This report contains the audited financial statements of the FSB, for the 12-month period from 1 April 2021 to 31 March 2022. It also provides details on the FSB governance arrangements and its transparency and accountability mechanisms.
A detailed explanation of the activities undertaken to implement the mandate and tasks of the FSB is provided in the FSB’s Annual Report, which is a separate report that will be published in November.

Available as: PDF

Compliments of the U.S. Financial Stability Board.
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As of today, the EU has coordinated the delivery of 66,224 tonnes of in-kind assistance to Ukraine from 30 countries via the EU Civil Protection Mechanism. The assistance delivered includes 180 ambulances, 125 fire-fighting vehicles, 300 power generators, 35 heavy machinery vehicles, and 4 pontoon bridges. This is by far the largest, longest lasting and most complex operation via the EU Civil Protection Mechanism since it was established in 2001, with an estimated value so far of over €425 million. To support this operation, logistics hubs have been set up in Poland, Romania and Slovakia where assistance is then chanelled directly to Ukraine.
Commissioner for Crisis Management, Janez Lenarčič said: “We are all horrified by Russia’s atrocities in Ukraine. By providing emergency assistance, we can at least ease the immense pressure on Ukraine’s emergency response systems. Today we have reached an important milestone – over 60,000 tonnes of in-kind assistance coordinated via the EU Civil Protection Mechanism has arrived in Ukraine. I am extremely grateful to every single Member State, together with Norway, Turkey and North Macedonia for having offered help that we have then channelled most effectively through the Mechanism. This solidarity is the proof that the EU is with Ukraine not only in words but in actions.”
On 15 February, Ukraine activated the EU Civil Protection Mechanism in preparation for a large-scale emergency. Ever since, the EU Emergency Response Coordination Centre has maintained close contact with the Ukrainian authorities to determine the specific needs, and to coordinate the EU’s crisis response.
The EU continues receiving new offers to Ukraine from its Member States still today. The latest offers via the Mechanism include, hospital beds and hygiene kits from Austria, an ambulance and medical equipment from Norway, shelter equipment from Finland, Protective personal equipment  from Germany, medicines from Czechia and Slovakia, power generators from Italy and energy supply equipment from France.
The EU’s Emergency Response Coordination Centre is operating 24/7 to provide further assistance based on the specific needs indicated by Ukraine.
Background
Since the start of Russia’s invasion on 24 February, the humanitarian needs in Ukraine have risen to unprecedented levels. The ongoing war endangers the lives of civilians and causes severe damage to housing, water and electricity supply, heating, but also public infrastructure such as schools and health facilities. Millions of people have no access to basic needs. The EU has mobilised all possible resources to enable emergency assistance into Ukraine.
In response to the Russia’s military aggression against Ukraine, the European Commission is coordinating its largest ever operation under the EU Civil Protection Mechanism. All 27 EU countries, plus Norway, Turkey and North Macedonia, have offered in-kind assistance ranging from medical supplies and shelter items to vehicles and energy equipment. Given the immense need for medical supplies in Ukraine, the EU has also deployed its strategic rescEU reserves.
The European Commission has allocated €348 million for humanitarian aid programmes to help civilians affected by the war in Ukraine. This includes respectively €335 million for Ukraine and €13 million for Moldova. EU humanitarian funding is helping people inside Ukraine by providing them with food, water, essential household items, health care, psychosocial support, emergency shelter, protection, and cash assistance to help to cover their basic needs.
Compliments of the European Commission.
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The Federal Reserve Board on Monday announced final guidelines that establish a transparent, risk-based, and consistent set of factors for Reserve Banks to use in reviewing requests to access Federal Reserve accounts and payment services. The final guidelines are substantially similar to those proposed by the Board in its May 2021 proposal and March 2022 supplemental proposal.
“The new guidelines provide a consistent and transparent process to evaluate requests for Federal Reserve accounts and access to payment services in order to support a safe, inclusive, and innovative payment system,” said Vice Chair Lael Brainard.
Institutions offering new types of financial products or with novel charters have grown in recent years and many have requested access to accounts – often referred to as “master accounts” – and payment services offered by Federal Reserve Banks. The guidelines will be used by Reserve Banks to evaluate those requests with a transparent and consistent set of factors.
The new guidelines include a tiered review framework to provide additional clarity on the level of due diligence and scrutiny that Reserve Banks will apply to different types of institutions with varying degrees of risk. For example, institutions with federal deposit insurance would be subject to a more streamlined level of review, while institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review. In response to public comments, the tiered review framework in the final guidelines was refined to provide more comparable treatment between non-federally-insured institutions chartered under state and federal law.

