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First Recovery and Resilience Dialogue with the European Commission

07-05-2021 PE 659.651 ECON
In-Depth Analysis
Summary : Vice-President Dombrovskis and Commissioner Gentiloni have been invited to the first Recovery and Resilience Dialogue under the Recovery and Resilience Facility Regulation. This briefing addresses the following subjects: the Recovery and Resilience Facility and its scrutiny; the framework for defining and assessing Recovery and Resilience Plans and the procedures and timelines for their adoption; the financing of the Facility; data on the current economic situation and some estimates on the impact of Facility. Five annexes present, respectively, a timeline of the Facility; the state of play with national plans; economic data; the European Semester roadmap and survey data on involvement of national parliaments in the Facility.
Authors : Alice ZOPPÉ, Jost ANGERER, OVIDIU IONUT TURCU, WOLFGANG LEHOFER, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, GIULIA GOTTI, KATJA KOMAZEC

Country-Specific Recommendations for 2019 and 2020 - A tabular comparison and an overview of implementation

06-05-2021 PE 651.389 ECON
Study
Summary : This document presents: • The 2019 Country-Specific Recommendations proposed by the European Commission on 5 June 2019 and adopted by the Council on 9 July 2019 and • The European Commission’s assessments of the implementation of the 2018 Country-Specific Recommendations based on its Country Reports published on 27 February 2019. • The 2018 Country-Specific Recommendations proposed by the European Commission on 23 May 2018 and adopted by the Council on 13 July 2018
Authors : Jost ANGERER, KRISTINA GRIGAITE, GIULIA GOTTI, KATJA KOMAZEC

Update on recent banking developments - Calendar week 17

30-04-2021 PE 659.642 ECON
Briefing
Summary : This briefing gives an update on and summarises recent events and developments in the Banking Union, based on publicly available information. The following topics are specifically addressed: recent ECB banking supervision publications (the Targeted Review of Internal Models Project Report, the ECB annual report on supervisory activities and the most recent supervisory statistics); the recent SRB guidance on bail-in for international debt securities; risks and vulnerabilities in the financial sector (ESRB Risk Dashboard; Joint Committee Report on Risks and Vulnerabilities); macroprudential concerns in the non-banking sector; recent ESMA publications (consultation on money market funds; peer review on CCPs supervision); and two reports on climate related risks published by the Basel Committee on Banking Supervision.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, GIULIA GOTTI, KATJA KOMAZEC

The role (and accountability) of the President of the Eurogroup

28-04-2021 PE 602.116 ECON
Briefing
Summary : This note provides an overview of the role of the President of the Eurogroup, the procedures for his/her appointment, as well as proposals on a “full time position” as part of the wider debate on deepening the Economic and Monetary Union. The note also briefly addresses the mandate and working methods of the Eurogroup. In addition, this note refers to the debate around the transparency of Eurogroup proceedings. It is updated regularly.
Authors : Kajus HAGELSTAM, WOLFGANG LEHOFER, CRISTINA SOFIA PACHECO DIAS

The Euro Area Fiscal Stance

21-04-2021 PE 587.374 ECON
Briefing
Summary : The concept of “Euro area fiscal stance” is used by European and international institutions, as well as academics, to measure the discretionary fiscal effort at the level of euro area as a whole. From 2012 to 2018, the Commission has referred to the euro area fiscal stance in its “Opinions on Draft Budgetary Plans” and has expressed its position on the appropriate fiscal stance in its proposals for the Council recommendation on the economic policies of the euro area. The concept became more prominent with the publication of the Commission Communication on “Towards a Positive Fiscal Stance” of November 2016. Since 2019, however, the Commission has not explicitly proposed an appropriate euro area fiscal stance for the upcoming year. The euro area fiscal stance is also the subject of a report and of a recommendation by the European Fiscal Board. This note (which is regularly updated) provides an overview of the concept and of the latest developments.
Authors : Alice ZOPPÉ, GIULIA GOTTI

EU economic developments and projections

14-04-2021 PE 645.716 ECON
Briefing
Summary : This briefing provides a summary of the recent economic developments in the EU Member States and gives an overview of relevant economic projections forecasted by major international and EU institutions
Authors : Javier María VEGA BORDELL, KRISTINA GRIGAITE, GIULIA GOTTI, KATJA KOMAZEC

Single Resolution Board: Accountability arrangements (9th parliamentary term)

14-04-2021 PE 659.621 ECON
Briefing
Summary : This document provides an overview of public hearings and exchange of views with the Chair of the Single Resolution Board (SRB) in the ECON Committee since July 2019. It also provides an overview of all external papers requested by the ECON Committee by a standing panel of banking experts. Lastly, the annex contains an overview of the respective legal bases for these hearings as part of the accountability framework of the SRB. For an overview of public hearings during the 8th parliamentary term, please see here.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL

Single Supervisory Mechanism: Accountability arrangements (9th parliamentary term)

14-04-2021 PE 659.623 ECON
Briefing
Summary : This document provides an overview of public hearings and exchange of views with the Chair of the European Central Bank (ECB) Supervisory Board in the ECON Committee since July 2019. It also provides an overview of all external papers requested by the ECON Committee by a standing panel of banking experts. Lastly, the annex contains an overview of the respective legal bases for these hearings as part of the accountability framework of the Single Supervisory Mechanism (SSM). For an overview of public hearings during the 8th parliamentary term, please see here.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL

The SURE: Implementation

13-04-2021 PE 659.638 ECON
Briefing
Summary : Council Regulation 2020/672 established SURE, the European instrument for temporary support to mitigate unemployment risks in an emergency, which has been in force since 20 May 2020. This note provides an overview in tabular format of the SURE implementing decisions as adopted by Council, of Commission issuances under SURE and of disbursements. It will be regularly updated.
Authors : CRISTINA SOFIA PACHECO DIAS, GIULIA GOTTI, KATJA KOMAZEC

First appraisal of the EU-UK Trade and Cooperation Agreement by Policy Department A

