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Joint debt instruments: A recurrent proposal to strengthen economic and monetary union

02-04-2020

The idea of issuing joint debt instruments, in particular between euro-area countries, is far from new. It has long been linked in various ways to the Union's financial integration process and in particular to the implementation of economic and monetary union. In the first decade of the euro, the rationale for creating joint bonds was to reduce market fragmentation and thus obtain efficiency gains. Following the financial and sovereign debt crises, further reasons included managing the crises and ...

The idea of issuing joint debt instruments, in particular between euro-area countries, is far from new. It has long been linked in various ways to the Union's financial integration process and in particular to the implementation of economic and monetary union. In the first decade of the euro, the rationale for creating joint bonds was to reduce market fragmentation and thus obtain efficiency gains. Following the financial and sovereign debt crises, further reasons included managing the crises and preventing future sovereign debt crises, reinforcing financial stability in the euro area, facilitating transmission of monetary policy, breaking the sovereign-bank nexus and enhancing the international role of the euro. While joint debt instruments present considerable potential advantages, they also present challenges. These include coordination issues and reduced flexibility for Member States in issuing debt, the potential to undermine fiscal discipline by removing incentives for sound budgetary policies, and the fact that adoption of joint debt instruments would eventually entail the difficult political choice of transferring sovereignty from the national to the EU level. In the context of the current crisis caused by the COVID-19 pandemic, joint debt instruments have once more come to the fore as a potential medium-term solution to help Member States rebuild their economies following the crisis. In Eurogroup and European Council meetings, the solution is not favoured by all Member States and alternative – possibly complementary – approaches have been proposed, such as a credit line through the European Stability Mechanism.

The ECB’s disclosure of Pillar 2 capital requirements

02-04-2020

In January 2020, the European Central Bank (ECB) published for the first time a list with the specific Pillar 2 capital requirements for all banks under the ECB’s direct supervision, each individually mentioned by name. This briefing gives background information on the relevance of that disclosure, complementes the list with additional information, and analyses the data.

In January 2020, the European Central Bank (ECB) published for the first time a list with the specific Pillar 2 capital requirements for all banks under the ECB’s direct supervision, each individually mentioned by name. This briefing gives background information on the relevance of that disclosure, complementes the list with additional information, and analyses the data.

The European Financial Stabilisation Mechanism: Main Features

01-04-2020

This document presents the main features of the European Financial Stabilisation Mechanism (EFSM). The EFSM allows the Commission to provide loans to euro area Member States threatened by severe difficulties and to access financial markets, by issuing bonds or with private placements. The amount that can be borrowed by the Commission on behalf of the European Union is limited.

This document presents the main features of the European Financial Stabilisation Mechanism (EFSM). The EFSM allows the Commission to provide loans to euro area Member States threatened by severe difficulties and to access financial markets, by issuing bonds or with private placements. The amount that can be borrowed by the Commission on behalf of the European Union is limited.

Collective intelligence at EU level: Social and democratic dimensions

31-03-2020

Humans are among the many living species capable of collaborative and imaginative thinking. While it is widely agreed among scholars that this capacity has contributed to making humans the dominant species, other crucial questions remain open to debate. Is it possible to encourage large groups of people to engage in collective thinking? Is it possible to coordinate citizens to find solutions to address global challenges? Some scholars claim that large groups of independent, motivated, and well-informed ...

