Latest documents

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

18-06-2021 PE 648.787 ECON
Briefing
Summary : (Updated 18 June 2021) The COVID-19 pandemic was an unprecedented shock to the euro area economy. The ECB's Governing Council took a series of measures that collectively provided a substantial monetary policy stimulus aimed at safeguarding the effective transmission of monetary policy and preventing a serious deterioration of financial conditions. This briefing, which is reguarly updated since March 2020, summarises these monetary policy measures.
Authors : Drazen RAKIC

Economic Dialogue with the President of the Eurogroup - June 2021

18-06-2021 PE 689.437 ECON
In-Depth Analysis
Summary : Paschal Donohoe is attending his second Economic Dialogue in the ECON Committee since being elected as President of the Eurogroup in July 2020. His first Economic Dialogue took place on 25 January. The exchange of views 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 measures relating to the Economic and Monetary Union governance framework, including completing the Banking Union. This briefing covers the following issues: the Eurogroup work programme until June 2021 (Section 1); 2021 Euro Area Recommendation (Section 2); Economic situation and developments (Section 3); Recovery and Resilience Facility (Section 4); 2021 European Semester Cycle (Section 5); review of the governance framework (section 6) and Banking Union developments (Section 7).
Authors : Alice ZOPPÉ, Jost ANGERER, WOLFGANG LEHOFER, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

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

17-06-2021 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, GIULIA GOTTI

Euro Area fiscal policies and capacity in post-pandemic times

17-06-2021 PE 659.658 ECON
In-Depth Analysis
Summary : The euro area response to the Covid crisis avoided a financial crisis. In the short term, the withdrawal of fiscal stimulus should be guided by unemployment, output gap and inflation data. Over the medium term, reducing public debt ratios will require maintaining the growth of primary spending below the (higher) GDP growth rate to be achieved through structural reforms. Over the longer term, creating a central fiscal capacity, strengthening the enforcement of fiscal rules in good times and completing the banking and capital market unions remain priorities.
Authors : Carlo COTTARELLI

Monetary and Fiscal Spillovers Across the Atlantic: The Role of Financial Markets

17-06-2021 PE 662.915 ECON
In-Depth Analysis
Summary : We present a review of the channels through which the US fiscal and monetary post-pandemic policies may affect the euro area. US spillovers will likely be relevant and worth considering while setting the policy stance in the euro area, at a crossroad between economic global recovery and global overheating. A key role is going to be played by global financial markets, their appetite for open-ended stimulative policies and fears of hard disinflation scenarios affecting central banks' ability to keep the economies on the recovery path and inflation expectations anchored. 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 21 June 2021.
Authors : Luigi BONATTI, Andrea FRACASSO, Roberto TAMBORINI

Could the Euro Area Benefit From the US Stimulus Packages?

17-06-2021 PE 662.921 ECON
In-Depth Analysis
Summary : The recent US fiscal packages have raised some concerns on their magnitude, but also their spillovers to the euro area economy. After discussing US fiscal measures and reviewing the literature on international spillovers, we show that the US policy mix may have rather positive macroeconomic effects on the euro area. We conclude though that these effects need to be balanced against growing financial risks. 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 21 June 2021.
Authors : Christophe BLOT, Caroline BOZOU, Jérôme CREEL

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

16-06-2021 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

EU economic developments and projections

16-06-2021 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

Implications for the Euro Area of US Macroeconomic Policies

16-06-2021 PE 662.917 ECON
In-Depth Analysis
Summary : The US has undertaken much larger discretionary fiscal packages than euro area governments, particularly in 2021. The large 2021 US fiscal package is likely to provide a welcome boost to the euro area economy. There is a risk, however, that US fiscal policy could lead to overheating of the US economy and a possible monetary tightening from the Fed which could trigger a recession. This paper argues this scenario is unlikely to occur but discusses the implications for the ECB if it did. 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 21 June 2021.
Authors : Karl WHELAN

Looking Through and Past COVID-19: Do Spillovers Matter?