Study
Summary : “Agreements concluded by the Union are binding upon the institutions of the Union and on its Member States.” (Article 216(2) TFEU). According to the Case-law of the Court of Justice of the European Union (CJEU), International law takes precedence over (secondary) EU law: “It should also be pointed out that, by virtue of Article 216(2) TFEU, where international agreements are concluded by the European Union they are binding upon its institutions and, consequently, they prevail over acts of the European Union (see, to this effect, Case C‑61/94 Commission v Germany [1996] ECR I‑3989, paragraph 52; Case C‑311/04 Algemene Scheeps Agentuur Dordrecht [2006] ECR I‑609, paragraph 25; Case C‑308/06 Intertanko and Others [2008] ECR I‑4057, paragraph 42; and Joined Cases C‑402/05 P and C‑415/05 P Kadi and Al Barakaat International Foundation v Council and Commission [2008] ECR I‑6351, paragraph 307)” . Arguably, acts adopted by bodies established by the EU-UK TCA could also enjoy primacy: “7 It follows [...] that decisions of the EEC-Turkey Association Council are measures adopted by a body provided for by the Agreement and empowered by the Contracting Parties to adopt such measures. 18 In so far as they implement the objectives set by the Agreement, such decisions are directly connected with the Agreement and, as a result of the second sentence of Article 22(1) thereof, have the effect of binding the Contracting Parties. 19 By virtue of the Agreement, the Contracting Parties agreed to be bound by such decisions and if those parties were to withdraw from that commitment, that would constitute a breach of the Agreement itself.
Authors : Andreas Huber at Al.

Implementation of the Stability and Growth Pact under pandemic times

22-03-2021 PE 659.618 ECON
Briefing
Summary : This document provides an overview of key developments under the preventive and corrective arms of the Stability and Growth Pact on the basis of the latest Council decisions and recommendations in the framework of the Stability and Growth Pact and the latest European Commission economic forecast. This document is regularly updated.
Authors : Jost ANGERER

Thematic digest: Non-performing loans and asset management companies

19-03-2021 PE 659.631 ECON
Briefing
Summary : This document presents summaries of seven external papers commissioned by the European Parliament in November 2020 upon request of the Economic and Monetary Committee (ECON). Papers were delivered, analysed and published in March 2021. ECON has requested its Banking Expert Panel to address the topic of “Non-performing Loans – New Risks and Policies”.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, GIULIA GOTTI, KATJA KOMAZEC

Public hearing with Elke König, Chair of the Single Resolution Board

19-03-2021 PE 659.640 ECON
Briefing
Summary : This note is prepared in view of an ordinary public hearing with the Chair of the Single Resolution Board (SRB), Elke König, which will take place on 23 March 2021. This briefing addresses the review of the crisis management framework; contributions to the SRF; resolvability assessments, following a European Court of Auditors report; the relationship with the United Kingdom; the EBA’s benchmarking of national insolvency regimes; and SRB publications, including the MREL dashboard for Q3, 2020, a Communication on the permission regime for the reduction of eligible liabilities, and access to financial market infrastructures in resolution.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Public hearing with Andrea Enria, Chair of the ECB Supervisory Board

19-03-2021 PE 659.637 ECON
In-Depth Analysis
Summary : This note is prepared in view of a regular public hearing with the Chair of the Supervisory Board of the European Central Bank (ECB), Andrea Enria, which will take place on 23 March 2021. During the hearing, Chair Enria will present the Annual Report on supervisory activities 2020, which will be published the same day. This paper addresses (i) the implications of supervisory measures in response to COVID-19; (ii) supervisory work for 2021 (supervisory priorities, stress test, fit and proper assessments, recovery planning); (iii) medium and longer term structural risks (Basel III, anti-money laundering, climate risk, and completing the Banking Union); (iv) recent ECB publications; and (v) recent developments in the banking sector relating to the Greensill case.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, GIULIA GOTTI, KATJA KOMAZEC

Update on Wirecard case: public hearing

18-03-2021 PE 659.639 ECON
Briefing
Summary : This paper updates and summarises earlier briefings on the Wirecard case, ahead of a public hearing on 23 March organised by the JURI and ECON Committees of the European Parliament. It also describes the most recent developments on the basis of information available in the public domain.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, GIULIA GOTTI, KATJA KOMAZEC

Thematic digest: When and how to unwind COVID-support measures to the banking system

18-03-2021 PE 659.641 ECON
Briefing
Summary : This document presents the summaries of four external papers commissioned by EGOV in November 2020 upon request of the Economic and Monetary Committee (ECON). Papers were delivered, analysed and published in March 2021. ECON has requested its Banking Panel to address the question of when and how to unwind COVID-support measures to the banking system.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, GIULIA GOTTI, KATJA KOMAZEC

When and how to unwind COVID-support measures to the banking system? The quest for safe landing place

17-03-2021 PE 659.650 ECON
In-Depth Analysis
Summary : Bank loans increased considerably in 2020, due to an unprecedented wave of extraordinary measures aimed at supporting bank borrowers. Where constraints posed by public-sector deficits were tighter, the response was more focused on contingent/fiscally-neutral measures (e.g. public guarantees and moratoria), which might lead to greater unbalances in the future. Post-Covid recovery can be expected to be selective in nature, both across industries and within. Accordingly, emergency measures cannot simply be dismantled, but rather must be replaced by interventions aimed at smoothing the transition towards a different economic environment.
Authors : A. Resti

Non-performing Loans - New risks and policies? NPL resolution after COVID-19

15-03-2021 PE 651.387 ECON
Study
Summary : This paper discusses policy implications of a potential surge in NPLs due to COVID-19. The study provides an empirical assessment of potential scenarios and draws lessons from previous crises for effective NPL treatment. The paper highlights the importance of early and realistic assessment of loan losses to avoid adverse incentives for banks. Secondary loan markets would help in this process and further facilitate bank resolution as laid down in the BRRD, which should be uphold even in extreme scenarios.
Authors : J. Kasinger, J.P. Krahnen, S. Ongena, L. Pelizzon, M. Schmeling, M. Wahrenburg

Non-performing Loans - New risks and policies? NPL resolution after COVID-19

15-03-2021 PE 651.388 ECON
Study
Summary : The COVID-19 crisis is a significant and exogenous shock to the EU corporate sector, with implications for the operations and funding of many businesses. We compare key indicators for the global financial crisis (GFC) and the current situation, and assess implications for the policy response. We find that while many policy actions taken in response to the GFC remain valid, the nature of COVID-19 suggests a more tailored response is appropriate, with support focused on sectors most directly affected and corporates whose continuation value exceeds their liquidation value.
Authors : J. Haynes, P.Hope, H. Talbot

Non-performing Loans - New risks and policies? NPL resolution after COVID-19

12-03-2021 PE 659.648 ECON
In-Depth Analysis
Summary : This paper reviews the main differences between the prospects for NPL build-up and resolution between the current pandemic and the financial crisis of 2008-2009. To facilitate NPL reduction following the pandemic, the ECB should actively counter the revealed tendency of banks with low profitability to implement relatively low loan loss provisions.
Authors : A. C. Bertay, H. Huizinga

When and how to unwind COVID-support measures to the banking system?

