645

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Date

The settlement of disputes arising from the United Kingdom's Withdrawal from the European Union

17-11-2017

This study, commissioned by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs at the request of the AFCO Committee, analyses the various jurisdiction options, under EU law and under public international law, in settling disputes arising from the Withdrawal Agreement of the UK from the EU and in the context of the Future Relationship Agreement with the UK. It examines in particular the continued involvement of the CJEU in the new context of the EU-UK relations ...

This study, commissioned by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs at the request of the AFCO Committee, analyses the various jurisdiction options, under EU law and under public international law, in settling disputes arising from the Withdrawal Agreement of the UK from the EU and in the context of the Future Relationship Agreement with the UK. It examines in particular the continued involvement of the CJEU in the new context of the EU-UK relations and, based on CJEU case-law and previous international agreements, presents the various governance possibilities for these agreements.

External author

Antonio Francisco FERNÁNDEZ TOMÁS

TARGET (IM)BALANCES AT RECORD LEVEL: SHOULD WE WORRY?

16-11-2017

TARGET balances are the claims and liabilities of euro area national central banks (NCBs) with the ECB. TARGET balances add up to zero but the sum of the absolute value of these balances has grown substantially since 2008. The levels of TARGET balances within the Eurosystem has never been so high. In September 2017, Germany’s positive TARGET balance equalled €879 billion, which is over 25 percent of current German GDP. Luxembourg, Netherlands and Finland have also built up large claims relative to ...

TARGET balances are the claims and liabilities of euro area national central banks (NCBs) with the ECB. TARGET balances add up to zero but the sum of the absolute value of these balances has grown substantially since 2008. The levels of TARGET balances within the Eurosystem has never been so high. In September 2017, Germany’s positive TARGET balance equalled €879 billion, which is over 25 percent of current German GDP. Luxembourg, Netherlands and Finland have also built up large claims relative to their levels of GDP. On the other side, Italy (€432 billion) and Spain (€373 billion) have built up large negative balances. The ECB itself had a negative TARGET balance of €215 billion in September 2017.

DESIGN AND SEQUENCING OF EXIT FROM NONSTANDARD MONETARY POLICY MEASURES: WHAT SHOULD THE ECB “NEW NORMAL” LOOK LIKE?

16-11-2017

With the economic upswing in the euro area strengthening, both consumer and business confidence indicators at their highest levels since the beginning of the crisis, there is mounting pressure on the ECB for a change to its monetary policy stance. However, President Draghi has repeatedly stated that the programme of asset purchases will continue until the ECB “sees a sustained adjustment in the path of inflation consistent with its inflation aim”. Even though the recovery appears to be gaining momentum ...

With the economic upswing in the euro area strengthening, both consumer and business confidence indicators at their highest levels since the beginning of the crisis, there is mounting pressure on the ECB for a change to its monetary policy stance. However, President Draghi has repeatedly stated that the programme of asset purchases will continue until the ECB “sees a sustained adjustment in the path of inflation consistent with its inflation aim”. Even though the recovery appears to be gaining momentum, there is still a lot of slack in the euro-area economy (as well as significant heterogeneity between countries) and the inflation outlook is still well below the ECB’s target. In any case, however, exit strategies from unconventional monetary measures are likely to be implemented very gradually to preserve financial market stability. The normalisation of monetary policy will thus entail a long period characterised by large central banks’ balance sheets.

The Protection Role of the Committee on Petitions in the Context of the Implementation of the UN Convention on the Rights of Persons with Disabilities

15-11-2017

This briefing note provides an update on developments in the implementation of the UNCRPD in the EU since the study "The Protection Role of the Committee on Petitions in the Context of the Implementation of the UN Convention on the Rights of Persons with Disabilities", requested by PETI in 2015 and updated in 2016. It reviews the recommendations of that study and identifies the key challenges regarding the European Parliament’s responsibilities in relation to the UN CRPD and other EU institutions ...

