Chapter News

International Cooperation on Civil Justice

In parallel with the adoption of EU instruments in the area of civil and commercial law, the EU’s exclusive external competence to negotiate and conclude international conventions has also increased. As a result, the EU (represented by the Commission) has gradually replaced Member States internationally. Where the EU cannot be formally a Contracting Party to an international Convention (because the participation of regional/international organisations is not foreseen in the convention), the EU exercises its competence through its Member States.

The EU promotes multilateral conventions in its relations with third countries in order to rely on a common legal framework on a wide range of issues. The aim is to enhance EU values, promote trade and protect EU citizens and businesses at the global level. The main international partner of the EU on civil justice cooperation is the Hague Conference on Private International Law, of which the EU is a full Member since 2007. Other relevant organisations are Uncitral (United Nations Commission on International Trade Law) and Unidroit (International institute for the unification of private law), where the EU has an observer status. Conventions developed by these international organisations cover issues such as child protection ( in particular  child support and  prevention of child abduction), choice of court, recognition and enforcement of foreign judgments, security interests, insolvency or protection of vulnerable adults.

So far, four major multilateral conventions have been negotiated by the Commission on behalf of the Union: the Lugano Convention with Norway, Switzerland and Iceland on jurisdiction, recognition and enforcement of judgments in civil and commercial matters basically extending the Union’s system to these three countries; the 2007 Hague Child Support Convention (ratified  by the EU in 2014) and its Protocol on applicable law (concluded in 2010) ensuring the protection of children and spouses in need to maintenance beyond the EU’s borders; the 2005 Hague Choice of Court Convention, ratified  by the EU in 2015, which ensures that a court chosen by parties is respected and the resulting judgment is recognised and enforced and the 2019 Hague Judgments Convention, which sets up a comprehensive system for the recognition and enforcement of foreign judgments in civil or commercial matters.

The Commission has proposed on 16 July 2021 that the EU accedes to the Judgments Convention. The Council adopted the decision on accession on 12 July 2022 and the EU joined the Judgments Convention on 29 August of the same year. The EU accession to this convention aims at facilitating the recognition and enforcement of judgments given by courts in the EU in non-EU countries, while allowing foreign judgments to be recognised and enforced in the EU only where fundamental principles of EU law are respected.

Compliments of the European Commission.

Chapter News

‘We Will Bring Him to His Knees’ EU Ambassador Stavros Lambrinidis Talks About World Response to Russia’s Invasion of Ukraine

By Donna Isbell Walker

On a recent trip to South Carolina, Stavros Lambrinidis, the European Union’s ambassador to the United States, praised the strong ties between the U.S. and the EU, and lauded South Carolina for its strong economy.

“We are stronger together,” Lambrinidis said at a May 26 dinner sponsored by the European American Chamber of Commerce – Carolinas, and he discussed the Russian invasion of Ukraine at length.

The world community has united against Vladimir Putin, making it less likely that Putin will win the Ukraine war, Lambrinidis told the audience at the Westin Poinsett Hotel.

Lambrinidis, who has been ambassador since 2019, previously served as EU Special Representative for Human Rights and as Foreign Affairs Minister of Greece. 

Lambrinidis also spoke of the Ukraine situation and the global community’s response against Putin in a phone interview the week after the event.

The following Q&A has been edited for length and clarity.

Question: What are the most hopeful things you’ve seen in response to the Russian invasion of Ukraine?

Lambrinidis: Without a doubt, the trans-Atlantic unity of the Americans and Europeans in facing Putin, which is manifest in a number of different ways. The economic sanctions that are crippling his economy as we speak, but will be even harsher in the medium term, in terms of incapacitating his ability to diversify that economy away from fossil fuels and towards a more advanced high-tech future. Those sanctions were not at all a given. In terms of what Mr. Putin was calculating, I’m sure he was betting on having at least one EU member state, or two, disagreeing on them. Because in Europe … you don’t just take the signature of one president, as in the U.S., President Biden, to impose sanctions. You need the signatures of 27 heads of state or 27 dependent European Union countries. You need unanimity to be able to impose sanctions. And those massive sanctions against Russia covering everything, and now increasingly, its energy imports to Europe, I think makes it most hopeful. 

Equally hopeful, I am, about the unity that NATO showed, the European Union itself showed, in the military response to Putin. For the first time in our history, from the European Union budget, this was inconceivable a few years back, even a year back. We have financed, with 2 billion Euros, more than $2 billion, the capacity of our member states to transfer lethal weapons to the Ukrainians. 

And if you like, a third major positive surprise for me has been how the Ukrainians have been able to use that indispensable aid from the EU and the US to fight back to upend Putin’s plans to take over the country in a few days, to take over Kyiv, to topple the Ukrainian government, effectively to wipe Ukraine off the map. He has failed continuously on this, and that’s because of what we have done together. 

And the final thing … is the way that we dealt with the broader energy issue. People don’t know that because of our proximity to Russia, the European countries and the European Union is much more entangled economically with Russia, for obvious reasons, than the United States is. A very large number of our imports in natural gas and oil in all the member states, come from Russia, historically and over decades, even out of the Soviet Union. And our decision to cut entirely coal imports from Russia and just now, to cut 90 percent of all oil imports from Russia by the end of the year, is a hugely important hit to Putin’s ability to keep financing his war. But it’s also a hugely important shift of the EU to two things: A. much more reliable Allied suppliers of gas and oil, and that puts the United States at the top of the map, and B. massive, front-loaded investments in what is the EU’s own homegrown energy, which is renewable energy. 

… This is a chess game. You need to be patient, you need to be resilient. Putin is hoping that he will be more patient than we are, that we will exhaust our capacity to be united against him in this war as it drags on. … The fact is, he will fail. We are united against him in this. We will not tire, and we will bring him to his knees.

Q. What, in your opinion, will it take to get Russia out of Ukraine?

A. One issue is what happens immediately in the war in Ukraine. The second question is, how do we ensure that Russia ends this war in a way that it is massively diminished in its capacity to be a threat in the future, either in Ukraine or anywhere else. The immediate issue of the war right now is one that we need to be supporting Ukraine militarily so it is strong on the battlefield, so it can eventually be strong on the negotiating table. Because any war, at the end of the day, ends certainly with a cease-fire and then a negotiation, but Mr. Putin cannot be in a position that he can force his conditions and benefit from this war against the Ukrainians. So the emphasis on the American side and the European side together, is to keep the Ukrainians strong and resilient in their fight against Russia, and to change the calculus of Mr. Putin dramatically as to what is beneficial for him in this actual war.

The second, broader question, is, are sanctions really biting? (We must ensure that Russia) pays dearly for this adventure in decades to come. That it will never be in this position to be the threat that it has been up to now, to try to kill democracy in an independent country, to try to kill the right of people to self-determination, and that is what long-term economic pressure is going to achieve. 

Q. As a diplomat, what do you find most challenging in navigating this crisis?

A. What I have found extremely easy is to promote the cooperation of (the world community), which is the  most important piece of this puzzle. The United States has been impressed deeply, not just by European leadership and sanctions against Russia, at the highest and most massive and unified level, but also by our indication of our capacity to be … a major defense player in our neighborhood and in the world. And that has opened avenues of cooperation in every possible field imaginable, including, by the way, in trade and technology discussions we’re having with the United States. We launched a trade and technology council, a dedicated American-European discussion on setting the rules of the road for the 21st-century economy, to enrich our people, our own economies, but also to ensure that fairness (and) open-market conditions exist in the rest of the world.

We also did it to ensure that new technology of the future reflects open, human-centric, human rights-respecting values and not the values of authoritarians. 

… The thing that keeps me up at night on this is not something that’s directly in my portfolio; it’s to ensure that we maintain the focus of the rest of the world on the atrocities that Russia is committing, and to ensure that we can develop an international coalition that will, not just now but in the longer term, rally around the United Nations charter, which Russia is trying to tear up, at the same time it is trying to literally kill Ukrainians and Ukraine on the ground. And that is a more difficult fight because Russia’s war is creating some real emergencies and urgencies around the world, the biggest one of which is food security.

… Because of a deliberate effort from Russia to bomb wheat silos and to bomb tractors and agricultural fields and to make Ukraine’s ability to export by blocking Odessa and other ports impossible, food supply is a real issue, especially in countries in Africa that were relying a lot on Ukrainian and Russian supplies. And there is a concerted disinformation campaign by Russia and China and others to convince them that this is happening somehow because of sanctions that the US and the EU and other countries are imposing, not because of Russia’s aggression. That is as big of a lie as any lie that has been circulating out there. But we have to keep in mind – Americans and Europeans – that the rest of the world doesn’t always look at things the way that we look at them. So we have a tremendous amount of work ahead of

us to ensure that we use diplomacy around the world to isolate Russia even further. 

Q. Global terrorism hasn’t been as much of a presence in the news since the Russian invasion of Ukraine, but what are the biggest threats currently?

A. Well, we’re certainly all looking at Afghanistan and the situation there and how it’s developing. We’re looking at Africa and the importance of countering terrorism in Africa, certainly, because I see that Al-Qaeda has not gone away, but also other terrorist groups. We’re also looking at domestic terrorism in our societies, and we should, and radicalization and extremism. 

… Looking at the root causes of terrorism and the ways to counter them on the field – not just with weapons, which are necessary – but in a sense to root them out, you cannot ignore the tremendous importance of Americans and Europeans in intelligent ways being able to support countries around the world to promote rights. 