12-03-2021 PE 659.649 ECON
In-Depth Analysis
Summary : This in-depth analysis proposes ways to retract from supervisory COVID-19 support measures without perils for financial stability. It simulates the likely impact of the corona crisis on euro area banks’ capital and predicts a significant capital shortfall. We recommend to end accounting practices that conceal loan losses and sustain capital relief measures. Our in-depth analysis also proposes how to address the impending capital shortfall in resolution/liquidation and a supranational recapitalisation.
Authors : T. Tröger, R. Haselmann

Thinking Beyond the Pandemic: Monetary Policy Challenges in the Medium- to Long-Term

12-03-2021 PE 658.221 ECON
Study
Summary : The economic characteristics of the COVID-19 crisis differ from those of previous crises. It is a combination of demand- and supply-side constraints which led to the formation of a monetary overhang that will be unfrozen once the pandemic ends. Monetary policy must take this effect into consideration, along with other pro-inflationary factors, in the post-pandemic era. It must also think in advance about how to avoid a policy trap coming from fiscal dominance. This paper was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 18 March 2021.
Authors : Marek DABROWSKI

EU/EA measures to mitigate the economic, financial and social effects of coronavirus State of play 8 March 2021

09-03-2021 PE 645.723 ECON
In-Depth Analysis
Summary : 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 since its outbreak to early March 2021.
Authors : Kajus HAGELSTAM, Jost ANGERER, Marcel MAGNUS, Drazen RAKIC, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

When and how to unwind COVID-support measures to the banking system?

09-03-2021 PE 659.646 ECON
In-Depth Analysis
Summary : Designing exit strategy requires judgment, coordination among different institutions, and graduality. Restoring banks’ balance sheet transparency is a first-order objective. To this end, borrower relief measures should be phased out ahead of the other measures. Relaxation of loan classification and provisioning policies can be lifted in a second stage. The last one to be unwounded would be capital relief initiatives. To provide banks time and space of manoeuvre, exit strategies needs to be communicated in a clear and timely manner.
Authors : T. Beck, B. Bruno, E. Carletti

Non-performing loans - new risks and policies? What factors drive the performance of national asset management companies?

09-03-2021 PE 651.386 ECON
Study
Summary : In the past decade, asset management companies (AMCs) have been an effective tool for relieving banks of large portfolios of non-performing loans (NPLs). Managed over time, AMCs can reduce the financial burden on the overall system. This paper is based on the existing literature and EU experiences of national AMCs created in the aftermath of the global financial crisis. It discusses the advantages and disadvantages of using AMCs, and considers the key elements in their design.
Authors : E. Avgouleas, R. Ayadi, M. Bodellini, B. Casu, W. P. De Groen, G. Ferri

Non-performing Loans - New risks and policies? - What factors drive the performance of national asset management companies?

08-03-2021 PE 659.647 ECON
In-Depth Analysis
Summary : This paper develops, on the basis of a cost-benefit analysis, on the conditions that must be met for an Asset Management Company (AMC), established under the centralised approach in EU Member States, to efficiently facilitate the management and recovery of non-performing loans (NPLs). It concludes that public AMCs, even if optimally designed, should not be viewed as a ‘panacea’ but as one of several measures that can be taken to address the NPL problem and prevent bank failures.
Authors : C. V. Gortsos

Non-performing Loans – Different this Time? NPL resolution after COVID-19

05-03-2021 PE 659.645 ECON
In-Depth Analysis
Summary : Model estimates of NPLs of a large sample of banks in the euro area suggest that macro-economic factors drive NPLs. This implies that the NPL-ratio may not increase in a similar fashion as after the global financial crisis. However, the low fit of the model shows that idiosyncratic factors play a major role in explaining NPLs. This is illustrated in a case study for the Netherlands which suggests that deferred tax payments may lead to increasing NPLs. This paper was prepared by the Economic Governance Support Unit (EGOV) at the request of the Committee on Economic and Monetary Affairs (ECON).
Authors : Jakob DE HAAN

Economic Dialogue with the other EU Institutions under the European Semester Cycles during the 9th legislative term State of play - March 2021

04-03-2021 PE 624.436 ECON
Briefing
Summary : This document provides an overview of Economic Dialogues with the other institutions of the European Union that has taken place in the competent Committee(s) of the European Parliament since September 2019 under the European Semester Cycles. It also includes an overview of the respective legal bases for these dialogues. For an overview Economic Dialogues between January 2014 and January 2019, please see separate document. For an overview of Economic Dialogues with EU Member States, please see separate document.
Authors : Kajus HAGELSTAM

When and how to unwind COVID-support measures to the banking system?