Federal Register notice: Guidelines for Evaluating Account and Services Requests (PDF)
Board Memo: Proposed Guidelines to Evaluate Requests for Accounts and Services at Federal Reserve Banks (PDF)
Statement by Governor Bowman

Contact:

For media inquiries, please call 202-452-2955 or email media@frb.gov

Compliments of the U.S. Federal Reserve Board.
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The European Commission and Moderna have reached an agreement to better address Member States needs for COVID-19 vaccines for the late summer and winter period. This will ensure national authorities have access to the vaccines, including variant-adapted vaccines if authorised, at the time they need them for their own vaccination campaigns and to support their global partners.
This agreement will adapt the originally agreed contractual delivery schedules. Doses originally scheduled for delivery in the summer will now be delivered in September and during the autumn and winter period 2022, when Member States will more likely need additional stocks of vaccines for national campaigns and meeting their international solidarity commitments.
The agreement also ensures that, if one or more adapted vaccines receive marketing authorisation, Member States may choose to receive those adapted vaccines under the current contract.
In this context, at the request of some Member States, the agreement also secures additional 15 million doses of Omicron-containing vaccine booster candidates from Moderna, subject to marketing authorisation within timelines that would allow the use of these doses for their vaccination campaigns.
Commissioner for Health and Food Safety, Stella Kyriakides, said: “Increasing COVID-19 vaccination and booster rates will be crucial as we plan ahead for the autumn and winter months. To best ensure our common preparedness, Member States must have the necessary tools. This includes vaccines adapted to variants, as and when they are authorised by the European Medicines Agency. This agreement will ensure that Member States will have access to the vaccine doses they need at the right time to protect our citizens”.
Background
In 2020, the European Union invested heavily in the global production of a number of COVID-19 vaccines. It was crucial to have vaccines as early as possible and at the scale needed, requiring important investments before knowing whether any of these vaccines would prove successful.
These actions taken at risk in 2020 have clearly paid off, as the development of vaccines has been highly successful: Member States had equal access to safe and effective vaccines at the earliest opportunity, and at the scale needed, allowing all EU citizens to be offered primary and booster vaccinations, saving lives and mitigating the impact of the pandemic upon social and economic life.
Moreover, a large number of these vaccines could also be used in the global efforts to tackle the pandemic.  As of end July 2022, the EU exported more than 2.4 billion vaccine doses to 168 countries. Member States have shared over 478 million doses of which around 406 million have already been delivered to recipient countries (around 82% of these via COVAX). At the same time, Member States must continue to ensure they have the strategic stocks of vaccines they need to deal with the potential epidemiological evolution of the COVID-19 virus, given the uncertainties over its future evolution and impact. The EU’s Vaccines Strategy provides Member States with certainty that they will have the supply they need, including of adapted vaccines.
Compliments of the European Commission.
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Speech by Governor Michelle W. Bowman at the 2022 CEO & Senior Management Summit sponsored by the Kansas Bankers Association, Colorado Springs, Colorado |
Thanks to the Kansas Bankers Association for the invitation to share my perspective on the economy and bank regulation. It is always a pleasure to be here with you for this annual gathering. I am especially looking forward to hearing what is on your minds about supervision and regulation, how you are navigating current economic conditions, and your expectations going forward.
I’ll start with a recap of the decision from July’s Federal Open Market Committee meeting and then move on to my thoughts about the current economic uncertainty and challenges that lie ahead. The number one challenge, of course, is inflation, which continues to be much too high, and a heavy burden for households and businesses. As I’m sure you all already know, the Federal Open Market Committee decided last week to raise the federal funds rate by 75 basis points, to a range of 2-1/4 to 2-1/2 percent. I will share my reasoning for supporting this increase and why I support continued increases until inflation is on a consistent path to significantly decline. I will then touch on the current federal regulatory climate and the Fed’s agenda for supervision.
Inflation continued to climb in June, reaching 9.1 percent as measured by the consumer price index. This is yet another concerningly high reading, and it set another 40-year record high despite the expectation of many forecasters that inflation had peaked earlier in the year. I have seen few, if any, concrete indications that support this expectation, and I will need to see unambiguous evidence of this decline before I incorporate an easing of inflation pressures into my outlook.
Many of the underlying causes of excessive inflation are the same as they have been over the past year or so—supply chain issues, including those related to China’s COVID containment policies, constrained housing supply, the ongoing conflict in Ukraine, fiscal stimulus, and limitations on domestic energy production.