… When I was going around the world talking to countries where terrorism was a big issue and where governments very often were violating human rights … they would say, ‘Why are you poisoning the well of our relationships here? We are fighting terrorists; that’s the important thing. Why are you raising luxury issues such as human rights?’ And I would answer that question with another question. I would ask, ‘What is so scary about smart girls?’ I would say, ‘Why did Boko Haram in Nigeria … abduct 300 girls from school back in 2014 instead of bombing one more army barracks, which they’re good at? Why did terrorists in Pakistan try to kill Malala Yousafzai a few years back?’

… Why are terrorists so scared of smart girls? And the answer to me is very clear. They’re scared because smart girls become educated girls, and educated girls become empowered women, and empowered women change entirely the bounds of power in any society. And the last thing the terrorists want is empowered societies. They want societies (to be) dysfunctional, weak, with big black holes of power they can fill in with their violence and hatred.

Compliments of Greenville Business Magazine

Full Article: ‘We Will Bring Him to His Knees’ EU Ambassador Stavros Lambrinidis Talks About World Response to Russia’s Invasion of Ukraine | Greenville Business Magazine

Chapter News, News

EU budget 2023: Empowering Europe to continue shaping a changing world

The Commission has today proposed an annual EU budget of €185.6 billion for 2023, to be complemented by an estimated €113.9 billion in grants under NextGenerationEU. The EU budget will continue to mobilise significant investments to boost Europe’s strategic autonomy, the ongoing economic recovery, safeguard sustainability and create jobs. The Commission will continue to prioritise green and digital investments while addressing pressing needs arising from recent and current crises.

Commissioner Johannes Hahn, responsible for the EU Budget, said: “We are continuing to put forward extraordinary amounts of funding to support Europe’s recovery and to tackle current and future challenges. The budget remains an important tool the Union has at its disposal to provide clear added value to people’s lives. It helps Europe shape a changing world, in which we are working together for peace, prosperity and our European values”.

The draft budget 2023, boosted by NextGenerationEU, is designed to respond to the most crucial recovery needs of EU Member States and our partners around the world. These financial means will continue to rebuild and modernise the European Union and strengthen Europe’s status as a strong global actor and reliable partner.

Additional proposals to finance the impact of the war in Ukraine both externally and internally will be tabled later in the year, on the basis of a more precise needs assessment, as per the European Council conclusions of 31 May 2022.

The budget reflects the EU’s political priorities, which are crucial to ensure a sustainable recovery and to strengthen Europe’s resilience. To that end, the Commission is proposing to allocate (in commitments):

  • €103.5 billion in grants from NextGenerationEU under the Recovery and Resilience Facility (RRF) to support economic recovery and growth following the coronavirus pandemic and to address the challenges posed by the war in Ukraine.
  • €53.6 billion for the Common Agricultural Policy and €1.1 billion for the European Maritime, Fisheries and Aquaculture Fund, for Europe’s farmers and fishers, but also to strengthen the resilience of the agri-food and fisheries sectors and to provide the necessary scope for crisis management in light of expected global food supply shortages.
  • €46.1 billion for regional development and cohesion to support economic, social and territorial cohesion, as well as infrastructure supporting the green transition and Union priority projects.
  • €14.3 billion to support our partners and interests in the world, of which €12 billion under the Neighbourhood, Development and International Cooperation Instrument — Global Europe (NDICI — Global Europe), €2.5 for the Instrument for Pre-Accession Assistance (IPA III), and €1.6 billion for Humanitarian Aid (HUMA).
  • €13.6 billion for research and innovation, of which €12.3 billion for Horizon Europe, the Union’s flagship research programme. It would receive an extra €1.8 billion in grants from NextGenerationEU.
  • €4.8 billion for European strategic investments, of which €341 million for InvestEU for key priorities (research and innovation, twin green and digital transition, the health sector, and strategic technologies), €2.9 billion for the Connecting Europe Facility to improve cross-border infrastructure, and €1.3 billion for the Digital Europe Programme to shape the Union’s digital future. InvestEU would receive an extra €2.5 billion in grants from NextGenerationEU.
  • €4.8 billion for people, social cohesion, and values, of which €3.5 billion Erasmus+ to create education and mobility opportunities for people, €325 million to support artists and creators around Europe, and €212 million to promote justice, rights, and values.
  • €2.3 billion for environment and climate action, of which €728 million for the LIFE programme to support climate change mitigation and adaptation, and €1.5 billion for the Just Transition Fund to make sure that the green transition works for all. The Just Transition Fund would receive an extra €5.4 billion in grants from NextGenerationEU.
  • €2.2 billion for spending dedicated to space, mainly for the European Space Programme, which will bring together the Union’s action in this strategic field.
  • €2.1 billion for protecting our borders, of which €1.1 billion for the Integrated Border Management Fund (IBMF), and €839 million (total EU contribution) for the European Border and Coast Guard Agency (Frontex).
  • €1.6 billion for migration-related spending, of which €1.4 billion to support migrants and asylum-seekers in line with our values and priorities.
  • €1.2 billion to address defence challenges, of which €626 million to support capability development and research under the European Defence Fund (EDF), as well as €237 million to support Military Mobility.
  • €927 million to ensure the smooth functioning of the Single Market, including €593 million for the Single Market Programme, and close to €200 million for work on anti-fraud, taxation, and customs.
  • €732 million for EU4Health to ensure a comprehensive health response to people’s needs, as well as €147 million to the Union Civil Protection Mechanism (rescEU) to be able deploy operational assistance quickly in case of a crisis.
  • €689 million for security, of which €310 million for the Internal Security Fund (ISF), which will combat terrorism, radicalisation, organised crime, and cybercrime.
  • €138 million for secure satellite connections under the proposal for a new Union programme, the Union Secure Connectivity Programme.
  • Budgetary means for the European Chips Act will be made available under Horizon Europe and through redeployment from other programmes.

The draft budget for 2023 is part of the Union’s long-term budget as adopted by the Heads of State and Governments at the end of 2020, including subsequent technical adjustments, seeks to turn its priorities into concrete annual deliverables. A significant part of the funds will therefore be dedicated to combatting climate change, in line with the target to spend 30% of the long-term budget and the NextGenerationEU recovery instrument on this policy priority.

Background

The draft EU budget for 2023 includes expenditure under NextGenerationEU, to be financed from borrowing at the capital markets, and the expenditure covered by the appropriations under the long-term budget ceilings, financed from own resources. For the latter, two amounts for each programme are proposed in the draft budget – commitments and payments. “Commitments” refer to the funding that can be agreed in contracts in a given year; and “payments” to the money actually paid out. The proposed EU budget for 2023 amounts to €185.6 billion in commitments and €166.3 billion in payments. All amounts are in current prices.

The actual NextGenerationEU payments – and funding needs for which the European Commission will seek market financing – may be different, and will be based on precise estimates evolving over time. The Commission will continue to publish six-monthly funding plans to provide information about its planned issuance volumes in the months to come.

With a budget of up to €807 billion in current prices, NextGenerationEU helps the EU recover from the immediate economic and social damage caused by the coronavirus pandemic and enables us to respond to current and future crises such as the war in Ukraine. The temporary instrument helps build a post-COVID-19 EU that is greener, more digital, more resilient and better fit for the current and forthcoming challenges. The contracts/commitments under NextGenerationEU can be concluded until the end of 2023, the payments linked to the borrowing will follow until the end of 2026.

Compliments of the European Commission.

Chapter News, News

FSB | FinTech and Market Structure in the COVID-19 Pandemic: Implications for financial stability

The COVID-19 pandemic has accelerated the trend toward digitalisation of retail financial services.

This report examines whether the COVID-19 pandemic changed the ways in which individuals and firms engage with innovative financial service providers and traditional financial incumbents. Its main finding is that the pandemic has accelerated the trend toward digitalisation of retail financial services.

Comprehensive data on market shares of FinTechs, BigTechs and incumbent financial institutions in retail digital services are scarce. However, available proxies and insights from market participants suggest that BigTechs in particular have further expanded their footprint in financial services.

The report discusses benefits from accelerated digitalisation of financial services during the pandemic, and whether those observed changes may be structural or revert back to pre-pandemic levels once conditions normalise. The report also considers the financial stability implications of this accelerated trend towards digitalisation, such as potential market dominance of certain players, and the related concerns around incumbent financial institutions that may be digital laggards.

The report outlines the range of policy actions authorities have taken during the pandemic that may impact market structure and the role of FinTechs, BigTechs and incumbent financial institutions. These actions relate to financial stability, competition, data privacy and governance issues. The report also outlines parallel international work on third-party dependencies of the financial sector, for instance in cloud computing.

The report stresses the importance of cooperation between regulatory and supervisory authorities, including those charged with overseeing the bank and non-bank sectors, and where relevant, with competition and data protection authorities.

Compliments of the Financial Stability Board.

Chapter News, News

ECB Speech | A digital euro that serves the needs of the public: striking the right balance

Introductory statement by Fabio Panetta, Member of the Executive Board of the ECB, at the Committee on Economic and Monetary Affairs of the European Parliament |

Thank you for inviting me to update you on the digital euro project and the progress made since we last met in November.

We have previously discussed the broad policy objectives associated with a digital euro.[1] Today, I would first like to highlight some important features which, by making a digital euro attractive to citizens and merchants alike, would help us to achieve these objectives.

I will do so by discussing the findings of the focus groups we held – which we are publishing today on the occasion of this hearing[2] – and our analysis of “use cases” for the digital euro. In the jargon of payments, this term refers to the payment segments that a digital euro could serve.

