81

Resulta(a)t(en)

Woord(en)
Publicatietype
Beleidsterrein
Zoekterm
Datum

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 ‘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.

What can the EU do to alleviate the impact of the coronavirus crisis?

16-03-2020

The novel coronavirus (COVID-19) outbreak has now been declared a pandemic by the World Health Organization. Alleviating the human effects of the crisis is paramount, but repercussions are being felt across many sectors. European Union institutions are unanimous in calling for solidarity among Member States, and for Europe to offer support, within its remit, to its Member States in their response to the common challenge. On 10 March 2020, Heads of State or Government of the EU countries held a videoconference ...

The novel coronavirus (COVID-19) outbreak has now been declared a pandemic by the World Health Organization. Alleviating the human effects of the crisis is paramount, but repercussions are being felt across many sectors. European Union institutions are unanimous in calling for solidarity among Member States, and for Europe to offer support, within its remit, to its Member States in their response to the common challenge. On 10 March 2020, Heads of State or Government of the EU countries held a videoconference on COVID-19, to discuss how to coordinate the EU-level response. EU leaders stressed the need for a joint European approach and close coordination with the European Commission. Priorities were identified, to be followed up on 'at all levels immediately'. The measures that are – or could be – envisaged range across different policy areas. As an immediate response, European Commission President Ursula von der Leyen formed a coronavirus response team. Further measures were announced in a European coronavirus response on 13 March 2020. Planned – and potential – health and preparedness measures include reinforcing the EU's role in joint procurement, bolstering cooperation in disease management and control, and potentially widening the remit of the European reference networks. Greater controls on people crossing external EU borders are also proposed. Monetary, budgetary and macroeconomic measures include, for instance, those taken to ease the impact of the coronavirus emergency on the aviation industry. Moreover, the EU and the Member States, the European Central Bank, and the International Monetary Fund can also take steps to help people and firms. The EU budget has been mobilised to provide funds to reinforce preparedness and containment measures, as well as research into the virus. Furthermore, cross-border health threats, such as that posed by COVID 19, could be taken into account when shaping the multiannual financial framework for 2021-2027.

European Semester 2020 – Employment aspects

05-03-2020

The European Semester sets a timetable and framework for EU countries to discuss economic policy coordination. The European Parliament Committee on Employment and Social Affairs (EMPL) adopted its report on the employment and social aspects in the 2020 Annual Sustainable Growth Survey on 20 February 2020. Parliament is expected to discuss an own initiative resolution at the March I plenary part-session.

The European Semester sets a timetable and framework for EU countries to discuss economic policy coordination. The European Parliament Committee on Employment and Social Affairs (EMPL) adopted its report on the employment and social aspects in the 2020 Annual Sustainable Growth Survey on 20 February 2020. Parliament is expected to discuss an own initiative resolution at the March I plenary part-session.

Economic impact of epidemics and pandemics

27-02-2020

Despite significant medical progress over the last centuries, infectious diseases such as influenza or malaria still represent a considerable threat to society. While some are endemic to specific geographical regions, others can spread, becoming epidemics or pandemics. While the first and most crucial aspect of an epidemic is, and will always remain, the loss of human life, the spread of a virus can also have important repercussions for national or regional economies. The evidence reported in various ...

Despite significant medical progress over the last centuries, infectious diseases such as influenza or malaria still represent a considerable threat to society. While some are endemic to specific geographical regions, others can spread, becoming epidemics or pandemics. While the first and most crucial aspect of an epidemic is, and will always remain, the loss of human life, the spread of a virus can also have important repercussions for national or regional economies. The evidence reported in various studies indicates that epidemic disease impacts on a country's economy through several channels, including the health, transportation, agricultural and tourism sectors. At the same time, trade with other countries may also be impacted, while the interconnectedness of modern economies means that an epidemic can also implicate international supply chains. These considerations, as well as the fact that rapid urbanisation, increasing international travel and climate change all render epidemic outbreaks a global and not simply a local phenomenon, imply that it is important for all countries to take necessary measures to counter this threat. In this context, several initiatives have been proposed, ranging from a single measure (e.g. investing in new antibiotics), to broader solutions to be adopted by developing and developed countries alike. In the European Union (EU), healthcare organisation and provision are Member State prerogatives and responsibilities. The EU's actions in this area therefore aim at complementing national policies to help Member States face common challenges, such as epidemics. This support takes place via coordination and exchange of best practices between EU countries and health experts, financial support under Instruments for co-financing, (e.g. the Horizon 2020 research programme and European Fund for Strategic Investments), and the adoption of relevant legislation. The European Parliament has taken the opportunity, through own-initiative resolutions, to highlight the need for further actions.

Economic and Budgetary Outlook for the European Union 2020

31-01-2020

This study, the fourth in an annual series, provides an overview of the economic and budgetary situation in the EU and beyond. It summarises the main economic indicators in the EU and euro area and their two-year trends. It explains the annual EU budget, provides an overview of its headings for 2020, and sets out the wider budgetary framework – the multiannual financial framework (MFF) – and its possible evolution in the new decade. A special 'economic focus' puts the spotlight on the international ...

This study, the fourth in an annual series, provides an overview of the economic and budgetary situation in the EU and beyond. It summarises the main economic indicators in the EU and euro area and their two-year trends. It explains the annual EU budget, provides an overview of its headings for 2020, and sets out the wider budgetary framework – the multiannual financial framework (MFF) – and its possible evolution in the new decade. A special 'economic focus' puts the spotlight on the international role of the euro, and on various recent EU-level initiatives in this field.