Regardless of the source of the inflationary pressure, the Federal Reserve has a duty to bring inflation down to our 2 percent target. This duty is mandated by Congress to carry out monetary policy that results in price stability—meaning low and stable inflation. We all understand why this is a critically important responsibility, especially in times of extreme inflation. Rising prices for food, housing, and energy negatively impact affordability for all Americans, but especially those with low or moderate incomes. For those workers who drive long distances to get to work, high inflation is especially concerning, requiring some to make tradeoffs between feeding their families and buying fuel to fill gas tanks. Some workers have seen their wages grow significantly over the past two years, but most have seen any gains in wages far outpaced by higher prices. Therefore, in my mind, it is absolutely critical that we continue to use our monetary policy tools until we are successful in returning inflation to our 2 percent goal.
Businesses are also suffering from elevated inflation through rising and volatile prices for inputs and the need to price their own goods and services to cover costs without losing customers. This dynamic is evident in agriculture and what we are hearing directly from farmers and ranchers, who are dealing with added weather challenges and on-going drought. Prices for commodities have declined lately but are still at historically high levels. In contrast, prices for fertilizer and many crop inputs continue to rise. In some areas, high input costs and drought conditions are contributing to record early season cattle auction sales, as many ranchers choose to sell herds early to limit further outlays for input expenses.
I see a significant risk of high inflation into next year for necessities including food, housing, fuel, and vehicles. Rents have grown dramatically, and while home sales have slowed, the continued increasing price of single-family homes indicates to me that rents won’t decline anytime in the near future. Recently, gasoline prices have moderated but are still roughly 80 percent higher than pre-pandemic levels due to constrained domestic supply and the disruption of world markets. And I see continued inflation risk from motor vehicle prices, as auto manufacturers struggle with supply chain problems that haven’t improved significantly. Demand for cars continues to exceed supply, and retail used car prices are still very high, about 50 percent more than before the pandemic.
The supply problems pushing up inflation seem likely to persist. Indications are that the conflict in Ukraine will continue, and that the effects of shipping disruptions of agriculture products and limits on energy supplies from Russia will continue to be a significant problem. Even with the recent agreement intended to facilitate Ukrainian grain exports, it is unclear whether supply pressures on global markets will ease as a result. An announced reduction in Russian natural gas supplies to Western Europe has driven European prices even higher, causing ripple effects on world energy markets and raising concerns about shortages this winter. China has eased some of its most stringent COVID containment measures but recently revived travel restrictions in some areas, and its approach to the pandemic remains an upside risk for inflation. Despite a slowdown in sales of new and existing homes, inventories of homes for sale and rental vacancies remain low, supporting ongoing increases in housing costs.
On the other side of our dual mandate, maximum employment, we continue to see a tight labor market, though there are some emerging signs that would support expectations of loosening. Yesterday’s job report showed continued significant growth in hiring with the unemployment rate finally returning to the pre-pandemic level of 3.5 percent. As I am sure you all know, the job market in Kansas is even stronger, with an unemployment rate of 2.4 percent in June. In our state, finding workers is a bigger problem in most communities than finding a job.
One aspect of the job market that has not recovered is labor force participation. Based on the pre-pandemic trend, there are nearly four million people who are still sitting out of a strong labor market.
In contrast to this labor market strength in Kansas and nationwide, output growth has slowed this year. Real gross domestic product, GDP, edged lower in the second quarter, following a larger decline in the first quarter.
My base case is for a pickup in growth during the second half of this year and for moderate growth in 2023. As we learned during the summer and fall of 2021, both GDP and jobs numbers are subject to significant revision, both in subsequent months and then again the next year. From my perspective, had we known at the time about the eventual large upward revisions in last year’s employment data, we likely would have significantly accelerated our monetary policy actions. Going forward, we have to consider the possibility of these kinds of revisions when making real-time judgments as policymakers, which includes looking at other kinds of indicators instead of relying too heavily on the data. Taking all of that on board, while the data on economic activity are indeed lower and the view is murky, the evidence on inflation is absolutely clear, which brings me to the implications for monetary policy.
Based on current economic conditions and the outlook I just described, I supported the FOMC’s decision last week to raise the federal funds rate another 75 basis points. I also support the Committee’s view that “ongoing increases” would be appropriate at coming meetings. My view is that similarly-sized increases should be on the table until we see inflation declining in a consistent, meaningful, and lasting way.
On the subject of forward guidance, I am pleased to see that following the July meeting, the FOMC ended the practice of providing specific forward guidance in our post-meeting communications. I believe that the overly specific forward guidance implemented at the December 2020 FOMC meeting requiring “substantial further progress” unnecessarily limited the Committee’s actions in beginning the removal of accommodation later in 2021. In my view, that, combined with data revisions that were directly relevant to our decision making, led to a delay in taking action to address rising inflation.