I will then present our preliminary findings on how to reconcile the right to confidentiality with the public interest in countering illegal activities, continuing the discussion we had a year ago.[3]

Meeting the payment needs of Europeans today and tomorrow

The primary aim of a digital euro is to maintain the accessibility and usability of central bank money in an increasingly digitalised economy. But for a digital euro to fulfil this role, people need to be able and willing to use it.

From the outset, I have stressed that a digital euro can only be successful if it meets the payment needs of Europeans today and in the future.

The findings of our focus groups provide valuable input here, though we are mindful of the natural limitations of qualitative analyses of this kind.[4]

The focus groups suggested that people see the ability to “pay anywhere” as the most important feature of a new digital payment instrument. This emerged in all countries and age groups. It means that, ideally, all merchants across the euro area – both in physical stores and online – would need to accept a digital euro. 20 years ago, the introduction of euro banknotes made it possible for us to pay with physical euros anywhere in the euro area. So it is no surprise that people expect to be able to use the digital complement to banknotes wherever they can pay digitally or online.

Instant, easy, contactless payments, especially for person-to-person payments, were the second-most valued feature. Cash has so far remained dominant in person-to-person payments. And we will ensure that people continue to have access to cash. But the focus groups confirm previous findings: preferences are shifting towards digital payments.[5] The experience of countries both inside[6] and outside[7] the euro area shows that contactless person-to-person payments may grow very rapidly when convenient digital solutions become available.

Participants in the focus groups would like to see a solution that would allow instant person-to-person payments regardless of the platform used by the payers and payees. Today, making mobile payments to friends at the click of a button – for example when splitting bills in restaurants or collecting money for a gift – is often easiest when everyone is using the same app. Participants therefore envisaged a one-stop solution that would reduce the need for multiple cards, devices and identification methods and give them access to a range of payment options on a single device.

Our focus groups also confirmed what I called “rational inattention” during our exchange in November.[8] People tend not to pay attention to – or understand – the difference between the digital euro and the euros they already spend using private digital means of payment. For the financial system to work smoothly, public money and commercial bank money are meant to be fully interchangeable yet distinguishable. People do not think twice about storing and using their money via private intermediaries because they know they can regularly go to the cash machine and withdraw banknotes without any problems. This provides tangible proof that their money in the bank is safe. Convertibility with central bank money on a one-to-one basis therefore anchors people’s confidence in private money, supporting its wide acceptance.[9]

The findings from focus groups were also used to validate our selection of possible use cases of a digital euro.[10] We identified them by looking both at our policy objectives and at the importance of different market segments.

Physical stores are the most important market segment for digital payments, accounting for more than 40 billion transactions in the euro area in 2019.[11] E-commerce payments are less numerous but are expected to continue to grow rapidly in the coming years.[12] These segments are served by a multitude of payment solutions, often with only domestic reach. So far, they have been dominated by non-European providers and technologies.[13]

Given their importance now and in the future, payments in e-commerce and physical stores, as well as person-to-person payments, are natural candidates to be prioritised among the possible use cases of a digital euro. The digital euro could also be used for payments between governments and individuals, for example to pay out public welfare allowances or to pay taxes.[14]

If a digital euro offered these payment options, we would achieve network effects, continue to ensure public access and full usability of central bank money for digital payments, and help to address sovereignty concerns. In the next steps of our investigation phase, we will therefore focus on assessing the actual feasibility of these use cases.

But we will leave the door open to the inclusion of other use cases in the future. We are monitoring emerging trends such as machine-to-machine payments.[15] And we are looking into solutions to respond to these trends in future releases of a digital euro.[16]

In the coming months, and building on the findings of the focus groups, we will carefully investigate how to design an attractive digital euro product that responds to the expectations of payers and payees alike.

Co-legislators have a key role to play. For instance, the ability to pay with digital euro anywhere could be fostered by giving it legal tender status. We are thoroughly and carefully analysing this issue together with the European Commission. We stand ready to discuss the matter further with you, also on the basis of the outcome of the upcoming consultation on digital euro the Commission has recently announced.

The trade-offs between privacy and other EU policy objectives

The legal framework will also be key when it comes to privacy, which is one of the most important design features of a digital euro.[17]

The public consultation we conducted between October 2020 and January 2021 indicated that protecting privacy is key, so that the digital euro helps to maintain trust in payments in the digital age.[18] Focus group participants also said they would appreciate options that give them control over their personal data.

It is not surprising that people expect payments in digital euro to guarantee high privacy standards. As payments go digital, private companies are increasingly monetising payment data.

We already provide cash, the payment instrument with the highest level of privacy. We are committed, as a public institution, to retain people’s trust in this area if a digital euro is issued.

At the same time, we need to assess privacy in the context of other EU policy objectives, such as anti-money laundering (AML) and combating the financing of terrorism (CFT). Concerns about regulations being circumvented, including to bypass international sanctions, have become even more prominent recently, notably in relation to crypto-assets.

Over the past few months we have investigated various options to address the trade-off between retaining a high degree of privacy and other important public policy objectives.[19]

Full anonymity is not a viable option from a public policy perspective. It would raise concerns about the digital euro potentially being used for illicit purposes.[20] In addition, it would make it virtually impossible to limit the use of the digital euro as a form of investment, but this limitation is essential from a financial stability perspective.[21]

This means that users would need to identify themselves when they start using the digital euro.[22] Supervised intermediaries – which are the natural candidates for distributing a digital euro – are best placed to manage this onboarding process.[23]

Moving beyond onboarding, our analysis suggests that digital euro transaction data should not be visible to the Eurosystem – or any other central entity – beyond what is strictly needed to perform its functions.[24]

In a baseline scenario, a digital euro would provide people with a level of privacy equal to or higher than that of private digital solutions. Under this set-up, personal and transaction data[25] would only be accessible to intermediaries to ensure compliance with AML/CFT requirements and relevant provisions under EU law.[26]

We have also been exploring options to go beyond this baseline and provide greater privacy, should the co-legislators decide in favour of this approach. This could allow the digital euro to replicate some cash-like features and enable greater privacy for lower-value payments, which are usually low risk in terms of money laundering, terrorism financing and violations of relevant EU law.

Consider paying “offline” in digital euro in a shop, with payer and payee in close proximity to each other. This would be very similar to making a cash payment. Should different standards apply for these two payments, even if the risk profiles are similar? Take the example of a chip that can store up to €200 in digital euro – the risk that it is used for money laundering purposes hardly seems higher than for a physical €200 banknote, especially if the chip requires biometric authentication before you can use it.

We are therefore exploring an offline functionality whereby holdings, balances and transaction amounts would not be known to anyone but the user. To contain the risks, these balances and private offline payments would have an upper limit.

In general, a greater degree of privacy could be considered for lower-value online and offline payments. These payments could be subject to simplified AML/CFT checks, while higher-value transactions would remain subject to the standard controls.[27]

If greater privacy were to be enabled for lower-value payments in digital euro, it should apply to transactions anywhere in the euro area. This would require a harmonised framework for simplified checks, as foreseen in the European Commission’s AML/CFT package from July 2021.[28]

The Eurosystem High-Level Task Force that I chair is exploring the technical and regulatory aspects, in close cooperation with the European Commission and the European data protection authorities.[29]

But there are important political choices to be made, which makes our dialogue with you crucial.

Conclusion

Let me conclude.

We are building a broad consensus around the policy objectives for a digital euro through our interactions with stakeholders, political authorities and other major central banks. But just recognising the political need for a digital euro will not by itself guarantee sufficient usage.

Step by step, we are getting a clearer picture of what citizens and merchants want, so we can finetune all the design features of a digital euro before any potential issuance. And co-legislators have a key role to play, for instance to enable greater privacy.

We do not want to be “too successful” and crowd out private payment solutions and financial intermediation. But the digital euro should be “successful enough” and generate sufficient demand by adding value for users.

We already have an idea of the views of the prospective users of a digital euro thanks to our discussions with focus groups. Towards the end of the year we will conduct another round of focus groups, this time giving participants a better idea of the envisaged user experience to gather their feedback.

We will also step up our dialogue with stakeholders in the coming weeks and months, listening to prospective users like consumer groups, small and medium-sized enterprises, retailers and large corporations, as well as to banks and payment service providers. We will also continue to interact with academia and think tanks.

We stand ready to discuss these consultations with you at future hearings. The alignment of European authorities and institutions, mindful of their respective mandates and independence, will be key if a digital euro is to be accepted.

I now look forward to our discussion.

Compliments of the European Central Bank.