04-03-2021 PE 659.636 ECON
In-Depth Analysis
Summary : This paper examines regulatory measures and supervisory practices that have supported public guarantee schemes and moratoria in euro-area countries. The focus is on flexibility shown with regard to default classifications, accounting practices and the treatment of non-performing loans. The paper identifies a number of undesirable effects and examines how soon such policies can be normalised. This document was provided by the Economic Governance Support Unit at the request of the ECON Committee.
Authors : A. Lehmann, Bruegel

Non-performing Loans - New risks and policies? - What factors drive the performance of national asset

04-03-2021 PE 645.734 ECON
Study
Summary : In this study we examine the experience of Member States with Asset Management Companies (AMCs) to understand their opportunities and risks, and deeper determinants of performance, and draw some lessons for exploring potential solutions at an EU level. This document was provided/prepared by Economic Governance Support Unit at the request of the ECON Committee.
Authors : D. Ramos, M. Lamandini

Path to Recovery: Dangers of Cliff Effects

04-03-2021 PE 662.898 ECON
Study
Summary : From the onset of the COVID-19 pandemic, fiscal, monetary and prudential authorities were quick to provide an unprecedented level of support to the real economy and the financial system. Most adopted measures are temporary and due to be phased out once economic and financial conditions start improving. However, an untimely and divergent phase-out would introduce potentially destabilising cliff effects that could lead to increased fragility among euro area governments, firms and households. Four papers were prepared by the ECON Committee’s Monetary Expert Panel, discussing the possible cliff effects and ways to mitigate them, while weighing the benefits and costs of protracted policy support. This publication is prepared by Policy Department A for the Committee on Economic and Monetary Affairs (ECON), ahead of the Monetary Dialogue with ECB President Lagarde on 18 March 2021.
Authors : Charles WYPLOSZ, Daniel GROS, Farzaneh SHAMSFAKHR, Klaus-Jürgen GERN, Jan Phillip FRITSCHE, Anna GIBERT, Chi Hyun KIM

Recalibrated Monetary Policy Instruments to Address the Economic Fallout from COVID-19

04-03-2021 PE 662.899 ECON
Study
Summary : In response to the COVID-19 pandemic and the severe recession it has produced, the ECB Governing Council has adopted, since March 2020, an extraordinary set of monetary policy measures aimed at preserving favourable financing conditions and safeguarding price stability in the face of high uncertainty. The monetary policy instruments were recalibrated in the course of 2020, lastly in December 2020. Four papers were prepared by the ECON Committee’s Monetary Expert Panel, discussing the effectiveness and side effects of the monetary policy instruments employed as well as interactions between them. This publication is prepared by Policy Department A for the Committee on Economic and Monetary Affairs (ECON), ahead of the Monetary Dialogue with ECB President Lagarde on 18 March 2021.
Authors : Luigi BONATTI, Andrea FRACASSO, Roberto TAMBORINI, Marek DABROWSKI, Christophe BLOT, Caroline BOZOU, Jérôme CREEL, Pierpaolo BENIGNO, Paolo CANOFARI, Giovanni DI BARTOLOMEO, Marcello MESSORI

European Parliament involvement in scrutinising the Recovery and Resilience Facility

02-03-2021 PE 659.627 ECON
Briefing
Summary : This note provides a brief overview of Parliament involvement in scrutinising the Recovery and Resilience Facility (and the European Union Recovery Instrument). It is based on Regulation 2021/241 of 21 February, setting out the Recovery and Resilience Facility, and the relevant parts of the new Interinstitutional Agreement on budgetary matters established between the Parliament, the Council and the Commission. It does not cover nor discusses in detail other instruments or frameworks for scrutiny, namely those relating to the European Semester, EU budgetary procedures, written or oral questions or any discharge procedures.
Authors : CRISTINA SOFIA PACHECO DIAS, ISABEL LARA MIRANDA

The Challenging Cliff-Edge

01-03-2021 PE 658.220 ECON
In-Depth Analysis
Summary : From an economic policy viewpoint, the harder part will come once the pandemic is over. The crisis will leave many scars that are likely to significantly slow growth down. Countering these effects will require continuous and well-targeted fiscal policy support. Monetary policy, which provided adequate support during the crisis, will have to eventually normalise its interest rates. The ECB could play a crucial role in reducing the large debts that fragilize several member countries. This paper was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 18 March 2021.
Authors : Charles WYPLOSZ

Unconventional Policy Instruments and Transmission Channels: A State-Contingent Toolbox for the ECB

01-03-2021 PE 658.222 ECON
In-Depth Analysis
Summary : We present a general framework apt to explain why central banks care about the co-existence of different transmission channels of monetary policy, and hence they endow themselves with different policy instruments. Within this framework, we then review and examine the key instruments adopted by the ECB to tackle the post-pandemic challenges, with a view to their consistency and efficacy. Finally, we make a few considerations about the future perspectives of monetary policy. This paper was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 18 March 2021.
Authors : Luigi BONATTI, Andrea FRACASSO, Roberto TAMBORINI

From the Cliff to the Top: The Path to a Resilient and Sustainable Europe

01-03-2021 PE 658.223 ECON
In-Depth Analysis
Summary : The European Union has put in place an extraordinary array of policy measures to mitigate the devastating economic consequences of the COVID-19 pandemic. The sheer amount and extent of the support economic lifelines makes a rushed termination of policies potentially subject to dire cliff effects. Avoiding these cliff effects requires a combination of decisive and long-lasting fiscal stimuli with an accommodating monetary stance, as well as a renewed European strategy that presents a unified fiscal policy, growth-enhancing investments, and a green modernisation of the economy. This paper was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 18 March 2021.
Authors : Jan Phillip FRITSCHE, Anna GIBERT, Chi Hyun KIM

Adjusting Support in a K-Shaped Recovery

01-03-2021 PE 658.224 ECON
In-Depth Analysis
Summary : As recovery from the pandemic continues, fiscal and monetary support can be reduced, at least for industry. Cliff effects are unlikely to arise under a gradual reduction of support. With financial markets in a “risk on” phase, monetary policy support becomes less relevant. The withdrawal of the various pandemic measures should not pose a risk to the recovery or to financial stability. This paper was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON), ahead of the Monetary Dialogue with the ECB President on 18 March 2021.
Authors : Daniel GROS, Farzaneh SHAMSFAKHR

The ECB’s Measures in Support of the COVID-19 Crisis

01-03-2021 PE 658.225 ECON
In-Depth Analysis
Summary : This paper illustrates and discusses the monetary policies activated in response to the COVID-19 crisis. We argue that these policy measures have stabilised the European economic and financial system by incentivising banks’ lending to households and businesses and by indirectly creating short-term fiscal capacity also for those Member States of the euro area that have a very high government debt/GDP ratio. This paper was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 18 March 2021.
Authors : Pierpaolo BENIGNO, Paolo CANOFARI, Giovanni DI BARTOLOMEO, Marcello MESSORI

Monetary Policy During the Pandemic: Fit for Purpose?