It is helpful that the FOMC provided clear direction earlier this year that it was prepared to act quickly to tighten monetary policy. Since we have now taken actions to raise rates and finally reduce the Fed’s balance sheet, we are following through on that commitment. Looking ahead, the FOMC will be getting two months of data on inflation and another month on employment before our next meeting in September, and while I expect that ongoing rate increases will be appropriate, given the uncertainty in how those data and conditions will evolve, I will allow that information to guide my judgment on how big the increases will need to be.
I do expect that the labor market will remain strong as we continue to increase interest rates and allow the balance sheet to run off, but there is a risk that our actions will slow job gains, or even reduce employment. Growth has softened, and perhaps this is an indication that our actions to tighten monetary policy are having the desired effect, with the ultimate goal of bringing demand and supply into greater balance.
When considering the risks to the labor market, these risks must be viewed in the context of its current strength and with the understanding that our primary challenge is to get inflation under control. In fact, the larger threat to the strong labor market is excessive inflation, which if allowed to continue could lead to a further economic softening, risking a prolonged period of economic weakness coupled with high inflation, like we experienced in the 1970s.
In any case, we must fulfill our commitment to lowering inflation, and I will remain steadfastly focused on this task.
With my outlook out of the way, let me turn to another of my responsibilities at the Fed, which is bank regulation and supervision. I am sure that we will have the opportunity to discuss many issues of interest to you during our discussion, but I’d like to mention a pending rulemaking that would update the Community Reinvestment Act. I understand that the draft rule was intended to provide greater clarity to banks regarding community development activities and their consideration for CRA. While I am a strong supporter of the fundamentals behind CRA, and I support community development activities, I am concerned that the proposal does not adequately account for the costs and benefits of certain provisions, and that no attempt has even been made to either ensure that or to analyze whether the benefits exceed the costs, which is a fundamental element of effective regulation. The comment period for the proposal ended on August 5, and I will repeat what I have said in the past: if this proposal affects you or your business, I hope that you made your voice heard by submitting a comment to the more than 600-page proposal within the short 90-day comment period. Public comments really do matter when considering the content of proposed rulemakings.
Of course, my comments about the benefits of public participation in rulemaking apply beyond the CRA proposal, and there are other regulatory topics on the horizon that would benefit from robust engagement. One that comes to mind is the regulatory framework for analyzing bank mergers. Earlier this year, the Justice Department requested comment on whether to revise their 1995 Bank Merger Competitive Review guidelines, seeking input on a wide range of issues. The FDIC also issued a request for information on the Bank Merger Act framework. I expect this review will be a focus across the banking agencies, and I will be very interested to see how the framework for small and regional banks is affected by any proposed change. I would be concerned about any changes that would result in making mergers among these institutions more difficult or would not address some of the longstanding issues with the existing framework. Among those are that the framework doesn’t account for new technologies or overwhelming competition posed by credit unions, internet based financial services, and non-bank financial companies. Another concern is that overly strict criteria for mergers could have the unintended consequence of depriving consumers in some areas of access to any banking services. “Banking deserts” in rural and underserved areas are a real problem and regulators should guard against this outcome when proposing or evaluating rules.
I should also briefly mention three other regulatory topics of interest to all banks, including those here today.
First, the Fed’s LIBOR proposal is currently out for comment on a short timeline. That proposal implements the recently passed LIBOR Act by providing default rules for certain contracts that use the soon to be discontinued reference rate. Second, comments are currently under review for the third-party risk management guidance jointly proposed by the Fed with the other banking agencies. Banks and third parties will benefit from clear guidance that helps banks navigate the challenging issues and risks raised by third party engagement.
Finally, another area that could benefit from more regulatory clarity is digital assets, including stablecoins and crypto assets. Some banks are considering expanding into a range of crypto activities, including custody, lending backed by crypto collateral, and facilitating the purchase and sale of these assets for their customers. In the absence of clear guidance, banks should consult with their primary regulator and exercise caution when engaging with customers in these types of activities.
I will conclude with a brief comment on supervision. While the trend of returning to on-site bank examination is continuing, progress has been somewhat slow. This may be driven in part by the varied pace of employees returning to the office. That said, the Fed intends to return to some form of on-site supervision. We find substantial value in those in-person interactions during bank examinations.
In closing, thank you again for the opportunity to speak to you today. I look forward to hearing how high inflation is affecting you and your communities and your thoughts on the regulatory agenda.
Compliments of the U.S. Federal Reserve.
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As part of our monetary policy strategy review we adopted a new symmetric 2% inflation target. One year on, we examine how the strategy review has helped anchor financial analysts’ inflation expectations. We also show that recent policy normalisation is grounded in our strategy.