16-06-2021 PE 662.916 ECON
Study
Summary : The main thrust of fiscal and monetary responses to the pandemic in the EU and the US are contrasted. Estimates of the spillovers from US fiscal policy to Europe are estimated. They are found to be significant but economically modest. Consequences for debt and debt sustainability in the long-run are also examined. Concerns over debt sustainability in the EU and the US are warranted. Observers advocating much higher debt levels need to consider lessons from history. 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 21 June 2021.
Authors : Pierre L. SIKLOS

Recovery and Resilience Plans - An overview

15-06-2021 PE 659.657 ECON
In-Depth Analysis
Summary : This document provides an overview of the adoption of the Recovery and Resilience Plans (RRPs) under the Recovery and Resilience Facility (RRF) and some relevant developments. The document will be regularly updated.
Authors : Alice ZOPPÉ, Jost ANGERER, OVIDIU IONUT TURCU, WOLFGANG LEHOFER, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, GIULIA GOTTI, KATJA KOMAZEC

Technical Support Instrument: main features

14-06-2021 PE 659.652 ECON
In-Depth Analysis
Summary : In order to help national authorities in improving their capacity to design, develop and implement reforms, including those covered by recovery and resilience plans pursuant to Regulation (EU) 2021/241), the European Parliament and the Council adopted on 10 February 2021 the Regulation (EU) 2021/240 establishing a Technical Support Instrument. The Instrument may finance a broad range of technical assistance actions refering to policy areas related to cohesion, competitiveness and others, with specific emphasis on digital and just green transitions.This note presents its main characteristics, focusing notably in its connection with the EU economic governance framework and the European Semester.
Authors : Jost ANGERER, CRISTINA SOFIA PACHECO DIAS

Exchange of views with Commissioner Elisa Ferreira on the implementation of the Technical Support Instrument

11-06-2021 PE 659.644 ECON
Briefing
Summary : Ahead of BUDG-ECON exchange of views with Commissioner Ferreira, on 14 June, this note provides a brief overview on the 2021 annual workplan, ongoing and finalised projects and some other elements of the Technical Support Instrument.
Authors : Jost ANGERER, CRISTINA SOFIA PACHECO DIAS

Macro-Financial Assistance to EU Member States - State of Play – June 2021

11-06-2021 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

The main building blocks of the Recovery and Resilience Facility

11-06-2021 PE 659.656 ECON
In-Depth Analysis
Summary : This note presents the main features of the Recovery and Resilience Facility relevant for scrutiny by the European Parliament, namely its financing; the Recovery and Resilience Plans and the framework for their assessment; and EU level governance of the RRF, in terms of both its implementation and monitoring and oversight . It also highlights the changes the Facility is bringing to the European Semester.
Authors : Alice ZOPPÉ, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL

Country-Specific Recommendations for 2019, 2020 and 2021

11-06-2021 PE 651.391 ECON
Study
Summary : This document presents: • The 2019 Country-Specific Recommendations (CSRs) adopted by the Council in the framework of the European Semester on 9 July 2019 (on the basis of European Commission proposals of 5 June 2019). • The European Commission’s assessments of the implementation of the 2019 CSRs based on its Country Reports published on 26 February 2020. • The 2020 CSRs adopted by the Council in the framework of the European Semester on 20 July 2020 (on the basis of European Commission proposals of 20 May 2020). • The 2021 fiscal recommendations (recommendations for Council opinions on the 2021 Stability and Convergence Programmes) proposed by the European Commission on 2 June 2021 and to be adopted by the Council in July. During the 2021 Semester Cycle, exceptionally, due to the preparations and adoptions of the Recovery and Resilience Plans under the Recovery and Resilience Facility, there will be no further Country Specific Recommendations (CSRs) under the European Semester.
Authors : Jost ANGERER, KRISTINA GRIGAITE, GIULIA GOTTI, KATJA KOMAZEC

Implementation of the Stability and Growth Pact under pandemic times

10-06-2021 PE 659.655 ECON
In-Depth Analysis
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 Commission and Council decisions and recommendations in the framework of the Stability and Growth Pact and the latest European Commission economic forecasts. This document is regularly updated.
Authors : Jost ANGERER, GIULIA GOTTI

Preventing money laundering in the banking sector - reinforcing the supervisory and regulatory framework

09-06-2021 PE 659.654 ECON
In-Depth Analysis
Summary : This paper provides an overview of current initiatives and actions aiming at reinforcing the anti-money laundering (AML) supervisory and regulatory framework in the EU, in particular from a Banking Union perspective. This briefing first outlines the EU framework for fighting money laundering, which includes legislation (most notably the 5th AML Directive) and a number of Commission and Council Action Plans. Secondly, an overview of AML prevention relevant authorities, at both the EU and national level, is provided. This section also explains the 2019 review of the founding regulations of the European Supervisory Authorities, through which competences relating to preventing AML in the financial sector were consolidated within the European Banking Authority. Lastly, the paper highlights expected upcoming changes to the AML framework, largely based on the Commission’s May 2020 Action plan for a comprehensive Union policy on preventing money laundering and terrorism financing, and associated legislative initiatives expected in July 2021. It is relevant to note that this briefing focuses on AML concerns in the banking sector. While financial and non-financial intermediaries have an important role to play, these are not the focus of this briefing. Nevertheless, reference is made to closely related areas (notably, to Financial Intelligence Units, the work of markets and insurance supervisors on preventing AML and related matters) when relevant to a better understanding of its impacts on the banking sector. This paper builds on and updates a previous EGOV briefing on the same topic.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, KATJA KOMAZEC