  1. Panetta, F. (2021), “Designing a digital euro for the retail payments landscape of tomorrow”, introductory remarks at the ECON Committee of the European Parliament, 18 November.
  2. Study on New Digital Payment Methods, Report March 2022
  3. See the letter to Ms Irene Tinagli MEP available on the ECB’s website.
  4. The qualitative research was conducted by an external company in all euro area countries. To ensure the robustness of the research and to obtain a comprehensive overview of perceptions and attitudes on the topic, a carefully selected range of target audiences were interviewed across all 19 euro area countries. These included 2,160 members of the general public, 142 tech-savvy participants, 138 merchants and retailers, and 89 individuals with limited access to banking services or the internet, all of whom were interviewed using a tailored qualitative design per target group. At the same, given the qualitative nature of the research, no conclusions can be drawn with regard to the representativeness of these results for the population of the euro area.The aim of the focus groups was to explore the user perspective on new digital payment methods and potential key features which could drive the adoption of a new digital means of payment. Participants were not immediately presented with the concept of a digital euro for multiple reasons, including the complexity of the concept of central bank digital currencies in general and the concept of the digital euro specifically. Instead, the idea of a new “digital wallet” was introduced to encourage discussions about possible desirable features and functionalities of a new digital payment method in comparison with those already on the market. The digital euro was introduced towards the end of the discussion to explore the existing level of knowledge and understanding among respondents as well as their perception of a digital euro being backed by the ECB/Eurosystem.
  5. ECB (2020), Study on the payment attitudes of consumers in the euro area (SPACE), December.
  6. In 2019 Dutch consumers made 54% of their transactions with relatives, friends, colleagues and other acquaintances in cash and 45% electronically. Between 2018 and 2019, the share of cash fell by 5 percentage points, whereas that of electronic money transfers increased by 7 percentage points. See De Nederlandsche Bank (2020), “Shift of cash to debit card continues”, 20 April.
  7. In Sweden, the successful introduction and rapid growth of Swish resulted in a sharp decline in the use of cash. See Sveriges Riksbank (2020), “Cash is losing ground”, 29 October.
  8. Panetta, F. (2021), op. cit.
  9. Panetta, F. (2021), “Central bank digital currencies: a monetary anchor for digital innovation”, speech at the Elcano Royal Institute, Madrid, 5 November.
  10. A digital euro use case describes a payment segment that a digital euro could serve. For instance, a digital euro could be used by individuals to pay another individual (person to person), to pay e-retailers for online purchases (e-commerce) or for purchases made in a physical shop (point of sale). A digital euro could also be used by businesses to pay an individual (business to person) or to pay another company (business to business). Finally, a digital euro could be used for payments to/by the government (e.g. to pay tax or receive welfare payments) or for machine-initiated payments (e.g. to make fully automated payments initiated by a device or software based on predetermined conditions).
  11. ECB (2020), op. cit.
  12. Figures from Eurostat indicate that the adoption of e-commerce doubled in the euro area between 2015 and 2021. In terms of population reach, 73% of the EU population indicated that they had “bought online or ordered” “goods or services” for private use in the previous 12 months, compared with 62% in 2015. Looking at developments across countries, growth rates in e-commerce tend to be inversely correlated with e-commerce penetration. Compared with the United States (20%) and the United Kingdom (24%), e-commerce penetration is still relatively low in key European markets such as Spain (9%), France (9%) and Germany (14%), which suggests there is potential for continued growth. See, for example, McKinsey & Company (2021), “How e-commerce share of retail soared across the globe: A look at eight countries”, 5 March.
  13. Non-European payment providers handle around 70% of European card payment transactions. See ECB (2019), Card payments in Europe, AprilFurthermore, international e-payment solutions are gaining traction.
  14. Public payments would allow direct digital payment of government subsidies and allowances to citizens that have no access to bank accounts, which could provide added value compared with existing solutions in the market.
  15. Machine-to-machine payments are automated payments between machines. For example, autonomous vehicles, such as cars or trucks, or other industrial machines could pay for their own energy, maintenance and insurance and accept payments for their services.
  16. Design features like privacy, programmability or an offline functionality could apply to multiple use cases.
  17. Panetta, F. (2021), “A digital euro to meet the expectations of Europeans”, introductory remarks at the ECON Committee of the European Parliament, 14 April.
  18. About 43% of respondents to the public consultation conducted by the ECB from 12 October 2020 to 12 January 2021 ranked privacy as the most important aspect of a digital euro, well ahead of other features.
  19. From a user perspective, different privacy options could be envisaged. Full anonymity would mean the identity of users is unknown when they access services, with no “know your customer” (KYC) or customer due diligence (CDD) checks. Payments that would be fully transparent to the central bank would involve KYC checks during onboarding, and all transaction data and user profiling data would be fully transparent to the central bank. Payments that are non-transparent to third parties would also involve KYC checks during onboarding, but balances and transaction amounts would not be known to intermediaries or the central bank. Payments that are transparent to intermediaries would involve KYC checks during onboarding, and transaction data and user profiling data would be transparent to the intermediary for AML/CFT purposes. Selective privacy would involve KYC checks during onboarding, but there would be a higher degree of privacy for low-value transactions, while large-value transactions would remain subject to standard CDD checks.
  20. The AML/CFT package proposed by the European Commission in July 2021 extends the ban on anonymous accounts to wallets, in line with the international standards of the Financial Action Task Force. This means that intermediaries of a digital euro will be prohibited from hosting anonymous accounts and/or wallets.
  21. Panetta, F. (2021), “Evolution or revolution? The impact of a digital euro on the financial system”, speech at a Bruegel online seminar, 10 February.
  22. The KYC and CDD checks currently in place include processes to determine a customer’s status, such as their political exposure, source of funds, appearance on sanction lists, etc. Users will need to go through the onboarding process when first starting to use a digital euro. One possibility could be to provide different types of accounts/wallets where the transaction amounts could be limited in proportion to KYC/CDD measures – similar to the risk-based approach taken by some other central banks.
  23. ECB (2020), Report on a digital euro, October.
  24. The Eurosystem would only access the minimum information required, for example for performing the settlement function (i.e. validating payments if performed by the Eurosystem), or for other central bank functions, such as supervisory and oversight tasks.
  25. Personal data are understood as any information that relates to an individual who can be identified (e.g. name, physical and email addresses and location information). Transaction data include any information related to a specific payment, which includes payer’s wallet/account number, transaction counterparty, transaction amount, date/time/location of the transaction, and information about goods/services purchased (including billing or shipping address).
  26. In particular, the requirements set out in the General Data Protection Regulation and the Payment Services (PSD 2) Directive.
  27. Larger-value transactions would still be subject to standard CDD checks and it would be important to ensure that larger payments are not split into many smaller ones to circumvent checks.
  28. The AML package proposes harmonising AML/CFT requirements, including CDD checks, across the EU. This would ensure a level playing field for CDD checks that could also benefit the digital euro. The package also proposes defining new harmonised conditions for simplified due diligence by means of a regulatory technical standard to be prepared by the future EU AML authority. Where lower risks are identified, simplified due diligence could potentially be applied, in certain circumstances, to certain digital euro transactions.
  29. ECB (2021), “ECB intensifies technical work on digital euro with the European Commission”, MIP News, 19 January.
Chapter News, News

Green Deal: New proposals to make sustainable products the norm and boost Europe’s resource independence

The Commission is presenting today a package of European Green Deal proposals to make sustainable products the norm in the EU, boost circular business models and empower consumers for the green transition. As announced in the Circular Economy Action Plan, the Commission is proposing new rules to make almost all physical goods on the EU market more friendly to the environment, circular, and energy efficient throughout their whole lifecycle from the design phase through to daily use, repurposing and end-of-life.

The Commission is also presenting today a new strategy to make textiles more durable, repairable, reusable and recyclable, to tackle fast fashion, textile waste and the destruction of unsold textiles, and ensure their production takes place in full respect of social rights.

A third proposal aims to boost the internal market for construction products and ensure that the regulatory framework in place is fit for making the built environment deliver on our sustainability and climate objectives.

Finally, the package includes a proposal on new rules to empower consumers in the green transition so that consumers are better informed about the environmental sustainability of products and better protected against greenwashing.

With today’s proposals, the Commission is presenting the tools to move to a truly circular economy in the EU: decoupled from energy- and resource dependencies, more resilient to external shocks and respectful of nature and people’s health. The proposals build on the success of EU’s existing Ecodesign rules, which have brought remarkable reductions in EU’s energy consumption and significant savings to consumers. In 2021 alone, existing ecodesign requirements saved consumers €120 billion. The rules have also led to a 10% lower annual energy consumption by the products in scope. By 2030, the new framework can lead to 132 mtoe of primary energy savings, which corresponds roughly to 150 bcm of natural gas, almost equivalent to EU’s import of Russian gas.

Making sustainable products the norm

The proposal for a Regulation on Ecodesign for Sustainable Products addresses product design, which determines up to 80% of a product’s lifecycle environmental impact. It sets new requirements to make products more durable, reliable, reusable, upgradable, reparable, easier to maintain, refurbish and recycleand energy and resource efficient. In addition, product-specific information requirements will ensure consumers know the environmental impacts of their purchases. All regulated products will have Digital Product Passports. This will make it easier to repair or recycle products and facilitate tracking substances of concern along the supply chain. Labelling can be introduced as well. The proposal also contains measures to end the destruction of unsold consumer goods, as well as expand green public procurement and provide incentives for sustainable products.

Today’s proposal extends the existing Ecodesign framework in two ways: first, to cover the broadest possible range of products; and second, to broaden the scope of the requirements with which products are to comply. Setting criteria not only for energy efficiency, but also for circularity and an overall reduction of the environmental and climate footprint of products will lead to more energy and resource independence and less pollution. It will strengthen the Single Market, avoiding diverging legislation in each Member State, and create economic opportunities for innovation and job creation, notably in remanufacturing, maintenance, recycling and repair. The proposal will set a framework and a process through which the Commission, working in close cooperation with all those concerned, will progressively set out requirements for each product or group of products.

Together with this proposal, the Commission has also adopted an Ecodesign and Energy Labelling Working Plan 2022-2024 to cover new energy-related products, update and increase the ambition for products that are already regulated, as a transitionary measure until the new regulation enters into force. It notably addresses consumer electronics (smartphones, tablets, solar panels) – the fastest growing waste stream.

To support the deployment of sustainable products across the EU market, targeted sectoral initiatives are also presented today. The EU Strategy for Sustainable and Circular Textiles and the revision of the Construction Products Regulation will address two priority product groups with significant impacts.