01-03-2021 PE 658.226 ECON
In-Depth Analysis
Summary : This contribution reviews the ECB measures since the start of the COVID-19 crisis, i.e. the extension of APP and the introduction of PEPP. We show that APP announcements have helped steer inflation expectations upward. We also show that PEPP has alleviated fragmentation risk. Finally, we show that since the mid-2000s, ECB measures have had real effects on euro area unemployment rates, nominal effects on inflation rates and financial effects on banking stability. This paper was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 18 March 2021.
Authors : Christophe BLOT, Caroline BOZOU, Jérôme CREEL

Economic Dialogue with the European Commission on EU Fiscal Surveillance

01-03-2021 PE 659.635 ECON
In-Depth Analysis
Summary : Vice-President Dombrovskis and Commissioner Gentiloni have been invited to an Economic Dialogue on the fiscal part of the European Semester autumn package adopted by the Commission in November 2020. The fiscal elements of the package include the Commission Opinions on euro area 2021 Draft Budgetary Plans, the fiscal policy recommendation for the euro area and some elements of the 2021 Alert Mechanism Report. In March 2020, the general escape clause of the Stability and Growth Pact was activated and the Commission and the Council are expected to reassess its duration soon. The Commission has announced that it will publish on 3 March guidance for the related discussions (“One year since the outbreak of COVID-19: fiscal policy response”).
Authors : Alice ZOPPÉ, Jost ANGERER, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Balanced Withdrawal of Policy Support to Avoid Cliff Effects

01-03-2021 PE 662.897 ECON
In-Depth Analysis
Summary : The COVID-19 crisis has triggered unprecedented concerted economic policy response. The paper investigates potential cliff effects that may arise from the temporary nature of the measures adopted and their different phase-out schedules. It finds that the concern that premature policy tightening could jeopardise the recovery are overblown. The major challenges for economic policy lie in the medium term. This paper was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 18 March 2021.
Authors : Klaus-Jürgen GERN

The SURE: Main Features

26-02-2021 PE 645.721 ECON
In-Depth Analysis
Summary : This document presents the main features of the European instrument for temporary support to mitigate unemployment risks in an emergency (SURE) and compares such facility with other financial assistance instruments that were already available in the European Union. It also highlights the differences between the Commission proposals and the final version agreed in Council. This note updates a previous version.
Authors : Alice ZOPPÉ, CRISTINA SOFIA PACHECO DIAS

Background Reader on the European Semester - Winter Edition 2021

18-02-2021 PE 645.713 ECON
Study
Summary : This fifth edition of the background reader on the European Semester, prepared by the Economic Governance Support Unit (EGOV) in the Directorate for Economic and Scientific Policies of the European Parliament, provides an overview of publications related to the European Semester from a parliamentary perspective. It aims at further increasing the links between Members of the European Parliament and national Parliaments, notably during inter-parliamentary meetings.

Public finances in Euro Area Member States: Selected indicators - February 2021

17-02-2021 PE 624.406 ECON
Briefing
Summary : This document presents selected indicators on public finance for the Euro Area Member States and the Euro Area as a whole. For each indicator, it provides a short explanation and the data sources. The final section presents a short overview of the main indicators used by the European and other international institutions to assess debt sustainability.
Authors : Alice ZOPPÉ

Update on recent banking developments - Calendar week 6

13-02-2021 PE 659.629 ECON
Briefing
Summary : This briefing gives an update on and summarises recent events and developments in the Banking Union, based on publicly available information. The following topics are specifically addressed: (i) the results of the recent European Central Bank (ECB) Supervisory Review and Evaluation Process; (ii) Single Supervisory Mechanism (SSM) risk assessment and supervisory priorities; (iii) results of the latest Bank Lending Survey; (iv) 2021 stress testing exercise; (v) ECB final guidelines on consolidations; (vi) proportionality; and (vii) Brexit.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

The EU’s regulatory and supervisory response to addressing non-performing loans

12-02-2021 PE 659.634 ECON
In-Depth Analysis
Summary : Building on earlier EGOV papers, this briefing addresses the evolution of non-performing loans (NPLs) over time, the EU regulatory and supervisory approaches to manage NPLs and highlights areas where gaps may still be observed. Renewed interest in asset management companies as a possible instrument to deal with NPLs is discussed in an annex. Concerns around NPLs are growing, as the impact of COVID-19 crisis related responses on banks’ balance sheets begin to be further scrutinised. This briefing will be updated in light of relevant developments.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

The ECB’s Monetary Policy Response to the COVID-19 Crisis

09-02-2021 PE 648.787 ECON
Briefing
Summary : (Updated 9 February 2021) The coronavirus pandemic is taking a heavy toll on the euro area economy, necessitating a timely and resolute macroeconomic policy response. The ECB's Governing Council acted decisively by taking a series of measures that collectively provide a substantial monetary policy stimulus aimed at safeguarding the effective transmission of monetary policy and preventing a serious deterioration of financial conditions.
Authors : Drazen RAKIC

Implementation of the Macroeconomic Imbalance Procedure: State of play February 2021

08-02-2021 PE 497.739 ECON
In-Depth Analysis
Summary : This note presents the EU Member States' situation with respect to the Macroeconomic Imbalance Procedure, taking into account recent assessments and decisions by the European Commission and the Council. It also gives an overview of relevant comments on the MIP published by EU institutions. A separate EGOV note describes the MIP procedure. This document is regularly updated.
Authors : Alice ZOPPÉ

Thematic Digest: “When and how to deactivate the SGP general escape clause?”