US Macroeconomic Policy Response to COVID-19: Spillovers to the Euro Area

08-06-2021 PE 662.923 ECON
Study
Summary : The United States (US) have responded to the COVID-19 shock with a massive fiscal stimulus in 2020 and 2021. At the same time, the Federal Reserve (Fed) has maintained a highly accommodative monetary policy stance. However, the Fed’s new average inflation targeting regime is being put to the test by the spike in inflation observed in recent months. Due to the global influence of the US economy and interlinkages with the euro area, questions arise over the possibility of significant spillovers from these US policy measures. Five papers were prepared by the ECON Committee’s Monetary Expert Panel, looking into the channels of Transatlantic fiscal and monetary policy spillovers and their significance in the current context. This publication is provided by Policy Department A for the Committee on Economic and Monetary Affairs (ECON), ahead of the Monetary Dialogue with ECB President Lagarde on 21 June 2021.
Authors : Pierre L. SIKLOS, Karl WHELAN, Luigi BONATTI, Andrea FRACASSO, Roberto TAMBORINI, Christophe BLOT, Caroline BOZOU, Jérôme CREEL, Charles WYPLOSZ

Low for Longer: Effects of Prolonged Negative Interest Rate Policies

08-06-2021 PE 662.924 ECON
Study
Summary : In June 2014, the European Central Bank (ECB) was among the first major central banks to lower policy rates into negative territory. The deposit facility rate was subsequently cut four more times, lastly in September 2019 (to -0.5%). As an unconventional monetary policy instrument used over a prolonged period, negative interest rates require attention because of their uncertain or possibly negative side effects on the banking sector and economy at large. Four papers were prepared by the ECON Committee’s Monetary Expert Panel, assessing the experience with negative interest rates in the euro area over the past seven years. This publication is provided by Policy Department A for the Committee on Economic and Monetary Affairs (ECON), ahead of the Monetary Dialogue with ECB President Lagarde on 21 June 2021.
Authors : Grégory CLAEYS, Joscha BECKMANN, Klaus-Jürgen GERN, Nils JANNSEN, Justus INHOFFEN, Atanas PEKANOV, Thomas URL, Daniel GROS, Farzaneh SHAMSFAKHR

Comparison of key figures in the 2021 Stability Programmes and European Commission Spring 2021 forecast

07-06-2021 PE 659.630 ECON
Briefing
Summary : The purpose of this document is to show the differences between some key indicators of the 2021 Stability and Convergence Programmes (SCP) of the EU Member States and the Spring 2021 economic forecast of the European Commission. In accordance with Art. 4 of Council Directive 2011/85/EU, the budgetary planning of the Member States “shall be based on the most likely macrofiscal scenario or on a more prudent scenario. (…). Significant dif¬fe¬ren¬ces between the chosen macrofiscal scenario and the (most recent) Commission’s forecast shall be described with reasoning (…).”
Authors : Jost ANGERER, KATJA KOMAZEC

Economic Dialogue with Cyprus - ECON on 3 June 2021

31-05-2021 PE 659.653 ECON
In-Depth Analysis
Summary : This note presents selected information on the current status of the EU economic governance procedures and related relevant information in view of an Economic Dialogue with Constantinos Petrides, Cyprus Finance Minister, in the ECON committee of the European Parliament. The invitation for a dialogue is in accordance with the EU economic governance framework. The last exchange of views with the Cypriot authorities took place on 25 January 2016.
Authors : Alice ZOPPÉ, Jost ANGERER, Marcel MAGNUS, OVIDIU IONUT TURCU, CRISTINA SOFIA PACHECO DIAS, KRISTINA GRIGAITE, GIULIA GOTTI, KATJA KOMAZEC

The SURE: Implementation

28-05-2021 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

Gender balance on the boards of significant banks in the Banking Union

28-05-2021 PE 659.643 ECON
Briefing
Summary : EGOV analysed publicly available information on the corporate governance structures to determine the gender balance on the boards of the banks in the euro area supervised by the ECB (“significant institutions”), comparing the situation in 2014 with that in 2020. The general observation is that, overall, the share of female executive directors has risen in significant banks from 15.3% to 27.4% (see figure 1) and the share of female supervisory directors has increased from 22.3% to 31.7% (see figure 2, further down); these levels are still quite distant from an equal gender distribution. Moreover, the differences between the nature of board (executive versus supervisory boards) and between the type of bank (large versus small) have become smaller. Large banks are, for our purposes, those with assets exceeding EUR 100 bn. Large differences in the share of female directors persist, though, if the data is grouped at the country level.
Authors : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, GIULIA GOTTI, KATJA KOMAZEC