A year ago the Governing Council of the ECB published its new monetary policy strategy.[1] Since then, the monetary policy environment has changed completely. The war in Ukraine and the reopening of the economy as the pandemic abates have contributed to a shift from an era of subdued price increases to a period of elevated inflation. Given the importance of inflation expectations to monetary policy and price stability, in this post we address two key questions. To what extent have inflation expectations become more firmly anchored at the 2% inflation target since the new strategy was announced? And how has the strategy laid the groundwork for monetary policy normalisation in the current phase of undesirably high inflation?[2]
The strategy review challenge: how to re-anchor expectations at target when inflation is low?
In 2020-21 we needed to review our monetary policy strategy to grapple with the structural economic changes over the preceding decades. The most fundamental of these was a decline in the equilibrium real interest rate, which keeps the economy balanced between inflationary or disinflationary forces.[3] The estimated equilibrium rate dropped from close to 3% at the start of the monetary union to levels close to or even below zero in the period before the pandemic. This decline reduced the space available for central banks to carry out monetary easing using conventional interest rate policy.
The new strategy addresses this challenge with an explicitly symmetric 2% inflation target over the medium term, which is slightly higher than our previous target. Being “symmetric” means that it is equally undesirable for inflation to rise above or drop below the target. The strategy also acknowledges that, when the economy is operating close to the lower bound on nominal interest rates, especially forceful or persistent monetary policy action is required. This may also imply a transitory period in which inflation is moderately above target.
Bringing low inflation up to our target was the key monetary policy challenge until the summer of 2021. The new target of 2% was expected to help with this by contributing to anchoring longer-term inflation expectations more solidly. There is evidence to confirm that this has indeed happened. Following the announcement of the new strategy, the ECB Survey of Monetary Analysts showed a noticeable increase in the percentage of respondents expecting long-run inflation at 2%, together with a decline in the percentage of respondents expecting inflation below 2% (see Chart 1). According to the latest survey round, the median respondent expects inflation to be exactly 2.0% as of the fourth quarter of 2024, suggesting that both medium-term and long-term inflation expectations are firmly anchored at our new inflation target. Other indicators broadly support this assessment. For instance, according to a special Survey of Professional Forecasters aimed at evaluating our new strategy, survey respondents, on balance, revised their longer-term inflation expectations moderately upwards, with the balance of risks surrounding these expectations coming closer to symmetry.[4]
Today’s challenge: how to keep inflation expectations anchored at 2%?
Only 12 months after publishing our new strategy, the world has changed. The pandemic and the war in Ukraine have fostered inflationary forces. So central banks have had to shift their focus from tackling low inflation to combating high inflation. The ECB’s monetary policy response to the higher inflation outlook can clearly be rationalised based on the new strategy – in particular its symmetric inflation target.
Two aspects of the ECB’s strategy support the continued accommodative monetary policy stance during the initial phase of rising inflation in the second half of 2021.
The first is the flexible medium-term orientation, which allows for inevitable short-term deviations of inflation from target, as well as lags and uncertainty in the transmission of monetary policy to the economy and to inflation. Initially, the unexpected rise in inflation was largely seen as transitory and mainly caused by supply bottlenecks, such as the temporary closure of port terminals. Such supply shocks tend to push inflation higher and economic activity and employment lower. In cases like this, the medium-term orientation enables a lengthening of the horizon over which inflation is brought back to target. This avoids pronounced falls in economic activity and employment, which, if persistent, could jeopardise medium-term price stability. Lengthening this horizon is a viable option as long as inflation expectations remain well-anchored.
The second aspect supporting the policy stance in the second half of 2021 is that the euro area is emerging from a long period with policy interest rates at the lower bound. This is a situation for which our strategy prescribes that monetary policy accommodation should be “especially persistent” and adjustments gradual, so that inflation expectations do not settle below the 2% target.
From the end of 2021 onwards, inflationary pressures broadened and intensified, with core inflation rising above 2% as of October 2021 and more significantly so as of February 2022. This was driven by a sequence of supply shocks, in particular disruptions in energy markets following Russia’s unjustified aggression towards Ukraine, combined with a rebound in demand reflecting pandemic restrictions being lifted. A succession of supply-side shocks has the potential to destabilise inflation expectations, with the risk that the increase in inflation becomes self-sustained. In response, the ECB began normalising monetary policy in December 2021, with the decision to end net purchases under the pandemic emergency purchase programme at the end of March 2022.
In early 2022 concerns increased that inflation expectations might become unanchored from the 2% target. Our April monetary policy statement reflected those concerns, stating “initial signs of above-target revisions in those measures [of inflation expectations] warrant close monitoring”. Data and analysis in the following months raised the need for further steps to be taken on the path towards policy normalisation, most importantly the ending of net asset purchases to pave the way for an increase – by 50 basis points – in the ECB’s key policy rates at the July Governing Council meeting. This ended an eight-year period of negative rates.[5]
To sum up, the new ECB strategy has contributed to a more solid anchoring of inflation expectations at 2%. Monetary policy decisions taken by the ECB’s Governing Council since July 2021 have been firmly grounded in the strategy. In the light of rising inflationary pressures, in December 2021 the Governing Council decided to embark on a path of monetary policy normalisation. Since then the Governing Council has repeatedly emphasised that it will ensure inflation returns to the 2% target over the medium term, in line with its commitment to symmetry.
It is always worth noting that, at any point in time, it is likely that several monetary policy options are each consistent with the overall strategy. While a strategic framework provides a fundamental anchor for the medium-orientation of monetary policy, meeting-by-meeting decisions still require considerable judgement in terms of assessing the latest conjunctural information and determining the appropriate speed in adjusting the monetary policy stance.