03-02-2021 PE 659.625 ECON
Briefing
Summary : This note presents summaries of four papers on the conditions and timing for the future deactivation of the general escape clause of the Stability and Growth Pact, which is in force since March 2020. The papers, written by external experts, were requested by the ECON Committee of the European Parliament.
Authors : Alice ZOPPÉ, Jost ANGERER

2020 EGOV Annual Activity Report

03-02-2021 PE 659.628 ECON
In-Depth Analysis
Summary : This activity report covers the year 2020 and presents an overview of the expertise provided by the Unit in the area of economic governance and banking union in view of supporting the related scrutiny activities in the competent committee(s).
Authors : DONELLA BOLDI, KRISTINA GRIGAITE

Economic Dialogues and Exchanges of Views with the Member States under the European Semester Cycles - State-of-Play (January 2021)

28-01-2021 PE 497.736 ECON
Briefing
Summary : This table provides a regular update on Member States invited for an Economic Dialogue in the competent Committee of the European Parliament and an overview of the respective legal base.
Authors : Kajus HAGELSTAM

Banking Union: Postponed Basel III reforms

22-01-2021 PE 651.347 ECON
At a Glance
Summary : This briefing summarises the Basel Committee’s decision to postpone the implementation of the outstanding Basel III standards, their main content, and their estimated impact on banks’ capital needs.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Economic dialogue with the President of the Eurogroup

22-01-2021 PE 659.633 ECON
In-Depth Analysis
Summary : Paschal Donohoe has been invited to his first Economic Dialogue in the ECON Committee since his election as President of the Eurogroup in July 2020. The previous dialogue with Mário Centeno took place on 21 April 2020. The exchange of views with Members of the ECON Committee will cover the ongoing work of the Eurogroup, notably short term policy measures intended to combat the economic, financial and social consequences of COVID-19, medium term policies to support a sustainable recovery and increase resilience of the Euro Area and longer term objectives relating to the robustness of the EMU governance framework, including completing the Banking Union. This briefing covers the following issues: the Eurogroup work programme until June 2021 (Section 1); Economic situation and developments (Section 2); the Recovery and Resilience Facility and the 2021 European Semester Cycle (Section 3); EU/EA policy measures taken to mitigate the economic effects of the pandemic (Section 4); Financial assistance programmes and reform of European Stability Mechanism (Section 5) and Banking Union developments (Section 6). For an overview of the role of the President of the Eurogroup, please see Briefing: The role (and accountability) of the President of the Eurogroup.
Authors : Jost ANGERER, Marcel MAGNUS, WOLFGANG LEHOFER, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, ISABEL LARA MIRANDA

Economic Dialogue and Exchange of Views with the President of the Council (ECOFIN)

21-01-2021 PE 659.626 ECON
Briefing
Summary : João Leão, Minister of Finance of Portugal, is participating in the ECON Committee in his capacity of President of the ECOFIN Council during the Portuguese Presidency (January-June 2021). In accordance with the Treaty of the Union, “Member States shall regard their economic policies as a matter of common concern and shall coordinate them within the Council”. This briefing provides an overview of the Portuguese presidency priorities in ECON matters, including the Council’s work relating to the implementation of the European Semester for economic coordination, notably the application of the Recovery and Resilience Facility and deepening of the Economic and Monetary Union (EMU).
Authors : Alice ZOPPÉ, Jost ANGERER, WOLFGANG LEHOFER, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, ISABEL LARA MIRANDA

The proposed amendments to the Treaty establishing the European Stability Mechanism

18-01-2021 PE 634.357 ECON
In-Depth Analysis
Summary : This document presents the proposed amendments to the Treaty establishing the European Stability Mechanism (ESM). The note outlines the relevant changes and provides a comparison between the current ESM Treaty and the proposed amended one. This note will be updated in light of relevant developments and it complements two separate EGOV briefings: The European Stability Mechanism: Main Features, Instruments and Accountability and the ESM Pandemic Crisis Support.
Authors : Alice ZOPPÉ, CRISTINA SOFIA PACHECO DIAS

When and how to deactivate the SGP general escape clause?

15-01-2021 PE 651.375 ECON
In-Depth Analysis
Summary : The unprecedented level of economic uncertainty requires clarifying the European fiscal rules. To avoid repeating the mistakes of the last crisis, the deactivation of the General Escape Clause should be state-dependent, not time-dependent and should take place only when 1) a reform of the SGP has been agreed upon, 2) the EU has returned to its pre-crisis level in terms of GDP per capita or employment. The state-dependent strategy should also apply at the country level.
Authors : Philippe MARTIN, Xavier RAGOT

Macro-Financial Assistance to EU Member States -January 2021

14-01-2021 PE 651.367 ECON
In-Depth Analysis
Summary : This document provides regularly updated information on EU Member States which receive or received financial assistance from the ESM, the EFSF, the EFSM, the EU balance of payments assistance facility, other Member States and/or the IMF. Since August 2018 all financial assistance programmes to EU Member States have been concluded; therefore, the document focuses on the implementation of the enhanced surveillance framework for Greece and post-programme reviews for Ireland, Portugal, Romania, Cyprus and Spain undertaken by the European Commission (EC) in liaison with the ECB (Post-Programme Surveillance, PPS), the IMF (Post-Programme Monitoring, PPM, and Article IV assessments) and the ESM (Early Warning System, EWS).
Authors : Jost ANGERER, CRISTINA SOFIA PACHECO DIAS

Policy Departments’ Monthly Highlights - January 2021

At a Glance
Summary : The Monthly Highlights publication provides an overview, at a glance, of the on-going work of the policy departments, including a selection of the latest and forthcoming publications, and a list of future events.

Review of the bank crisis management and deposit insurance frameworks Banking Union Working Group

11-01-2021 PE 659.620 ECON
Briefing
Summary : This briefing summarises key elements of the intended initiative, based on the information that the Commission provided on 10 November 2020 in its related public consultation and additional public sources. The briefing also briefly focuses on other related issues, namely, misalignments between state-aid and resolution and some European Court of Justice decisions with impact on the crisis management framework, and a box focusing on rele-vant aspects of the Commission’s recently released NPL Action Plan (an Annex lists most recent EGOV briefings and external papers relevant for these matters). The briefing has been prepared in view of a discussion of the Banking Union Working Groupof the European Parliament on the Commission's revision of the bank crisis management framework.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Impact of state aid on competition and competitiveness during the COVID-19 pandemic: an early assessment

17-12-2020 PE 658.214 ECON
Study
Summary : This economic assessment of EU state aid principles and practises related to the COVID-19 pandemic confirms the clear focus on maintaining the level playing field in the EU single market. Future monitoring and policy fine-tuning, focusing on SMEs, and keeping all Member States involved are the main challenges. Moreover, current policies fail to incorporate a strong focus on broader, strategic policy goals like the green and digital transformation of the European economy or the enhancing of EU firms’ global competitiveness. This document was prepared by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Committee on Economic and Monetary Affairs (ECON).
Authors : Jan VAN HOVE

When and how to deactivate the SGP general escape clause?