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

27-05-2021 PE 651.390 ECON
Study
Summary : As the COVID-19 pandemic hits all Member States severely, some initial signs are surfacing of what is likely to be a substantial increase in bank non-performing loans (NPLs) in the coming months. Strengthening the tools needed to face the problems caused by NPLs is therefore of foremost importance. This paper argues that asset management companies (AMCs) can be an effective tool in this direction. It further discusses the legal issues related to their implementation, presenting several examples from past experiences illustrating how such issues can be solved. The paper concludes that a network of national publicly funded AMCs, applying the same standards and procedures across all European Member States, would be an effective and feasible solution to the problems presented by NPLs.
Authors : C. Brescia Morra, A. Guaccero, A.F. Pozzolo, G. Rojas Elgueta, N. Vardi, A. Zoppini

Taxonomy Regulation: Approved EU Taxonomy Climate Delegated Act under Art. 10(3) and 11(3)of the Taxonomy Regulation

11-05-2021 PE 648.248 ECON
Briefing
Summary : This briefing has been prepared to support the parliamentary scrutiny of the Delegated Act (DA) on climate change mitigation and climate change adaptation as foreseen by Regulation (EU) No 2020/852 on the establishment of a framework to facilitate sustainable investment (Taxonomy Regulation) . In accordance with the empowerments set out in Articles 10 and 11 of the Taxonomy Regulation, the Commission shall adopt a delegated act establishing screening criteria to determine the conditions under which an economic activity qualifies as contributing substantially to climate change adaptation or mitigation and whether it does not cause significant harm to one or more of the environmental objectives listed under Article 9.
Authors : Sebastien VANHOUCKE, Stephanie HONNEFELDER, GAELLE CHARLOTTE CHAILLET

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 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

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

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.

Anti Money Laundering Package 2021

29-03-2021 PE 662.624 ECON
Briefing
Summary : Over the past three decades, the European Union has constantly improved its framework to fight money laundering and terrorist financing. Despite the constant improvements, the existing framework still suffers from some shortcomings. In 2020, the European Commission therefore presented an action plan for a new single EU anti-money laundering system, outlining areas for future proposals that the European Commission will present in a package in spring 2021. The main areas for this 2021 package will most likely be a proposal to transfer parts of the existing anti-money laundering Directive to a directly applicable regulation, as well as an EU level supervision with an EU-wide anti-money laundering supervisory system, and a coordination and support mechanism for Member States’ Financial Intelligence Units. This EPRS briefing presents the forthcoming Commission proposal as well as the opinions of relevant EU Institutions and stakeholders.
Authors : ECKHARD BINDER

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

Updating the Crypto Assets Regulation and establishing a pilot regime for distributed ledger technology

03-03-2021 PE 662.617 ECON
Briefing
Summary : The markets in crypto assets (MiCA) proposal intends to adapt to the latest technological trends in the FinTech sector. The briefing analyses the strengths and weaknesses of the impact assessment (IA) accompanying the MiCA and DLT proposals. The IA is quite technical and difficult to read for a non-expert. The policy options were compared against the criteria of effectiveness, efficiency and coherence, but not against proportionality, which is required by the better regulation guidelines. The preferred option is a mix of various options, and one of the preferred options is transferred into another, new legislative proposal, i.e., on the DLT. The IA foresees cost reduction for business due to the use of DLT, which saves costs compared to the traditional trading activities, with new entrants facing one-off costs similar to multilateral trading facilities (MTFs).
Authors : Laura ZANDERSONE

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.

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

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

Implementation of the EU requirements for tax information exchange

04-02-2021 PE 662.603 ECON
Study
Summary : The Directive on administrative cooperation (DAC) in the field of taxation provides the basis for information exchange on direct taxation within the EU. This European Implementation Assessment evaluates the implementation of the initial directive and the first three amendments (DAC1-4). Building mainly on interviews with tax administrations and a survey among stakeholders, this publication provides additional evidence on the directive’s effectiveness and external coherence, looking at its interaction with other EU legislation and with tax information frameworks at international level. Despite broad agreement among the institutions and stakeholders on the usefulness of DAC, there is a need for further work in the area of tax information exchange. This study therefore contains a list of detailed recommendations for further improvement to the directive’s effectiveness and coherence, offering a basis for discussions.
Authors : ECKHARD BINDER

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