Chart 1
Evolution of long-run inflation expectations over survey rounds
(Percentage of respondents)

Source: ECB Survey of Monetary Analysts (SMA) (all vintages from January 2020 until July 2022 results).
Notes: The three groups are based on the Harmonised Index of Consumer Prices long-run point forecasts provided by respondents on the macroeconomic projections question of the SMA. 2% is calculated as inflation expectations between 1.95% and 2.05%. The number of respondents to the July 2022 SMA was 27. The latest observation (SMA) is for July 2022.

Authors:

Ursel Baumann, Deputy Head of Division · Monetary Policy, Capital Markets/Financial Structure

Christophe Kamps, Deputy Director General

Manfred Kremer, Adviser · Research, Financial Research

Compliments of the European Central Bank.
Footnotes:
1. See the ECB’s monetary policy strategy statement and an overview of the ECB’s monetary policy strategy.
2. The decision on the ECB monetary policy strategy also covered: the measurement of inflation; the inclusion of owner-occupied housing; the proportionality of monetary policy measures; the instruments within the ECB’s toolkit; the role of fiscal and other policies; considerations relating to balanced growth; employment; financial stability and climate change; the analytical framework; and the communication of ECB policies. An assessment of these topics goes beyond the scope of this blog. For an assessment of the ECB’s first milestone when it comes to incorporating climate change considerations into its monetary policy, see Elderson, F. and Schnabel, I. (2022),“A catalyst for greening the financial system”, The ECB Blog, 8 July.
3. The concept of the equilibrium real interest rate is explained in the ECB Monetary Policy glossary.
4. See European Central Bank (2021), “Results of a special survey of professional forecasters on the ECB’s new monetary policy strategy”, Economic Bulletin, ECB, Issue 7.
5. See Lagarde, C. (2022), “Ensuring price stability”, The ECB Blog, 23 July. To support the effective transmission of monetary policy across all euro area countries, at its July 2022 meeting the ECB’s Governing Council also approved the establishment of the Transmission Protection Instrument.
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Josep Borrell, High Representative of the European Union for Foreign Affairs and Security Policy / Vice-President of the European Commission |
HR/VP Blog – Europe is facing a perfect storm: energy prices are up, economic growth is down and winter is coming. The Kremlin is using energy as a political weapon. We must prepare ourselves for a possible gas cut-off, principally through savings, diversification and solidarity among us. At the same time, we must accelerate investments in renewables and wage a global campaign for energy efficiency and savings to ensure sustainable energy access to all while staying within planetary boundaries.
“We must prepare ourselves for a Russian gas cut-off through savings, diversification and solidarity. And at the same time wage a global campaign for energy efficiency and savings.” – HR/VP Josep Borrell
When it comes to energy, Europe faces a dilemma: it needs to balance its short-term goals – to wean itself off Russian oil and gas while getting through the winter – with its long-term net-zero targets under the Green Deal. And it must ensure that its internal choices are compatible with its external commitments. There is no point pretending that doing so is easy, cheap or without trade-offs. But it is possible, if we invest seriously in energy savings, renewables and solidarity, both at home and around the world.
The short-term imperative
Winter comes every year but the one we face promises to be exceptional. There is real uncertainty over whether the EU will have enough gas (i.e. volume) and whether it will be affordable (i.e. at what price). While oil prices have come down to where they were at the start of the war in Ukraine, gas prices are more than four times the price of end-February and almost ten times what they were a year ago.
We know the reason. The energy price hikes did not start on 24 February, however, as for many other issues, Russia’s aggression has made it much worse. Russia is using energy as a weapon: it has already cut or reduced supplies to 12 member states, in clear breach of contract. Last week it cut supplies trough Nord Stream 1 to only 20% of its normal capacity. By creating shortages and nervousness in the market, it guarantees the exact price rises from which it profits itself. We should prepare ourselves for all scenarios including one where Russia cuts supplies altogether, at a moment of its choosing.
“We have already managed to cope with an overall reduction in the share of Russian gas imports from 40% at the beginning of the year to around 20% today.”
We have already managed to cope with an overall reduction in the share of Russian gas imports from 40% at the beginning of the year to around 20% today, principally by buying more LNG, whose share of gas usage has doubled from 19% to 37%. We have also made progress in buying more pipeline gas from Norway, Algeria and Azerbaijan. In July, I co-chaired the EU-Azerbaijan Cooperation Council where we welcomed the recent signature of a Memorandum of understanding on a Strategic Partnership on Energy. Longer-term, we can expect more progress with this diversification drive. But the hard truth is that for this winter, we are approaching the limits of what extra gas we can buy from non-Russian sources. So, the bulk will have to come from energy savings, i.e. demand reduction.