Humans are among the many living species capable of collaborative and imaginative thinking. While it is widely agreed among scholars that this capacity has contributed to making humans the dominant species, other crucial questions remain open to debate. Is it possible to encourage large groups of people to engage in collective thinking? Is it possible to coordinate citizens to find solutions to address global challenges? Some scholars claim that large groups of independent, motivated, and well-informed people can, collectively, make better decisions than isolated individuals can – what is known as 'collective intelligence.' The social dimension of collective intelligence mainly relates to social aspects of the economy and of innovation. It shows that a holistic approach to innovation – one that includes not only technological but also social aspects – can greatly contribute to the EU's goal of promoting a just transition for everyone to a sustainable and green economy in the digital age. The EU has been taking concrete action to promote social innovation by supporting the development of its theory and practice. Mainly through funding programmes, it helps to seek new types of partners and build new capacity – and thus shape the future of local and national innovations aimed at societal needs. The democratic dimension suggests that the power of the collective can be leveraged so as to improve public decision-making systems. Supported by technology, policy-makers can harness the 'civic surplus' of citizens – thus providing smarter solutions to regulatory challenges. This is particularly relevant at EU level in view of the planned Conference on the Future of Europe, aimed at engaging communities at large and making EU decision-making more inclusive and participatory. The current coronavirus crisis is likely to change society and our economy in ways as yet too early to predict, but recovery after the crisis will require new ways of thinking and acting to overcome common challenges, and thus making use of our collective intelligence should be more urgent than ever. In the longer term, in order to mobilise collective intelligence across the EU and to fully exploit its innovative potential, the EU needs to strengthen its education policies and promote a shared understanding of a holistic approach to innovation and of collective intelligence – and thus become a 'global brain,' with a solid institutional set-up at the centre of a subsidised experimentation process that meets the challenges imposed by modern-day transformations.

Outcome of European Council video-conference of 26 March 2020

30-03-2020

On 26 March, EU Heads of State or Government continued their joint coordination efforts to address the COVID-19 outbreak and held a six hour long video conference on this subject, but failed to agree on the adequate financing instruments to help countries in fiscal difficulty due to the crisis, The President of the European Parliament President, David Sassoli, strongly criticised the results of the European Council and ‘the short-sightedness and selfishness of some governments’.EU leaders asked the ...

On 26 March, EU Heads of State or Government continued their joint coordination efforts to address the COVID-19 outbreak and held a six hour long video conference on this subject, but failed to agree on the adequate financing instruments to help countries in fiscal difficulty due to the crisis, The President of the European Parliament President, David Sassoli, strongly criticised the results of the European Council and ‘the short-sightedness and selfishness of some governments’.EU leaders asked the President of the Commission and the President of the European Council to start working on a Roadmap accompanied by an Action Plan to prepare an exit strategy and a comprehensive recovery plan, including unprecedented investment.

The economy and coronavirus - Weekly Picks - 30/03/2020

30-03-2020

This paper provides a summary of some recent analyses of the macroeconomic effects of the coronavirus and some policy recommendations made in the public domain to mitigate these negative effects.

This paper provides a summary of some recent analyses of the macroeconomic effects of the coronavirus and some policy recommendations made in the public domain to mitigate these negative effects.

Regular Update on EUEA level to mitigate the economic and social effects of coronavirus - 30/03/2020

30-03-2020

This document compiles information, obtained from public sources, on the measures proposed and taken at the EU or Euro Area level to mitigate the economic and social effects of Covid19. It will be regularly updated, following new developments.

This document compiles information, obtained from public sources, on the measures proposed and taken at the EU or Euro Area level to mitigate the economic and social effects of Covid19. It will be regularly updated, following new developments.

The ‘general escape clause’ within the Stability and Growth Pact: Fiscal flexibility for severe economic shocks

27-03-2020

An important element of the response to the COVID-19 pandemic will come from European Union (EU) Member States in the form of fiscal intervention. At the same time, Member States are constrained by the fiscal rules in place at both EU and national level. The Stability and Growth Pact contains two clauses allowing Member States to undertake appropriate budgetary measures, within the Pact, in the face of exceptional circumstances. The first is known as the 'unusual events clause', while the second ...

