Agreement goals, global annual investment in climate change mitigation designed to help transition our economies have to reach up to USD 11.7 trillion annually by 2035, according to estimates by the United Nations Environment Programme (UNEP). That equals about 10 percent of global economic output. The energy transition alone requires investment in clean energy to triple by 2030. We urgently need to unlock all possible sources of capital, at speed and at scale, and to put in place the regulatory conditions to finance our green future and preserve nature.
Climate change and nature degradation will transform our societies irrespective of the actions we take. That means we must adapt and become more resilient – and we must do so in a manner that is fair and equitable.
Even in the most optimistic scenarios, governments will need to help, particularly those in the most vulnerable groups. Yet, looking at the investment for climate adaptation, the difference between what is needed and what is planned – what we call the “financing gap” – is widening. UNEP also estimates that those financing needs are growing. They are 50% higher than previously estimated and up to 18 times greater than current commitments.
Falling behind on climate change mitigation and adaptation increases the risk of natural disasters and, in turn, the need for disaster relief. It is especially a duty for the strongest countries to help the most vulnerable ones, for both humanitarian and economic reasons. But here again, our efforts are far from sufficient, and funding for climate disaster relief is a long way from where it needs to be.
This is in part due to the widening gap between insured and uninsured losses. According to Swiss Re, only 38% of the total USD 280 billion in global economic losses in 2023 was insured, and most of it was concentrated in the industrialised world. The agreement on the Loss and Damage Fund reached two years ago at COP 27 in Sharm el-Sheikh was a welcome step, and COP 29, which begins this week in Baku, is an opportunity for countries to equip it with the capital it needs. Given the unequal impacts of climate change, however, more developed countries should increase their contributions to it.
Climate change and nature degradation are threats to our economies. This is why the European Central Bank and other central banks take them into consideration when working to keep prices stable, banks sound and the financial system safe. It is our task to gather and analyse data on how climate change and the loss of nature have an impact on banks and the economy. This can help to guide already committed and future funding efficiently, so that the economy will align with the Paris goals.
But it is governments that are at the forefront of the fight against climate change. They are the ones with the means and the tools to tackle it. However, they cannot do so alone. Companies, capital markets and venture investors will also have a vital role to play in financing green innovation. And within the EU, structural policies, fiscal incentives (such as carbon pricing and abolishing fossil fuel subsidies), transition plans and progress on the capital markets union are all critical to removing investment barriers and accelerating the green transition.
Tackling climate change and safeguarding biodiversity fairly and equitably is not a task we can afford to leave to future generations – it is our duty to act now. To ensure our economic survival, we need to invest in our green and resilient future. This year’s COP marks the time to close the global climate finance gap.
This post was also published as an opinion piece in the Financial Times.
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The first seven proposals for artificial intelligence (AI) Factories have now been submitted under the EuroHPC Joint Undertaking (JU), which manages the call announced in September 2024. These AI Factories will create a thriving European ecosystem for training advanced AI models and developing AI solutions. They will be built around the EU’s world-class network of  European High-Performance Computing (HPC) supercomputers and will be bringing together the key ingredients for success in AI: computing power, data and talent. The AI Factories will substantially increase the computing power available for AI in Europe. They will be interconnected and available to European AI startups, industry and researchers.
The seven proposals submitted in total by 15 Member States and two associated participating states demonstrate a very strong interest in this important initiative. Proposals to build an AI Factory around an existing or a new supercomputer adapted to AI needs were submitted by Finland (together with the participation of Czechia, Denmark, Estonia, Norway and Poland), Luxembourg, Sweden, Germany, Italy (together with the participation of Austria and Slovenia), and Greece. Furthermore, Spain has prepared a proposal with the participation of Portugal, Romania and Turkey which is expected imminently.
The submitted proposals will now be evaluated by an independent panel of experts. The EuroHPC JU expects to announce the selection of the first AI Factories in December 2024 and launch them soon thereafter.
In addition to the above proposals, Cyprus and Slovenia have submitted letters of interest to either join or create an AI Factory at a later stage.  The next cut-off date for the subsequent proposals is the 1st of February 2025.
The EU is now one step closer to setting up the first AI Factories in early 2025, as announced in the political guidelines of Commission President Ursula von der Leyen.
 
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