A 15% reduction of EU gas consumption
The experts from Bruegel as well as those of the Commission estimate that we will need an overall reduction of EU gas consumption of 15% to manage a complete stop of Russian supplies. Of course, there are significant variations among EU countries in their exposure and vulnerability to a possible Russian cut off. On 26 July, the Council adopted an important set of measures. Its central plank is  this overall gas savings target of 15%. But it will take into account different national circumstances and efforts, for instance the degree to which infrastructure exists that connects individual countries to their neighbours. For now, this is a voluntary target but if circumstances so dictate, member states can decide to make the savings compulsory.
“At heart, this is about how we prepare ourselves for a tough winter and how we organise solidarity among us, pooling risks and resources. We need to develop a real Energy Union. ”
At heart, this is about how we prepare ourselves for a tough winter and how we organise solidarity among us, pooling risks and resources. It is a familiar debate for us Europeans: we went through a comparable process at the beginning of the pandemic. At first, the tendency was for every country to go it alone, but then, quite rightly and successfully, EU countries opted for joint procurement of vaccines, which guaranteed all EU citizens had equal access to life-saving vaccines.
After Russia’s annexation of Crimea, we should have but didn’t develop a real EU energy union, built around diversification away from Russia and investing in energy efficiency and home-grown and climate-friendly renewables. This time the stakes are even higher: we cannot afford to make that same mistake again.
The bigger picture
As we in Europe think about our current energy dilemmas and focus on savings, we need to remember that for the vast majority of humanity the challenge is how to get more energy: 600 million of Africans lack secure access to electricity according to the IEA. Demographic and economic trends make it clear that we need a massive acceleration of energy efficiency and renewables to meet the growing demands for energy world-wide and avoid runaway climate change at the same time. This is what EU energy and climate diplomacy are about since many years: forging longer-term partnerships, with investment, technology and finance. Good examples include our promising work to shape Just Transition Energy Partnerships first with South Africa, but also with others.
“Despite our short-term needs for fossil fuels to partially replace supplies from Russia, we are not in any way promoting a global renaissance of fossil fuels.”
Despite our short-term needs for fossil fuels to partially replace supplies from Russia, we are not in any way promoting a global renaissance of fossil fuels. We need in particular to avoid aggravating the problem of so-called “stranded assets” for fossil fuel producers. That is why we also work with our partners on the production and trade of clean hydrogen. It has great potential to become a major new source of energy and some of the existing infrastructure including pipelines could be re-purposed. This is one of the priorities under the EU strategy with the Gulf that we adopted last May. A large part of the EU’s alternative gas needs could also be ensured simply with a better management of oil and gas production and transit facilities, where the IEA estimates that over 50 bcm of gas is wasted to through leaks, flaring or venting. This is roughly the volume we need to cover a possible Russian gas cut off. It would also generate significant climate benefits.
The best energy of all, is the one you don’t need
But mainly, it is still true that the best energy of all is the one you don’t need. That’s why saving energy and improving energy efficiency has to get the priority it has long deserved. In the EU, we are now embarking on a serious effort at demand reduction. The Commission has proposed to raise the binding Energy Efficiency target to 13% by 2030, along with additional savings measures in industry, buildings and elsewhere.
Doing so is necessary to get through the next winter, but this will also give us the necessary credentials to put the international focus and launch a global movement on energy savings and efficiency in the run up to the UNGA and COP27 in Sharm El-Sheikh. We can draw inspiration from the Methane Pledge, a real success of EU climate diplomacy: the EU proposed it, the US partnered with us and in the end 110 countries signed, representing 70% of the global economy. We need a similar global campaign around energy efficiency and savings, and in the coming months I will invest in helping building the necessary coalition.
Compliments of the European External Action Service.
The post Europe’s energy balancing act first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