This briefing note provides an update on developments in the implementation of the UNCRPD in the EU since the study "The Protection Role of the Committee on Petitions in the Context of the Implementation of the UN Convention on the Rights of Persons with Disabilities", requested by PETI in 2015 and updated in 2016. It reviews the recommendations of that study and identifies the key challenges regarding the European Parliament’s responsibilities in relation to the UN CRPD and other EU institutions. There have been developments in legislation, increased visibility for disability issues in the open methods of co-ordination, and progress on disability data and indicators for rights monitoring. However, some long-standing blockages remain and few of the PETI study recommendations have been actioned.

External author

Mark Priestley, Professor of Disability Policy, University of Leeds

Design and sequencing of exit from non-standard monetary policy measures: What should the ECB “new normal” look like?

15-11-2017

This paper discusses 1) the design and sequencing of exiting from unconventional monetary policy measures, which the ECB has undertaken to achieve price stability and support the euro area economy and 2) the new normal—namely, how the future operational framework of the ECB should look and to what extent it will resemble the pre-crisis state of affairs. We argue that the exit from unconventional measures should be gradual and accompanied by transparent communication, and that the exit should precede ...

This paper discusses 1) the design and sequencing of exiting from unconventional monetary policy measures, which the ECB has undertaken to achieve price stability and support the euro area economy and 2) the new normal—namely, how the future operational framework of the ECB should look and to what extent it will resemble the pre-crisis state of affairs. We argue that the exit from unconventional measures should be gradual and accompanied by transparent communication, and that the exit should precede interest rate hikes. The new normal for the ECB is likely to be different from what we know from pre-crisis times (prior to 2008). It is likely to be characterised by the continuation of an extended balance sheet, more active communication measures towards the public, and a greater emphasis on financial stability issues.

External author

Roman Horvath (CASE)

TARGET imbalances at record levels: Should we worry?

15-11-2017

TARGET is the payments system for making settlements between euro area economies and five other EU economies. Cross-border transactions generate claims/surpluses and liabilities/deficits among national central banks which “net out” for the system as a whole. These imbalances are manageable in relative terms, but look large in absolute terms. None are larger than one third of their corresponding public debt ratios; and despite a big build up in the 2010-13 period, the imbalances now appear to be on ...

TARGET is the payments system for making settlements between euro area economies and five other EU economies. Cross-border transactions generate claims/surpluses and liabilities/deficits among national central banks which “net out” for the system as a whole. These imbalances are manageable in relative terms, but look large in absolute terms. None are larger than one third of their corresponding public debt ratios; and despite a big build up in the 2010-13 period, the imbalances now appear to be on a non-expanding cyclical path. The implications for the EU economies and their policymakers are less easy. The main drivers, beyond the need to fund persistent current account deficits or surpluses, are the use of different funding sources (some outside the euro area), internal and external portfolio re-balancing, loose monetary policy and exchange rate risks. TARGET imbalances support quantitative easing, but are not driven by it. The main threats are the divergence that interrupts further economic integration; and the increasing liabilities taken on by the ECB since 2015. That said, self-correcting mechanisms are weak which makes symmetric adjustments by both creditor and debtor countries essential (because of the adding up constraint); and the difficulty that the imbalances cannot always be eliminated simply by balancing current accounts around the system.

External author

Andrew HUGHES HALLETT

TARGET (im)balances at record level: Should we worry?

15-11-2017

LAccording to the ECB, the recent rise in TARGET 2 balances could be seen as the result of the decentralised implementation of the extended asset purchase programme (APP). The programme entails cross-border payments by the purchasing NCBs, with around 50% of involved counterparties resident outside the euro area, including the UK. These counterparties access the TARGET system via a limited number of financial centres, particularly Germany and, to a lesser extent, the Netherlands. According to the ...