Sustainable and circular textiles

European consumption of textiles has the fourth highest impact on the environment and climate change, after food, housing and mobility. It is also the third highest area of consumption for water and land use, and fifth highest for the use of primary raw materials.

The EU Strategy for Sustainable and Circular Textiles sets out the vision and concrete actions to ensure that by 2030 textile products placed on the EU market are long-lived and recyclable, made as much as possible of recycled fibres, free of hazardous substances and produced in respect of social rights and the environment. Consumers will benefit longer from high quality textiles, fast fashion should be out of fashion, and economically profitable re-use and repair services should be widely available. In a competitive, resilient and innovative textiles sector, producers have to take responsibility for their products along the value chain, including when they become waste. In this way, the circular textiles ecosystem will be thriving, and be driven by sufficient capacities for innovative fibre-to-fibre recycling, while the incineration and landfilling of textiles has to be reduced to the minimum.

The specific measures will include ecodesign requirements for textiles, clearer information, a Digital Product Passport and a mandatory EU extended producer responsibility scheme. It also foresees measures to tackle the unintentional release of microplastics from textiles, ensure the accuracy of green claims, and boost circular business models, including reuse and repair services. To address fast fashion, the Strategy also calls on companies to reduce the number of collections per year, take responsibility and act to minimise their carbon and environmental footprints, and on Member States to adopt favourable taxation measures for the reuse and repair sector. The Commission will promote the shift also with awareness-raising activities.

The Strategy also aims to provide support to and accompany the textiles ecosystem throughout its transformative journey. Therefore, the Commission is launching today the co-creation of a transition pathway for the textiles ecosystem. This is an essential collaborative tool to help the ecosystem to recover from negative impacts of the Covid-19 pandemic which have been affecting companies in their daily operations for the last two years. It will also strengthen their capacities to withstand both a fierce global competition and future shocks for their long-term survival. All the actors are encouraged to take active part in the co-creation process through their commitments on circularity and circular business models, actions to strengthen sustainable competitiveness, digitalisation and resilience, and identification of specific investments needed for the twin transition.

The construction products of tomorrow

The construction ecosystem represents almost 10% of EU value added, and employs around 25 million people in over 5 million firms. The construction products industry counts 430,000 companies in the EU, with a turnover of €800 billion. These are mainly small and medium-size enterprises. They are a key economic and social asset for local communities in European regions and cities.

Buildings are responsible for around 50% of resource extraction and consumption and more than 30% of the EU’s total waste generated per year. In addition, buildings are responsible for 40% of EU’s energy consumption and 36% of energy-related greenhouse gas emissions.

The revision of the Construction Products Regulation will strengthen and modernise the rules in place since 2011. It will create a harmonised framework to assess and communicate the environmental and climate performance of construction products. New product requirements will ensure that the design and manufacture of construction products is based on state of the art to make these more durable, repairable, recyclable, easier to re-manufacture.

It will also make it easier for standardisation bodies to do their work of creating common European standards. Together with enhanced market surveillance capacities and clearer rules for economic operators along the supply chain, this will help to remove obstacles to the free movement of the internal market. Finally, the revised Regulation will offer digital solutions to reduce administrative burdens, particularly on SMEs, including a construction products database and a Digital Products Passport.

Members of the College said:

Executive Vice-President for the European Green Deal Frans Timmermans said: “It’s time to end the model of ‘take, make, break, and throw away’ that is so harmful to our planet, our health and our economy. Today’s proposals will ensure that only the most sustainable products are sold in Europe. They allow consumers to save energy, repair and not replace broken products, and make smart environmental choices when they are shopping for new ones. This is how we bring balance back in our relationship with nature and reduce our vulnerability to disruptions in global supply chains.”

Commissioner for the Internal Market Thierry Breton said: “European consumers rightly expect more environment-friendly and longer-lasting products. More sustainability and resource efficiency also means more resilience when a crisis disrupts our industrial supply chains. By harnessing the potential of the Single Market, making the most of digital tools and improving market surveillance, we will maximise opportunities for businesses and consumers alike. Greater resource and energy efficiency in the construction and textile sectors in particular will generate highly skilled jobs across Europe.”

Commissioner for the Environment, Oceans and Fisheries Virginijus Sinkevičius said: “Our circular economy proposals kick off an era where products will be designed in a way that brings benefits to all, respects the boundaries of our planet and protects the environment. Giving a longer lifespan to the phones we use, to the clothes we wear and to many other products will save money for European consumers. And at the end of their life products will not be a source of pollution, but of new materials for the economy, decreasing the dependency of European businesses on imports.”

Compliments of the European Commission.

Chapter News, News

Speech by Commissioner Gentiloni at the University of Oxford – Turning point: the implications of Putin’s war for Europe’s economic and political choices

“Check against delivery”

Good morning, it is a pleasure and an honour to be with you today, albeit virtually. Let me thank Professor Schleiter for the welcome and Professor Ruggeri for this interesting background, and of course Dr Garavoglia for organising this event.

When I first received this invitation, back in December, circumstances were very different. The European economy was on a path of strong growth, supported by the rollout of our unprecedented recovery plan, Next Generation EU – which remains of course a key priority.

I would have much preferred to centre my intervention on the challenges of Europe’s post-pandemic economy. Yet, our world has fundamentally, and tragically, changed since then.

Two years since the start of the pandemic, we have been plunged into another crisis, since 24 February.

The focus of today’s event has thus had to shift to the incalculable suffering of the Ukrainian people and the consequences for the European Union of Putin’s senseless war.

We should make no mistake. This is not just an attack on Ukraine, an independent European sovereign, democratic state. It is an attack on all the values we hold dear – democracy, freedom and the rule of law.

Yuval Noah Harari recently argued that what is at stake in Ukraine is the direction of human history. It is about whether the implausibility of war among superpowers painstakingly built in the aftermath of the Second World War will hold; or whether this signals a return to the law of the jungle and the realism of Thucydides: the notion that “the strong do what they will and the weak suffer what they must”.

[Economic implications]

The European economy entered this crisis on a solid footing, on the back of a strong recovery and an improving pandemic situation.

GDP was back at pre-pandemic levels. Unemployment had reached record lows. Accumulated savings were high. And business and consumer surveys were indicating growing confidence.

There were, of course, a number of challenges: notably rising energy prices and supply chain disruptions, both contributing to mounting inflation.

Still, it seemed these challenges would subside over the course of this year.

On 10 February, I presented our winter economic forecast, which projected 4% growth in 2022 for the EU as a whole.

The war will inevitably have an impact on the European economy and aggravate the challenges we were already facing, as a result of three factors:

  • significantly higher commodity prices, notably gas and oil, but also wheat prices, among others;
  • deteriorating supply disruptions and broken trade links; and
  • higher uncertainty, affecting both economic and financial sector confidence.

Indeed, commodities markets have seen large swings, both for energy and agricultural commodities.Oil and gas prices continue to be very volatile and remain at levels last seen in 2008. The price of wheat and sunflower oil has skyrocketed, as Russia and Ukraine are major grain exporters. These trends raise concerns about food security, particularly in developing countries. Egypt, for example, imports around 85% of its wheat from Russia and Ukraine. Somalia is already suffering from drought.

And this emergency will grow in the coming weeks and months.

Spiralling commodity prices will put further pressure on an already high consumer inflation. In February, inflation in the euro area increased to 5.9% from 5.1% in January, driven by energy –  energy inflation was 32% in February – but also food prices. The large increases in energy and unprocessed food prices we are seeing will certainly add further price pressures.

The conflict is also exacerbating existing global supply chain disruptions in terms of both lack of raw materials and price hikes. Explicit embargoes, implicit bans and voluntary withdrawal from trade are affecting prices as well as quantities of traded goods. For example, two of the largest container shipping companies, Maersk and MSC, have suspended their operations with Russia. The decision to close the airspace to Russia will increase the cost of flying cargo from Europe to Asia, potentially making some routes commercially unviable. So we are strongly supporting our sanctions decisions and we have to be honest with our citizens that this strategy that is not without a price.

Several industries in the EU and around the world will face important setbacks, as Russia is an important exporter of a wide range of raw materials. The production of semiconductors, batteries, steel and other goods relies on supplies from Russia.

The budgetary impact of the crisis will also be important: providing economic and material support to Ukraine, assistance to the millions of refugees that have poured into Europe and continued support to the economy to deal with high energy prices are all set to weigh on Member States’ budgets.

All in all, while at this stage it is still too early to quantify the precise impact of the war in Ukraine on our economy, it is increasingly clear that the 4% growth we had forecast will have to be revised downwards. And I will present our spring forecast on 16 May.

Just by how much, depends on our policy response. Our task is now to ensure that the recovery is not derailed completely and the European economy only suffers a deceleration.

The coordination of our economic and fiscal policies has a key role to play in this respect. It is what enabled us to weather the COVID-19 crisis successfully, all in all. We are now confronted with a very different crisis, but there are similarities too.

Both the pandemic – which, by the way, is not completely over – and the war in Ukraine are huge external shocks with potentially different outcomes across the EU.

Indeed, all Member States will be impacted, but some Member States will be more impacted than others, because of their dependence on Russian energy, their economic structures, their geographic location and the different impact of refugee flows, and on their fiscal space.

So we need a common response also to tackle the risk of divergence within the EU. This is why we must stand ready to adjust our policies to the rapidly changing circumstances.