As of today, all Member States must apply EU-wide rules to improve work-life balance for parents and carers adopted in 2019. These rules set out minimum standards for paternity, parental and carers’ leave and establish additional rights, such as the right to request flexible working arrangements, which will help people develop their careers and family life without having to sacrifice either. These rights, which come in addition to existing maternity leave rights, were achieved under the European Pillar of Social Rights and is a key milestone towards building a Union of Equality.
Work-life balance for parents and carers
The Directive on work-life balance aims to both increase (i) the participation of women in the labour market and (ii) the take-up of family-related leave and flexible working arrangements. Overall, women’s employment rate in the EU is 10.8 percentage points lower than men’s. Moreover, only 68% of women with care responsibilities work compared to 81% of men with the same duties. The Directive allows workers leave to care for relatives who need support and overall means that parents and carers are able to reconcile professional and private lives.

Paternity leave: Working fathers are entitled to at least 10 working days of paternity leave around the time of birth of the child. Paternity leave must be compensated at least at the level of sick pay;

Parental leave: Each parent is entitled to at least four months of parental leave, of which two months is paid and non-transferable. Parents can request to take their leave in a flexible form, either full-time, part-time, or in segments;

Carers’ leave: All workers providing personal care or support to a relative or person living in the same household have the right to at least five working days of carers’ leave per year;

Flexible Working Arrangements: All working parents with children of up to at least eight years old and all carers have the right to request reduced working hours, flexible working hours, and flexibility in the place of work.

Next steps
As set out by President von der Leyen in her Political Guidelines, the Commission will ensure the full implementation of the Work-Life Balance Directive, which will help bring more women into the labour market and help fight child poverty. The Commission will support Member States in applying the new rules including through the European Social Fund+ to improve the quality and accessibility of early childhood education and care systems.
Member States are required to transpose the Directive into national law by today. In a next step, the Commission will assess the completeness and compliance of the national measures notified by each Member State, and take action if and where necessary.
Members of the College said
Vice-President for Values and Transparency, Věra Jourová, said: “Over the past two years many Europeans have taken steps to focus on what truly matters to them. With more flexibility and new rights, the Work-Life Balance Directive provides them with a safety net to do so without worrying. Across the EU, parents and carers now have more guaranteed leave with fair compensation. It means we can care for the people we love without sacrificing the love of our work.”
Vice-President for Democracy and Demography Dubravka Šuica: “Through the work-life balance Directive, EU citizens will now have more time to care for those vulnerable family members who need it. Introducing carers’ leave is an important step that shows that the EU cares for its citizens in all stages of life. As a society we must care about caring. We have recently seen how fragile health can be and how important the solidarity of society is. Flexible work arrangements and the possibility to take time off when needed most show how the EU is a true society of solidarity. We are laying the foundations for creating a modern workplace fit for citizens and all family members.”
Commissioner for Equality, Helena Dalli, said: “The EU Work-Life Balance Directive encourages men and women to share parenting and caring responsibilities better. Men and women alike deserve an equal chance to take parental leave and carers’ leave, as well as equal opportunities to be part of and thrive in the labour market. This directive gives people the tools to divide their household and care duties fairly.”
Background
The Work-Life Balance Directive is the outcome of years of work by the Commission to encourage Member States and the European Parliament to improve legislation on leave available for parents and to introduce for the first time in EU legislation the right to carers’ leave. The Commission first tabled a proposal in 2008 to reform older legislation on maternity leave which it withdrew in 2015 after negotiations stalled. In order to broadly address women’s underrepresentation in the labour market, the right to suitable leave, flexible working arrangements and access to care services was embedded in Principle 9 of the European Pillar of Social Rights, jointly proclaimed by the European Parliament, the Council on behalf of all Member States and the Commission in Gothenburg in November 2017. The Work-Life Balance Directive is one of the actions of the European Pillar of Social Rights Action Plan to further implement the Pillar principles. The Directive proposal was adopted on 13 June 2019 and Member States had three years until 2 August to implement  it in national law. The new rules are in addition to the rights under Directive 92/85 on pregnant workers, according to which women have the right to a minimum of 14 weeks of maternity leave with at least two being compulsory. Maternity leave is compensated at least at the national sick pay level.
It also goes hand in hand with the Directive on Transparent and Predictable Working Conditions, which the Member States had to transpose into national law by 1 August (press release). The Directive updates and extends the rights for the 182 million workers in the EU, particularly addressing insufficient protection for workers in more precarious jobs, while limiting the burden on employers and maintaining flexibility to adapt to changing labour market conditions.
Compliments of the European Commission.
The post New rights to improve work-life balance in the EU enter into application today first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.