LAccording to the ECB, the recent rise in TARGET 2 balances could be seen as the result of the decentralised implementation of the extended asset purchase programme (APP). The programme entails cross-border payments by the purchasing NCBs, with around 50% of involved counterparties resident outside the euro area, including the UK. These counterparties access the TARGET system via a limited number of financial centres, particularly Germany and, to a lesser extent, the Netherlands. According to the ECB, the increase in TARGET balances stemming from the concentration of cross border flows due to APP transactions would reflect technical features of the euro-area financial structure rather than evidence of financial stress. However, these imbalances recently may be well indicative of a persistent fragmentation within the euro area’s financial markets as well as uneven liquidity allocation; the risks of which may be understated. Against this background, the paper discusses what the underlying factors behind the recent rise of TARGET2 (im)balances are, and the risks associated to rising Target (im)balances for the ECB’s monetary policy.

External author

Paul DE GRAUWE, Yuemei JI, Corrado MACCHIARELLI

Should we be concerned about TARGET balances?

15-11-2017

This document was provided to Policy Department A at the request of the Economic and Monetary Affairs Committee. The paper describes how the Eurosystem’s processing of cross-border banking transactions via its TARGET2 payments system produces a set of assets and liability items on the balance sheets of national central banks. The factors determining the evolution of TARGET-related balances are discussed and the risks associated with these balances are addressed.

This document was provided to Policy Department A at the request of the Economic and Monetary Affairs Committee. The paper describes how the Eurosystem’s processing of cross-border banking transactions via its TARGET2 payments system produces a set of assets and liability items on the balance sheets of national central banks. The factors determining the evolution of TARGET-related balances are discussed and the risks associated with these balances are addressed.

External author

Karl WHELAN, University College Dublin

TARGET imbalances at record levels: Should we worry?

15-11-2017

The imbalances within the Eurosystem’s Target 2 payment system are an indication that financial markets are not fully integrated. However, the increase in these imbalances in the wake of the large asset purchases (often called QE, for quantitative easing) that started in early 2015, should not be a particular cause for concern. The imbalances had declined until the start of QE, accompanied by a reduction in risk premia. QE was associated with a further reduction in financial stress. There is thus ...

The imbalances within the Eurosystem’s Target 2 payment system are an indication that financial markets are not fully integrated. However, the increase in these imbalances in the wake of the large asset purchases (often called QE, for quantitative easing) that started in early 2015, should not be a particular cause for concern. The imbalances had declined until the start of QE, accompanied by a reduction in risk premia. QE was associated with a further reduction in financial stress. There is thus little reason to believe that the increase since 2015 reflects renewed fears about a euro break-up. The ‘technical’ nature of the increasing imbalances in the wake of QE is illustrated by the fact that the European Central Bank (the central institution of the Eurosystem) has also run up a negative Target balance of over €200 billion. No one would argue that this is motivated by a fear of a break-up of the euro area. There are reasons to believe that the recent run-up in the negative balances of Italy and Spain is due to similarly technical reasons.

External author

Daniel GROS, CEPS

Simulating the macroeconomic effects of ECB tapering

15-11-2017

Although macroeconomic effects of asset purchases are intensively discussed, the literature addressing “tapering” is rather thin. Using a broad definition of tapering the study considers three tapering scenarios within a Dynamic Stochastic Equilibrium Model: A reduction of net purchases in the expansionary stage, the announcements of an earlier exit, and a faster than expected exit. In all three cases the effects on long-term yields are positive and negative on output growth and inflation. Quantitatively ...

Although macroeconomic effects of asset purchases are intensively discussed, the literature addressing “tapering” is rather thin. Using a broad definition of tapering the study considers three tapering scenarios within a Dynamic Stochastic Equilibrium Model: A reduction of net purchases in the expansionary stage, the announcements of an earlier exit, and a faster than expected exit. In all three cases the effects on long-term yields are positive and negative on output growth and inflation. Quantitatively, the effects are rather modest, however.

External author

Marius CLEMENS, Stefan GEBAUER, Malte RIETH (DIW Berlin)

Upcoming events

27-11-2017
Public Hearing on Cybersecurity Act
Hearing -
ITRE
28-11-2017
Agreements and cooperation with third countries on migration management and return
Hearing -
LIBE
28-11-2017
The case of NLB financial group Slovenia and Azerbaijan Laundromat revelations
Hearing -
PANA

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