An important element of the response to the COVID-19 pandemic will come from European Union (EU) Member States in the form of fiscal intervention. At the same time, Member States are constrained by the fiscal rules in place at both EU and national level. The Stability and Growth Pact contains two clauses allowing Member States to undertake appropriate budgetary measures, within the Pact, in the face of exceptional circumstances. The first is known as the 'unusual events clause', while the second is termed the 'general escape clause'. In essence, the clauses allow deviation from parts of the Stability and Growth Pact's preventive or corrective arms, either because an unusual event outside the control of one or more Member States has a major impact on the financial position of the general government, or because the euro area or the Union as a whole faces a severe economic downturn. As the current crisis is outside governments' control, with a major impact on public finances, the European Commission noted that it could apply the unusual events clause. However, it also noted that the magnitude of the fiscal effort necessary to protect European citizens and businesses from the effects of the pandemic, and to support the economy in the aftermath, requires the use of more far-reaching flexibility under the Pact. For this reason, the Commission has proposed to activate the general escape clause. With the Council having endorsed the Commission communication, a deviation from the medium-term budgetary objective or from the appropriate adjustment path towards it may be allowed for Member States, during both the assessment and the implementation of Stability or Convergence Programmes. In the corrective arm of the Pact, the clause will allow an extension of the deadline for the Member States to correct their excessive deficits under the excessive deficit procedure, provided those Member States take effective action as recommended by the Council.

Plenary round-up – Brussels, March II 2020

27-03-2020

The need to observe strict sanitary measures, in view of the COVID-19 contagion, requires a flexible response from everyone. Consequently, the European Parliament organised and conducted its March II plenary session with new precautionary measures, allowing it to act rapidly to carry out its essential legislative function during the crisis. Parliament's Bureau put in place an alternative voting procedure for the 26 March extraordinary plenary session. The new procedure meant that all Members – with ...

The need to observe strict sanitary measures, in view of the COVID-19 contagion, requires a flexible response from everyone. Consequently, the European Parliament organised and conducted its March II plenary session with new precautionary measures, allowing it to act rapidly to carry out its essential legislative function during the crisis. Parliament's Bureau put in place an alternative voting procedure for the 26 March extraordinary plenary session. The new procedure meant that all Members – with most unable to be present in Brussels – could vote from a distance, sending their voting papers to Parliament’s Secretariat by e-mail. Parliament has adjusted its calendar, replacing the regular plenary part-sessions with shortened sessions until the summer. The temporary voting procedure will be available until 31 July 2020, unless extended by Bureau decision. Moreover, the Secretariat is working to put in place a more advanced remote voting system, which would enable more complex votes to be held among Members, in both committee and plenary, thus ensuring Parliament can carry out its essential budgetary and legislative functions throughout the ongoing public health crisis. The session focused on three urgent legislative proposals responding to the coronavirus pandemic. Parliament adopted its positions on temporary suspension of EU rules on airport slots, creation of a Corona Response Investment Initiative and extension of the EU Solidarity Fund, almost unanimously, less than two weeks after the European Commission tabled its proposals. With the Council also agreed on the three texts, the measures can now be adopted in the coming days. Members also heard from the Commission and Council on the coordination of the European response to the COVID-19 outbreak.

Financial assistance for countries seriously affected by a major public health emergency

24-03-2020

With much of Europe in the grip of the novel coronavirus, the European Commission announced a series of measures on 13 March 2020 to help countries cope with the socio-economic impact of the crisis. As part of this package, the Commission proposes extending the scope of the EU Solidarity Fund to include major public health emergencies, providing valuable additional support. The proposal for a regulation of the European Parliament and of the Council is due to be voted during the extraordinary plenary ...

With much of Europe in the grip of the novel coronavirus, the European Commission announced a series of measures on 13 March 2020 to help countries cope with the socio-economic impact of the crisis. As part of this package, the Commission proposes extending the scope of the EU Solidarity Fund to include major public health emergencies, providing valuable additional support. The proposal for a regulation of the European Parliament and of the Council is due to be voted during the extraordinary plenary session organised on 26 March to enable the adoption of this and two other specific measures.

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