Introduction to the European Semester: Coordinating and monitoring economic and fiscal policies in the EU

11-12-2019

The European Semester is a framework for the coordination of economic policies across the European Union that was established after the European sovereign debt crisis. This paper aims to provide a simple but comprehensive introduction, explaining the main steps of the Semester from November to July each year. It also provides a short review of the academic and institutional debates around the Semester, before closing with the priorities in the relevant areas identified by the new European Commission ...

The European Semester is a framework for the coordination of economic policies across the European Union that was established after the European sovereign debt crisis. This paper aims to provide a simple but comprehensive introduction, explaining the main steps of the Semester from November to July each year. It also provides a short review of the academic and institutional debates around the Semester, before closing with the priorities in the relevant areas identified by the new European Commission President, Ursula von der Leyen.

Hearings of the Commissioners-designate: Paolo Gentiloni - Economy

26-09-2019

This briefing is one in a set looking at the Commissioners-designate and their portfolios as put forward by Commission President-elect Ursula von der Leyen. Each candidate faces a three-hour public hearing, organised by one or more parliamentary committees. After that process, those committees will judge the candidates' suitability for the role based on 'their general competence, European commitment and personal independence', as well as their 'knowledge of their prospective portfolio and their communication ...

This briefing is one in a set looking at the Commissioners-designate and their portfolios as put forward by Commission President-elect Ursula von der Leyen. Each candidate faces a three-hour public hearing, organised by one or more parliamentary committees. After that process, those committees will judge the candidates' suitability for the role based on 'their general competence, European commitment and personal independence', as well as their 'knowledge of their prospective portfolio and their communication skills'. At the end of the hearings process, Parliament votes on the proposed Commission as a bloc, and under the Treaties may only reject the entire College of Commissioners, rather than individual candidates. The Briefing provides an overview of key issues in the portfolio areas, as well as Parliament's activity in the last term in that field. It also includes a brief introduction to the candidate.

Single-limb collective action clauses: A short introduction

05-07-2019

Sovereign bonds, the most common form of sovereign debt, have specific characteristics. They are issued by national debt management offices on the primary market and subsequently traded on secondary markets. Loan agreements signed at the issuance of sovereign bonds on the primary market may include collective action clauses (CACs) aimed at making restructuring more orderly and predictable. CACs have been included in loan agreements and bond contracts since the 1990s. These clauses enable a 'supermajority ...

Sovereign bonds, the most common form of sovereign debt, have specific characteristics. They are issued by national debt management offices on the primary market and subsequently traded on secondary markets. Loan agreements signed at the issuance of sovereign bonds on the primary market may include collective action clauses (CACs) aimed at making restructuring more orderly and predictable. CACs have been included in loan agreements and bond contracts since the 1990s. These clauses enable a 'supermajority' of creditors to modify essential payment terms of the contract, thus overcoming the problem posed by holdout creditors. Indeed, while debt restructuring involves benefits for both debtor countries and their creditors, there are also incentives for both parties to delay the process. Certain creditors, for instance, are tempted to hold out, and are therefore referred to as holdout creditors. Their incentive for holding out is the chance that they might recover their investment either in full or in a higher amount than the debtor country has offered in the restructuring agreement. While a holdout can bring creditors great gains, it has significant negative consequences for debtor countries and, in the worst case, can jeopardise the restructuring process. CACs can have one or two 'limbs'. While the EU Member States that are in the euro area decided in 2011 to include two-limb CACs in sovereign debt issued after 2013, the Greek restructuring experience and recent New York court decisions relative to sovereign debt have shown that such CACs can protect sovereign debtors only up to a certain point. Therefore, in the context of the euro-area governance reform, the Eurogroup has proposed that euro-area leaders should work for the introduction of single-limb CACs by 2022, and included this commitment in the draft revised text of the European Stability Mechanism Treaty.

Regulation of OTC derivatives: Amending the European Market Infrastructure Regulation (EMIR)

28-06-2019

The European Market Infrastructure Regulation (EMIR – Regulation (EU) No 648/2012), adopted in 2012, forms part of the European regulatory response to the financial crisis, and specifically addresses the problems observed in the functioning of the 'over-the-counter' (OTC) derivatives market in the 2007-2008 period. In May 2017, after carrying out an extensive assessment of EMIR, the Commission proposed a regulation amending and simplifying it in the context of its Regulatory Fitness and Performance ...

The European Market Infrastructure Regulation (EMIR – Regulation (EU) No 648/2012), adopted in 2012, forms part of the European regulatory response to the financial crisis, and specifically addresses the problems observed in the functioning of the 'over-the-counter' (OTC) derivatives market in the 2007-2008 period. In May 2017, after carrying out an extensive assessment of EMIR, the Commission proposed a regulation amending and simplifying it in the context of its Regulatory Fitness and Performance (REFIT) programme, to address disproportionate compliance costs, transparency issues and insufficient access to clearing for certain counterparties. A provisional agreement was reached in trilogue on 5 February 2019. Parliament voted to approve that agreement on 18 April 2019 in plenary session and the Council subsequently adopted it on 14 May. The new regulation comes into force on 17 June 2019. Third edition. The ‘EU Legislation in Progress’ briefings are updated at key stages throughout the legislative procedure.

Partners