At the start of the pandemic, the EU activated the General Escape Clause of the Stability and Growth Pact, meaning that our fiscal rules were temporarily suspended. And they are still suspended. Together with the temporary State aid framework we introduced, this allowed Member States to provide unprecedented support to their economies, which was crucial to avoid an even bigger recession. The rate of bankrupticies in 2020-21 was much lower than in the prveious decade – this is just to show the amount of support provided in this period. At the same time the ECB launched its pandemic emergency purchase programme.

And through the smart deployment of short-time work schemes, supported through the EU’s €100bn SURE instrument, the impact on jobs was far more contained than it would otherwise have been.

If our national and EU policy responses remain effectively coordinated, if monetary and fiscal policies remain complementary, and if we remain agile and ready to adjust as needed, I believe we can ensure that the recovery remains on track. We should avoid the discourse about stagflation becoming a self-fulfilling prophecy.

In this confrontation, the resilience of our economy is crucial not just to protect our citizens, but also to protect our democracies and our model of European society. Because that is what is at stake now.

[Political implications]

During the COVID crisis, the EU rediscovered a sense of solidarity and support for the countries hardest hit by the pandemic. Now the EU is again showing strong solidarity – with Ukraine and with the Ukrainian people fleeing their country and seeking refuge in Europe.

Yet, for the EU this must also be the time for autonomy. Because this crisis is a wake-up call for Europe to reduce dependencies in strategic sectors and strengthen its autonomy.

To some extent, the pandemic had already prompted this broader rethink, especially with regard to reassessing our supply chains in key areas. But the war has drastically accelerated this process, in particular in the fields of energy and defence.

So globalisation will be reshaped by this crisis. We need a new and more secure globalisation, not a revival of protectionism. And the balance will not be an easy one to find.

[Energy]

Ninety percent of the gas we consume in Europe is imported, and Russia provides almost half of those imports, in varying levels across Member States. Russia also accounts for 27% of oil imports and 46% of coal imports.

When one side of this trading relationship suddenly begins to use energy as a weapon, the relationship becomes untenable and must change completely. The European Union will not be blackmailed.

Earlier this month, the Commission announced a bold plan to reduce our overdependence on Russian energy imports – what we have called REPowerEU.

The goal is to slash EU demand for Russian gas by two thirds before the end of the year, and to make Europe independent from Russian fossil fuels by 2027. As President von der Leyen said, this must be backed by the necessary national and European resources.

[Affordability]

Energy prices were already soaring since last year, as the recovery drove up global demand and was not matched by increased supply. As we have seen, they have continued to rise since Russia’s invasion. Businesses and households are seeing this first hand in their utility bills. It is already hurting the economy.

High energy prices harm business competitiveness and impact low income households most severely. The European Central Bank estimated that the energy price shocks would reduce GDP growth by around 0.5 percentage points in 2022 – but this was before the invasion.

With the new REPowerEU plan we are now looking at ways to protect the economy, such as a new temporary State aid framework that we will deliver tomorrow. We have made clear that in the current context no option should be off the table, including setting regulated prices, which we are discussing.

[Security of supply]

Energy prices follow the laws of supply and demand, and part of their recent rise is due to uncertainty over future supplies from Russia. So enhancing our security of supply is key to reducing dependencies and keeping prices affordable.

Even in case of full disruption of supplies from Russia, our current gas supplies are sufficient for this winter heating season. However, we need to ensure the refilling of storage ahead of the next winter heating season.

Gas storage usually supplies 25-30% of EU gas consumed in winter. We will put forward a legislative proposal to achieve higher gas storage levels. It will establish a 90% filling target by 1October of each year, which will make us better prepared for the winters.

We are also looking to diversify our gas supplies, via higher Liquefied Natural Gas and pipeline imports from non-Russian suppliers.

In recent months, the Commission began to engage with a range of partners around the world, such as the US, Norway, Algeria and Qatar, which are already among our main suppliers, as well as others, like Egypt, Korea, Japan, Nigeria, Turkey, Israel. These discussions have intensified in recent weeks.

[Accelerating the green transition]  

Boosting imports from other suppliers is one way to secure alternatives to Russian gas in the short-term. But make no mistake: the best way to ensure we can meet our energy needs is to diversify our energy sources and reduce our dependency on fossil fuels altogether.

This brings me to the last key objective of the REPowerEU plan, which is to accelerate the green transition.

The case for a rapid clean energy transition has never been stronger and clearer. The EU is already a global leader in this respect. The European Green Deal sets a target for climate neutrality by 2050 and a 55% reduction of CO2 emissions by 2030.

And last year we presented concrete measures to achieve these goals – the so-called Fit for 55 package.

Given the current situation, we need to do more, and we need to do it faster. It would be a mistake to put on hold the green transition while we face this crisis and we must avoid doing that.

The EU’s new strategy to reduce our reliance on Russian energy is clearly an ambitious one. Meeting our goals will not be easy, but our analysis shows it can be done.

If we succeed, we will have addressed a key source of vulnerability, kept prices in check, secured alternative supplies and provided a decisive push to meeting our climate targets, all the while depriving the Kremlin of a significant source of revenue.

[Defence]

The war in Ukraine also marks a turning point for Europe’s defence policy and for the transatlantic relationship. The German Chancellor referred to it as a Zeitenwende, a turn in the times.

Positions that were held for decades have shifted in a matter of days.

Countries like Germany, with traditionally low defence spending and a long-standing policy of blocking weapons from being sent into conflict zones, announced a radical increase of the defence budget, a special fund of €100bn and the delivery of anti-tank weapons to Kyiv.

In others like Finland or Sweden, historically neutral and very cautious about joining NATO, polls have shown for the first time a majority of the population in favour of NATO membership.

Meanwhile, the EU unanimously agreed a €1bn fund to deliver arms and other equipment to a country that is under attack – this is also a first in our history.

At the recent summit in Versailles, EU leaders committed to bolster our defence capabilities, pledging to: substantially increase defence expenditure; develop joint projects and joint procurement of defence capabilities within the EU; increase investments in technologies and innovation for security and defence; and further develop our defence industry.

Russia’s invasion of a country bordering NATO has also strengthened the transatlantic alliance, after a few rocky years.

The Versailles Declaration stresses that the EU’s efforts in this field are complementary to NATO, which remains the foundation of collective defence for its members.

Indeed, where would we be now if the Baltic states or Poland were not in NATO? NATO’s eastward expansion has actually put us in a better place to deal with Putin’s history of aggressing Russia’s neighbours.

Boosting our defence capabilities will require significant investments in our industrial and technological base.

The new defence investment needs come on top of those to deliver on the green transition, for which we will have to mobilise an estimated additional 520 billion each year – of course mostly private investment.

Such investments are crucial to increase our autonomy in these strategic sectors. German Finance Minister Christian Lindner has called them “investments in our freedom”.

Financing them will require a more supportive framework of fiscal rules and potentially new tools at the European level.

[Conclusion]

Two years after the start of the pandemic, we are again at a historic crossroads, for both Europe and the world, and our transatlantic alliance.

After the dissolution of the Soviet Union, Francis Fukuyama famously wrote that humanity had reached “the end of history”, which he defined as “the universalization of Western liberal democracy as the final form of human government”.

For years now, Putin’s regime has sought to sow divisions within our societies and undermine our model of Western liberal democracy. The invasion of the Ukraine is the biggest threat yet. As President Zelensky said, Russia is seeking to build a wall in eastern Europe between freedom and bondage.

And the autocratic model – this is not only Russia – is challenging our model of societies based on liberty and democracy.

But Putin miscalculated. It turned out that the Ukrainians were determined to fight for their freedom, and the West did not stand idly by.

His plans have badly backfired: the EU is as united as ever. Together with our allies, we have agreed on unprecedented sanctions that are crippling Russia’s economy. And countries that Moscow considers within its orbit – Ukraine first of all, but also Georgia and Moldova too – have applied for EU membership.

We will continue to support Ukraine to prevent this new wall from being raised and build a bridge for those countries that share our values and want to join the European family.

At the same time, this crisis is an opportunity to shape the EU’s future direction.

If we maintain the same unity and ambition that we have shown during the pandemic, I am confident that a new Europe can be born out of this crisis. A stronger, more secure and more sustainable Europe. A quiet superpower that lives up to the aspirations of its citizens and especially of its youth.

Thank you.

Chapter News, News

EU restrictive measures in response to the crisis in Ukraine

EU adopts fourth package of sanctions against Russia

On 15 March 2022, the EU decided to impose a fourth package of economic and individual sanctions in response to Russia’s military aggression against Ukraine. The new measures include a prohibition on:
● all transactions with certain state-owned enterprises
 the provision of credit rating services to any Russian person or entity
 new investments in the Russian energy sectorThe Council expanded the list of persons connected to Russia’s defense and industrial base, on whom tighter export restrictions were imposed regarding dual-use goods, and goods and technology which might contribute to Russia’s technological enhancement of its defense and security sector. The EU also introduced:
● trade restrictions for iron, steel and luxury goods
 sanctions on an additional 15 individuals and 9 entitiesSince March 2014, the EU has progressively imposed restrictive measures in response to the:
● illegal annexation of Crimea in 2014
 decision to recognise the non-government controlled areas of Donetsk and Luhansk oblasts as independent entities in 2022
● unprovoked and unjustified military aggression against Ukraine in 2022The EU has imposed different types of restrictive measures:
 diplomatic measures
 individual restrictive measures (asset freezes and travel restrictions)
 restrictions on economic relations with Crimea and Sevastopol, and with the non-government controlled areas of Donetsk and Luhansk
 economic sanctions
 restrictions on media
 restrictions on economic cooperationBelow you can find more information on each type of restrictive measures.