15-12-2020 PE 651.381 ECON
In-Depth Analysis
Summary : This paper analyses the conditions under which to lift the SGP general escape clause (GEC). It is advisable that the timing for lifting the GEC be Member State-specific and contingent to the Member State’s return to its pre-Covid-19 output gap or real GDP level. Medium-Term Budgetary Objectives should be redesigned to take into account the debt-to-GDP level and the interest rate-growth differential. Maintaining government debt yields at low levels after the pandemic would make debt reduction less costly in terms of output.
Authors : Luisa LAMBERTINI

When and How to Deactivate the SGP General Escape Clause?

11-12-2020 PE 651.376 ECON
In-Depth Analysis
Summary : Based on a brief assessment of the current EU fiscal framework, the paper discusses when and how fiscal surveillance should be enacted again, and investigates possible options for reform. The general escape clause should be lifted as soon as epidemiological conditions allow for economic activity to normalise, probably by 2022. We propose a transitory arrangement if the discussion on a broader reform of the fiscal framework remains inconclusive while the general escape clause is in force.
Authors : Klaus-Jürgen GERN Stefan KOOTHS Ulrich STOLZENBURG

Update on recent banking developments

09-12-2020 PE 659.624 ECON
Briefing
Summary : This briefing gives an update on and summarises recent events and developments in the Banking Union, based on publicly available information. It gives an overview of: 1) the Eurogroup agreement on the backstop to the Single Resolution Fund; 2) the 7th monitoring report on risk reduction indicators; 3) recent European Central Bank publications, namely the Financial Stability Review and guidance on climate- related and environmental risks; 4) recent Single Resolution Board publications, specifically its 2021 Work Programme and guidance on bank mergers and acquisitions; and 5) the EBA’s benchmarking exercise of national insolvency regimes.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Study presentation proceedings: The Impact of Unfair Commercial Practices on Competition in the EU Passenger Transport Sector, in particular Air Transport

09-12-2020 PE 658.188 ECON
In-Depth Analysis
Summary : The study presented in the event aims at identifying and analysing the unfair commercial and trading practices in passenger air transport that not only are detrimental to consumers, but which can also distort competition in the Single Market. Moreover, the discussion during the event also covered competition and consumer protection aspects that arise in the context of the COVID-19 pandemic. These proceedings of the study presentation were prepared by the Policy Department for Economic, Scientific and Quality of Life Policies at the request the committee on Economic and Monetary Affairs (ECON).
Authors : RADOSTINA PARENTI, TIJMEN FERDINAND TUINSMA

The European Semester during the Pandemic

03-12-2020 PE 659.622 ECON
Briefing
Summary : Due to the pandemic, the European Semester for economic policy coordination will look rather different (in both form and substance) to what it was in previous cycles. This document provides an overview on how the various policy instruments comprised in the European Semester have been or are being implemented as part of the EU Recovery Plan, notably the interactions with the proposed Recovery and Resilience Facility.
Authors : Kajus HAGELSTAM, CRISTINA SOFIA PACHECO DIAS

Economic Dialogue with the European Commission on the 2021 European Semester Cycle

03-12-2020 PE 651.380 ECON
In-Depth Analysis
Summary : Vice-President Dombrovskis and Commissioners Schmit and Gentiloni have been invited to an Economic Dialogue to discuss the 2021 European Semester Cycle, in line with the relevant EU law. This briefing note covers the main elements of the 2021 European Semester Package proposed by the Commission. It gives an overview of the implementation of the previous Semester Cycles and of the on-going work to strengthen the governance and the resilience of Economic and Monetary Union.
Authors : Javier María VEGA BORDELL, Kajus HAGELSTAM, Alice ZOPPÉ, Jost ANGERER, OVIDIU IONUT TURCU, WOLFGANG LEHOFER, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, ISABEL LARA MIRANDA, MATTIA MARCHIONNI

Banking Union: ESMA report on Wirecard

01-12-2020 PE 659.619 ECON
Briefing
Summary : This briefing provides a summary of ESMA’s Fast-Track Peer-Review (FTPR), published on 3 November 2020. ESMA carried out an assessment of the effectiveness of the supervisory response in the financial reporting area by BaFin and FREP in the context of Wirecard AG fraud case.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

When and how to deactivate the SGP general escape clause?

25-11-2020 PE 651.378 ECON
In-Depth Analysis
Summary : This paper provides a framework for considering when and how to deactivate the general escape clause of the Stability and Growth Pact (SGP). That framework takes into account the goals of the SGP, the desire to avoid pro-cyclical policy influences that might stifle Europe’s economic recovery, and the necessity not to endanger fiscal sustainability in the medium term. The framework also considers the variation in performance across countries and the indicators that might be used to map transitional arrangements.
Authors : Erik JONES

Thematic Digest: “The role for the European Semester in the recovery plan”

24-11-2020 PE 659.615 ECON
Briefing
Summary : At the request of the ECON Committee, four papers were commissioned to external experts on the linkages between the Recovery and Resilience Facility (RRF) and the European Semester (ES), as well as on the role of the European Parliament in the the RRF. In particular, experts were asked to assess whether and how the ES constitutes a suitable governance framework for the recovery measures, notably on: •the identification of the EU priority areas; •the analysis, the adoptions and the monitoring of the national recovery plans; and •the performance of the European Parliament (EP) scrutiny and accountability role.
Authors : Alice ZOPPÉ, CRISTINA SOFIA PACHECO DIAS

The Financial Stability Board (FSB). An overview of the work for 2020

20-11-2020 PE 651.346 ECON
Briefing
Summary : The briefing provides an overview of the latest work by the Financial Stability Board (FSB). It first addresses the FSB as an institution, its mandate, members and governance arrangements, and second, outlines its current work. This paper builds and updates an earlier version.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, ISABEL LARA MIRANDA