Diplomatic measures

In 2014, the EU-Russia summit was cancelled and EU member states decided not to hold regular bilateral summits with Russia. Bilateral talks with Russia on visa matters, as well as on the new agreement between the EU and Russia, were suspended.

Instead of the G8 summit in Sochi, a G7 meeting was held – without Russia – in Brussels on 4-5 June 2014. Since then, meetings have continued within the G7 process.

EU countries also supported the suspension of negotiations over Russia’s joining the Organisation for Economic Co-operation and Development (OECD) and the International Energy Agency (IEA).

In February 2022, following Russia’s military aggression against Ukraine, the EU decided that diplomats, other Russian officials and business people are no longer able to benefit from visa facilitation provisions, which allow privileged access to the EU. This decision doesn’t affect ordinary Russian citizens.

Individual restrictive measures

> Asset freezes and travel restrictions

877 people and 62 entities are subject to an asset freeze and a travel ban because their actions have undermined Ukraine’s territorial integrity, sovereignty and independence. The list of sanctioned persons and entities are kept under constant review and are subject to periodic renewals by the Council.

These measures were introduced in March 2014. They were last extended until 15 September 2022.

List of persons and entities under EU restrictive measures over the territorial integrity of Ukraine (Official Journal of the EU)

> Misappropriation of Ukrainian state funds

In March 2014, the Council decided to freeze the assets of individuals responsible for the misappropriation of Ukrainian state funds. These measures were last extended in March 2020 until 6 March 2022.

Restrictions on economic relations with Crimea and Sevastopol

The Council adopted restrictive measures in response to the illegal annexation of Crimea and Sevastopol by the Russian Federation.

The measures apply to EU nationals and EU-based companies. Their scope is limited to the territory of Crimea and Sevastopol.

These measures include:
 an import ban on goods
 restrictions on trade and investment related to certain economic sectors and infrastructure projects
 a prohibition on supplying tourism services
● 
an export ban on certain goods and technologies

On 21 June 2021, the Council extended these measures until 23 June 2022.

Restrictions on economic relations with non-government controlled areas of Donetsk and Luhansk​

The Council adopted restrictive measures in response to the decision by the Russian Federation to proceed with the recognition of the non-government controlled areas of Donetsk and Luhansk oblasts in Ukraine as independent entities, and the ensuing decision to send Russian troops into these areas.

The scope of the measures is limited to the non-government controlled territories of Donetsk and Luhansk oblasts. These measures include:
 an import ban on goods
 restrictions on trade and investment related to certain economic sectors
 a prohibition on supplying tourism services
● 
an export ban on certain goods and technologies

These measures are in place until 24 February 2023.

Economic sanctions targeting exchanges with Russia in specific economic sectors

In July and September 2014, the EU imposed economic sanctions targeting exchanges with Russia in specific economic sectors.

In March 2015, EU leaders decided to align the existing sanctions regime to the complete implementation of the Minsk agreements, which was scheduled for the end of December 2015. Since this did not happen, the Council extended the economic sanctions until 31 July 2016.

The economic sanctions have been extended successively for six months at a time since 1 July 2016. The decision to extend them was made each time following an assessment of the implementation of the Minsk agreements. The economic sanctions are currently extended until 31 July 2022.

These sanctions target the financial, trade, energy, transport, technology and defense sectors. They include:
 restricted access to EU primary and secondary capital markets for certain Russian banks and companies
● a ban on transactions with the Russian Central Bank and the Central Bank of Belarus
 a SWIFT ban for seven Russian banks and three Belarusian banks
 a prohibition on the provision of euro-denominated banknotes to Russia and Belarus
 a ban on the overflight of EU airspace and on access to EU airports by Russian carriers of all kinds
 a ban on exports to Russia of goods and technology in different sectors (including the aviation, space, oil refining and metallurgical industries)
 a ban on export to Russia of dual-use goods for military use
 an export and import ban on arms

Sanctions on Russia Today and Sputnik

On 2 March 2022, the EU approved the suspension of the broadcasting activities in the EU of Sputnik and Russia Today until the aggression against Ukraine is brought to an end and until the Russian Federation and its associated outlets cease conducting disinformation and information manipulation actions against the EU and its member states.

Sputnik and Russia Today are under the permanent direct or indirect control of the authorities of the Russian Federation and are key to promoting and supporting the military aggression against Ukraine and to destabilising its neighbouring countries.

EU imposes sanctions on state-owned outlets RT/Russia Today and Sputnik’s broadcasting in the EU (press release, 2 March 2022)

Measures concerning economic cooperation

Restrictions on economic cooperation were introduced by EU leaders in July 2014:
● the European Investment Bank (EIB) was requested to suspend the signing of new financing operations in the Russian Federation
 EU member states agreed to coordinate their positions within the European Bank for Reconstruction and Development (EBRD) Board of Directors with a view to also suspending the financing of new operations
 the implementation of EU bilateral and regional cooperation programmes with Russia was re-assessed and certain programmes suspendedInfographic – EU sanctions against Russia over UkraineTimeline

Compliments of the European Council.

Chapter News, News

The war in Ukraine and its implications for the EU

14/03/2021 – HR/VP Blog – Putin’s war against Ukraine has already caused thousands of death but also major economic damages globally. We need to handle the impact of this third asymmetric shock in 15 years, at home and abroad. EU leaders agreed at the informal summit in Versailles to bolster European economic resilience, radically reduce our energy imports from Russia and move ahead with a serious strengthening of European defence.

“To handle the wider impact of the war against Ukraine, we need to bolster European economic resilience, end our energy dependence on Russia and further strengthen European defence”

  • Josep Borrell, HR/VP

The war against Ukraine that Vladimir Putin started is already having considerable economic consequences in Russia, where the rouble has lost half its value and inflation is soaring. Moscow’s stock exchange is closed. Many international companies, like Ikea, McDonald’s, Visa and MasterCard have left the country. Russia’s economy is expected to shrink by at least 15% this year. Weakened and isolated, Russia risks becoming very dependent on China in the future.

The price of freedom and democracy

However, we are also seeing significant effects in Europe, with energy and other prices rising and probably set to continue to do so. We, inside the EU, have to accept to pay also a price to stop this outrageous and unprovoked war: the future of our security and our democracies depends on it. The price to pay is the price of freedom.

The war in Ukraine is the third asymmetric shock, as economists call it, that the Union has experienced in the last two decades, after the 2008 financial and economic crisis and the following Eurozone crisis and the COVID-19 pandemic. An asymmetric shock is a sudden change in economic conditions that affects some EU countries more than others. The war in Ukraine is indeed having a much greater impact on neighbouring countries due to the influx of refugees and their heavy dependence on Russian gas.

To prevent asymmetric shocks from weakening the EU, we need to step up our capacity to show solidarity with the most affected countries. This is what we did after the 2008-2009 crisis, even if we were slow to do so. This is what we did facing the economic impact of the COVID-19 pandemic, both by pooling vaccine purchases and through the Next Generation EU plan. This is also what we need to do now.

The consequences of the war in Ukraine were at the centre of the informal EU leaders meeting in Versailles. The heads of states and government agreed to phase out our dependence on Russian gas, oil and coal imports as soon as possible. It is not possible for us to continue to feed Vladimir Putin’s war machine through our energy imports. The Commission will present, by the end of March, a plan to secure our supply in the coming winter season and specify by the end of May the details for the REPower EU plan to end our dependency to fossil fuels imports from Russia.

In parallel, the heads of states and governments will address the impact of rising energy prices on EU citizens and businesses at the next meeting of the European Council on 24-25 March. In particular, we probably need to rethink our wholesale electricity pricing system, which is currently driven for all energy sources by gas prices, even though gas-fired power generation is a very small fraction of the whole.

“The three ways of cutting our dependence on Russia are diversification of supplies, energy efficiency and the acceleration of renewables.”

This plan has many important internal implications for the EU, but also for its external policy. The three ways of cutting our dependence on Russia are diversification of supplies, energy efficiency and the acceleration of renewables. On the diversification front, we need to increase our purchases of Liquefied Natural Gas (LNG) from suppliers such as the US, Qatar, Norway, African producers and others.

To achieve this, we need in particular the infrastructure capable of receiving and processing LNG. These are currently very unevenly distributed in Europe with many in Spain, for example, but almost none in Germany or in the countries of Central and Eastern Europe. However, we currently lack sufficient pipeline connections between Spain and the rest of the continent. We will have to create new infrastructure and organise ourselves to pool these LNG supplies.

In addition, we must reduce energy consumption in the EU and hence our need for gas, but also for oil and coal, for which Russia is also our main supplier. Otherwise, our efforts to reduce our dependence on Russia risk leading to a sharp rise in the EU’s overall energy bill. We also need to avoid simply replacing  one excessive external dependence with another.

At the same time, we have to accelerate the deployment of renewable energies: in 2020, almost all EU countries had exceeded the targets set in 2008 for the share of renewables, but there is still a need to reinforce this trend. This is the purpose of the Fit for 55 action plan proposed by the Commission last year to implement our emission reduction commitments made in Glasgow. We must accelerate its implementation.

The need to increase defence spending

Finally, this war will also force us to increase our defence spending. We need to spend more but above all to spend better, i.e. jointly. Some member states, such as Germany, have already taken important new measures in this area with €100 billion additional defence spending in 2022 and an increase of the defence budget to above 2 % of GDP from 2024. This must be the case everywhere where defence spending is still too low. Again, these are always painful decisions in a context of high public debt and scarce public resources, but Vladimir Putin clearly leaves us no choice.