Guidance by the FSB, BCBS and IAIS on COVID related measures

20-11-2020 PE 659.617 ECON
Briefing
Summary : This briefing gives an overview of measures proposed by the Financial Stability Board, the Basel Committee on Banking Supervision and the International Association of Insurance Supervisors to address the COVID-19 pandemic related financial consequences.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, ISABEL LARA MIRANDA

Key Macroeconomic Indicators in the Euro Area and the United States

18-11-2020 PE 542.675 ECON
At a Glance
Summary : Latest forcest by EC, IMF and OECD.
Authors : Javier María VEGA BORDELL, KRISTINA GRIGAITE, MATTIA MARCHIONNI

Uncertainty and Monetary Policy in the Euro Area

18-11-2020 PE 658.196 ECON
In-Depth Analysis
Summary : The outbreak of the COVID-19 crisis has triggered a new wave of uncertainty, which may amplify the negative effect of the crisis. Based on several uncertainty measures, we show that inflation in the euro area is negatively affected by higher uncertainty. However, uncertainty does not impair the transmission of monetary policy. Consequently, the ECB should consider uncertainty in its reaction function in order to fulfil its mandate. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 19 November 2020.
Authors : Christophe BLOT, Paul HUBERT, Fabien LABONDANCE

The Euro Area After COVID-19

18-11-2020 PE 658.197 ECON
In-Depth Analysis
Summary : The COVID-19 pandemic will leave the euro area economy quite weak. It will be essential that both fiscal and monetary policies remain mobilised to achieve a sustainable recovery. Having indirectly financed a large share of new public debts, the ECB will have to tread a fine line between its price stability mandate and the need to avoid disrupting debt markets. The solution for the ECB is to use its announced strategy review to provide more clarity, both to its objectives and to its procedures. This includes adopting average inflation targeting, a formal relationship with member governments and the issuance of its own debt instruments. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 19 November 2020.
Authors : Charles Wyplosz

Rethinking Monetary and Fiscal Policy in the Post-COVID Euro Area

18-11-2020 PE 658.198 ECON
In-Depth Analysis
Summary : In the post-COVID environment, the ECB might face many and related trade-offs associated with the risk of being dominated by policy concerns other than price stability. Most of these risks could be reduced by a revision of the euro area governance framework, the creation of a new mechanism to provide financial assistance, and the implementation of a one-off intervention to reduce the exposure of the Eurosystem towards the euro area sovereign debts. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Committee on Economic and Monetary Affairs (ECON). ahead of the Monetary Dialogue with the ECB President on 19 November 2020.
Authors : Luigi BONATTI, Andrea FRACASSO, Roberto TAMBORINI

Uncertainty and the Pandemic Shocks

18-11-2020 PE 658.199 ECON
In-Depth Analysis
Summary : The COVID-19 pandemic shocks are a significant source of uncertainty in several aspects. In particular, these shocks influence the landscape, in which policymakers operates, and create further uncertainty about policy decisions and about their effectiveness. The aim of this paper is to offer some relative measures of the uncertainty caused by the pandemic, and to discuss the impact of this uncertainty on the possible evolution of European economies during the second wave of COVID-19. Emphasis will be placed on the effectiveness of the policies implemented. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 19 November 2020.
Authors : Pierpaolo BENIGNO, Paolo CANOFARI, Giovanni DI BARTOLOMEO, Marcello MESSORI

Uncertainty in the Euro Area During the First Wave of the COVID-19 Pandemic

18-11-2020 PE 658.200 ECON
In-Depth Analysis
Summary : Uncertainty - a state in which assessing future conditions by economic agents is hampered - rose sharply during the current pandemic. A bout of uncertainty can have similar effects like an adverse demand shock, dampening private consumption, investment and, hence, inflation. According to our own estimations, however, the pandemic-induced spike of uncertainty has caused little macroeconomic damage so far. The introduction of PEPP was a quick and decisive action that stopped uncertainty from rising further and probably contained its adverse economic effects. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 19 November 2020.
Authors : Atanas PEKANOV, Stefan SCHIMAN

Monetary Policy in the Time of COVID-19, or How Uncertainty is Here to Stay

18-11-2020 PE 658.201 ECON
In-Depth Analysis
Summary : The COVID-19 crisis has compounded the uncertainty that has come to characterise the European economy. We explore how this uncertainty manifests itself in terms of ECB decision-making and the long-run challenges the ECB faces. Confidence in ECB actions will come from the contingency scenarios it considers and communicates on, and from the adoption of potential policies for a wide range of such scenarios. Greater clarity around the ECB’s inflation target and surrounding tolerance bands would also be beneficial. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 19 November 2020.
Authors : Maria DEMERTZIS, Marta DOMINGUEZ-JIMENEZ

Public hearing with Christine Lagarde, Chair of the European Systemic Risk Board

16-11-2020 PE 645.712 ECON
Briefing
Summary : This note is prepared in view of a public hearing with the Chair of the European Systemic Risk Board (ESRB), Christine Lagarde, which will take place in ECON on 19 November 2020. This will be the second hearing with Ms Lagarde in her capacity as a Chair of the ESRB. The aim of the meeting is to discuss recent developments in the macroprudential policy field and the impact of the corona crisis. The briefing provides a (i) summary of the ESRB Annual Report, (ii) addresses the ESRB and national macroprudential authorities’ response to the COVID pandemic outbreak, (iii) including recent ESRB Recommendations to the European Commission and national authorities; (iv) latest ESRB systemic risk assessment and (v) other macroprudential policy concerns.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Key figures of 2021 Draft Budgetary Plans

16-11-2020 PE 659.613 ECON
Briefing
Summary : This document compares key figures included in the 2021 Draft Budgetary Plans (DBPs), as submitted by the Euro Area Member States by mid of October 2020, with those of the autumn 2020 forecasts by the European Commission (EC) and the key figures included in the 2020 Stability Programmes (SPs), as submitted by the Euro Area Member States by end of April 2020, with the those of the 2020 spring forecasts by the EC. The DBPs and the SPs are available on the Commission homepage (here: DBPs and SPs ). The EC is expected to adopt its opinions on the 2021 DBPs by end of November and the Eurogroup is expected to discuss these opinion in mid-December 2020.
Authors : Jost ANGERER, ISABEL LARA MIRANDA