“With the return of war to European soil, all of us in Europe must contribute more actively to taking responsibility for our own security. The Strategic Compass will provide a framework for using these additional means, ensuring full complementarity with NATO.”

With the return of war to European soil, all of us in Europe must contribute more actively to taking responsibility for our own security. The Strategic Compass, which I have prepared and which we are in the process of adjusting to the new situation, should be adopted by the Foreign Affairs Council on 21 March. It will provide a framework for using these additional means in an efficient and coordinated way within the EU, ensuring full complementarity with NATO. With the European Defence Agency, we will also analyse the structure of our military spending and the investment gaps, and propose additional initiatives to strengthen the European defence industrial and technological base.

Welcoming the refugees

In addition, this war is already causing a massive influx of refugees into the European Union. As I write, more than 2 million people have crossed our borders and this number is expected to increase further in the days and weeks ahead, as long as Putin continues his aggression. Ukraine’s EU neighbours have shown remarkable mobilisation and solidarity in welcoming these refugees. Here too, we already help the EU countries most directly concerned to cope with this influx and we will need to do more in the next future. But the refugees issue also raises the broader question of the renewal of our common policy on asylum and migration to build more solidarity, a process that began in 2020 but has not yet been finalised.

The war in Ukraine also makes it more urgent to prevent this conflict to spill over elsewhere in the world and to solve other crises. We have been working for a long time now to help find a political solution to the political and humanitarian crisis in Venezuela. We also need to reduce tensions in the Gulf region, which is closely linked to the resumption of the JCPoA, the Iranian nuclear deal, a file on which we have been working hard for many months. We must also monitor closely the situation in Western Balkans or in the Caucasus.

A negative impact on emerging and developing countries

This war will also have important repercussions for emerging and developing countries that are energy importers. They will suffer even more than us from the rise in the price of fossil fuels. And it is not just about energy. The impact on the market for grain, wheat but also maize, sunflower and fertiliser, for which Russia and Ukraine were major exporters, will also be significant. The prices of basic agricultural products were already high. They will probably increase further with major potential for creating suffering and political instability.

“We saw last year that developing countries had been hit harder than developed ones by the economic impact of the COVID-19 pandemic. The war in Ukraine may make things even worse with the risk of major unrests related to food and energy price hikes.”

We saw last year that developing countries had been hit harder than developed ones by the economic impact of the COVID-19 pandemic. World hunger and poverty had again increased significantly. The war in Ukraine may make things even worse in this respect with the risk of major unrests related to food and energy price hikes, as we have already seen in the past in comparable circumstances. Despite our own difficulties, we must therefore increase our support to poorer countries most affected by the indirect effects of this war, including in Africa and the Middle East.

With the invasion of Ukraine, Vladimir Putin is forcing us to urgently rethink many elements of our internal organisation and our worldview. We must rise to this challenge to defend our security and our democratic values.

Author:

  • Josep Borrell, EU High Representative

Compliments of the European Union External Action.

Chapter News, News

IMF | How War in Ukraine Is Reverberating Across World’s Regions

The conflict is a major blow to the global economy that will hurt growth and raise prices.

Beyond the suffering and humanitarian crisis from Russia’s invasion of Ukraine, the entire global economy will feel the effects of slower growth and faster inflation.

Impacts will flow through three main channels. One, higher prices for commodities like food and energy will push up inflation further, in turn eroding the value of incomes and weighing on demand. Two, neighboring economies in particular will grapple with disrupted trade, supply chains, and remittances as well as an historic surge in refugee flows. And three, reduced business confidence and higher investor uncertainty will weigh on asset prices, tightening financial conditions and potentially spurring capital outflows from emerging markets.

Russia and Ukraine are major commodities producers, and disruptions have caused global prices to soar, especially for oil and natural gas. Food costs have jumped, with wheat, for which Ukraine and Russia make up 30 percent of global exports, reaching a record.

Beyond global spillovers, countries with direct trade, tourism, and financial exposures will feel additional pressures. Economies reliant on oil imports will see wider fiscal and trade deficits and more inflation pressure, though some exporters such as those in the Middle East and Africa may benefit from higher prices.

Steeper price increases for food and fuel may spur a greater risk of unrest in some regions, from Sub-Saharan Africa and Latin America to the Caucasus and Central Asia, while food insecurity is likely to further increase in parts of Africa and the Middle East.

Gauging these reverberations is hard, but we already see our growth forecasts as likely to be revised down next month when we will offer a fuller picture in our World Economic Outlook and regional assessments.

Longer term, the war may fundamentally alter the global economic and geopolitical order should energy trade shift, supply chains reconfigure, payment networks fragment, and countries rethink reserve currency holdings. Increased geopolitical tension further raises risks of economic fragmentation, especially for trade and technology.

Europe

The toll is already immense in Ukraine. Unprecedented sanctions on Russia will impair financial intermediation and trade, inevitably causing a deep recession there. The ruble’s depreciation is fueling inflation, further diminishing living standards for the population.

Energy is the main spillover channel for Europe as Russia is a critical source of natural gas imports. Wider supply-chain disruptions may also be consequential. These effects will fuel inflation and slow the recovery from the pandemic. Eastern Europe will see rising financing costs and a refugee surge. It has absorbed most of the 3 million people who recently fled Ukraine, United Nations data show.

European governments also may confront fiscal pressures from additional spending on energy security and defense budgets.

While foreign exposures to plunging Russian assets are modest by global standards, pressures on emerging markets may grow should investors seek safer havens. Similarly, most European banks have modest and manageable direct exposures to Russia.

Caucasus and Central Asia

Beyond Europe, these neighboring nations will feel greater consequences from Russia’s recession and the sanctions. Close trade and payment-system links will curb trade, remittances, investment, and tourism, adversely affecting economic growth, inflation, and external and fiscal accounts.

While commodity exporters should benefit from higher international prices, they face the risk of reduced energy exports if sanctions extend to pipelines through Russia.

Middle East and North Africa

Major ripple effects from higher food and energy prices and tighter global financial conditions are likely. Egypt, for example, imports about 80 percent of its wheat from Russia and Ukraine. And, as a popular tourist destination for both, it will also see visitor spending shrink.

Policies to contain inflation, such as raising government subsidies, could pressure already weak fiscal accounts. In addition, worsening external financing conditions may spur capital outflows and add to growth headwinds for countries with elevated debt levels and large financing needs.

Rising prices may raise social tensions in some countries, such as those with weak social safety nets, few job opportunities, limited fiscal space, and unpopular governments.

Sub-Saharan Africa

Just as the continent was gradually recovering from the pandemic, this crisis threatens that progress. Many countries in the region are particularly vulnerable to the war’s effects, specifically because of higher energy and food prices, reduced tourism, and potential difficulty accessing international capital markets.

The conflict comes when most countries have minimal policy space to counter the effects of the shock. This is likely to intensify socio-economic pressures, public debt vulnerability, and scarring from the pandemic that was already confronting millions of households and businesses.

Record wheat prices are particularly concerning for a region that imports around 85 percent of its supplies, one-third of which comes from Russia or Ukraine.

Western Hemisphere

Food and energy prices are the main channel for spillovers, which will be substantial in some cases. High commodity prices are likely to significantly quicken inflation for Latin America and the Caribbean, which already faces an 8 percent average annual rate across five of the largest economies: Brazil, Mexico, Chile, Colombia, and Peru. Central banks may have to further defend inflation-fighting credibility.

Growth effects of costly commodities vary. Higher oil prices hurt Central American and Caribbean importers, while exporters of oil, copper, iron ore, corn, wheat, and metals can charge more for their products and mitigate the impact on growth.

Financial conditions remain relatively favorable, but intensifying conflict may cause global financial distress that, with tighter domestic monetary policy, will weigh on growth.

The United States has few ties to Ukraine and Russia, diluting direct effects, but inflation was already at a four-decade high before the war boosted commodity prices. That means prices may keep rising as the Federal Reserve starts raising interest rates.

Asia and the Pacific

Spillovers from Russia are likely limited given the lack of close economic ties, but slower growth in Europe and the global economy will take a heavy toll on major exporters.

The biggest effects on current accounts will be in the petroleum importers of ASEAN economies, India, and frontier economies including some Pacific Islands. This could be amplified by declining tourism for nations reliant on Russian visits.

For China, immediate effects should be smaller because fiscal stimulus will support this year’s 5.5 percent growth goal and Russia buys a relatively small amount of its exports. Still, commodity prices and weakening demand in big export markets add to challenges.

Spillovers are similar for Japan and Korea, where new oil subsidies may ease impacts. Higher energy prices will raise India’s inflation, already at the top of the central bank’s target range.

Asia’s food-price pressures should be eased by local production and more reliance on rice than wheat. Costly food and energy imports will boost consumer prices, though subsidies and price caps for fuel, food and fertilizer may ease the immediate impact—but with fiscal costs.

Global Shocks

The consequences of Russia’s war on Ukraine have already shaken not just those nations but also the region and the world, and point to the importance of a global safety net and regional arrangements in place to buffer economies.

“We live in a more shock-prone world,” IMF Managing Director Kristalina Georgieva recently told reporters at a briefing in Washington. “And we need the strength of the collective to deal with shocks to come.”

While some effects may not fully come into focus for many years, there are already clear signs that the war and resulting jump in costs for essential commodities will make it harder for policymakers in some countries to strike the delicate balance between containing inflation and supporting the economic recovery from the pandemic.

Authors:

  • Alfred Kammer
  • Jihad Azour
  • Abebe Aemro Selassie
  • IIan Goldfajn
  • Changyong Rhee

Compliments of the IMF.