Dokumenti reċenti

Sommarju : 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.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Sommarju : 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.

Awturi : Jost ANGERER, Marcel MAGNUS, WOLFGANG LEHOFER, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, ISABEL LARA MIRANDA

Sommarju : 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).

Awturi : Alice ZOPPÉ, Jost ANGERER, WOLFGANG LEHOFER, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, ISABEL LARA MIRANDA

Sommarju : 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.

Awturi : Alice ZOPPÉ, CRISTINA SOFIA PACHECO DIAS

Sommarju : 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.

Awturi : Philippe MARTIN, Xavier RAGOT

Sommarju : 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).

Awturi : Jost ANGERER, CRISTINA SOFIA PACHECO DIAS

Sommarju : 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.

Sommarju : 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.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Sommarju : 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

Awturi : Javier María VEGA BORDELL, OVIDIU IONUT TURCU, KRISTINA GRIGAITE, ISABEL LARA MIRANDA, MATTIA MARCHIONNI

Sommarju : 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.

Awturi : Alice ZOPPÉ

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

Awturi : Kajus HAGELSTAM, Jost ANGERER, Marcel MAGNUS, Drazen RAKIC, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Sommarju : 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).

Awturi : Jan VAN HOVE

Sommarju : 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.

Awturi : Luisa LAMBERTINI

Sommarju : This document provides an overview of Economic Dialogues with the other institutions of the European Union that has taken place in the competent Committee 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.

Awturi : Kajus HAGELSTAM

Sommarju : 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.

Awturi : Klaus-Jürgen GERN Stefan KOOTHS Ulrich STOLZENBURG

Sommarju : 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.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Sommarju : 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).

Awturi : RADOSTINA PARENTI, TIJMEN FERDINAND TUINSMA

Sommarju : 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.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL

Sommarju : 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.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL

Sommarju : 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.

Awturi : Kajus HAGELSTAM, CRISTINA SOFIA PACHECO DIAS

Sommarju : 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.

Awturi : 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

Sommarju : This note looks at the 2021 recommendation on the economic policies of the euro area proposed by the Commission. It also provides an overview of the follow up of the 2020 recommendations, making use of public information and based on proxies such as on how the Eurogroup has integrated euro area recommendations concerns in their “thematic discussions” and work programmes. In addition, the note provides a review of the euro area recommendations from an institutional perspective and includes broad comparisons to earlier recommendations, to illustrate how policy concerns have evolved over time. This is an update of similar note on the 2020 recommendations and it will be regularly updated.

Awturi : CRISTINA SOFIA PACHECO DIAS, KRISTINA GRIGAITE, ISABEL LARA MIRANDA

Sommarju : 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.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Sommarju : 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.

Awturi : Jost ANGERER, ISABEL LARA MIRANDA

Sommarju : 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.

Awturi : Erik JONES

Sommarju : 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.

Awturi : Alice ZOPPÉ, CRISTINA SOFIA PACHECO DIAS

Sommarju : 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.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, ISABEL LARA MIRANDA

Sommarju : 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.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, ISABEL LARA MIRANDA

Sommarju : Latest forcest by EC, IMF and OECD.

Awturi : Javier María VEGA BORDELL, KRISTINA GRIGAITE, MATTIA MARCHIONNI

Sommarju : 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.

Awturi : Alice ZOPPÉ

Sommarju : 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.

Awturi : Christophe BLOT, Paul HUBERT, Fabien LABONDANCE

Sommarju : 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.

Awturi : Charles Wyplosz

Sommarju : 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.

Awturi : Luigi BONATTI, Andrea FRACASSO, Roberto TAMBORINI

Sommarju : 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.

Awturi : Pierpaolo BENIGNO, Paolo CANOFARI, Giovanni DI BARTOLOMEO, Marcello MESSORI

Sommarju : 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.

Awturi : Atanas PEKANOV, Stefan SCHIMAN

Sommarju : 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.

Awturi : Maria DEMERTZIS, Marta DOMINGUEZ-JIMENEZ

Sommarju : 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.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Sommarju : 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.

Awturi : Jost ANGERER, ISABEL LARA MIRANDA

Sommarju : The global pandemic is deepening the linkages between fiscal and monetary policies. While some are concerned that high public debt may pressurise the ECB to pursue overly loose monetary policy, this paper argues there is a greater risk that the Treaty’s rules on monetary financing will constrain the ECB from reacting appropriately to the crisis and that re-imposing the EU’s fiscal rules from 2022 onwards could harm economic recovery. This paper calls for an overhaul of the economic rules in the Treaty. 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.

Awturi : Karl Whelan

Sommarju : The paper argues that the monetary policy response to the COVID-19 crisis has been appropriate in terms of the ECB’s primary objective. The concern over fiscal dominance is, however, valid as in a situation of rising inflationary pressure the ECB would have to choose between maintaining price stability on the one hand and public debt sustainability, financial stability and cohesion of the EMU on the other hand. Reform of the euro area institutional framework could mitigate this risk, either in the direction of a fiscal union or in the direction of full fiscal self-responsibility. 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.

Awturi : Salomon FIEDLER, Klaus-Jürgen GERN, Ulrich STOLZENBURG

Sommarju : Current developments during the COVID-19 pandemic involve strongly complementary monetary and fiscal policy, but both as responses to COVID-19 and not the outcome of an emergent monetary-fiscal nexus. Therefore, the ECB maintains its independence by using unconventional monetary policy measures to reach price stability, according to 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.

Awturi : Thomas MARMEFELT

Sommarju : This briefing gives an update on recent events and developments in the Banking Union, based on publicly available information. The briefing summarises: 1) the main elements of two papers commissioned by ECON on the effectiveness of relaxing capital and liquidity buffers as crisis measures; 2) the most recent ECB Bank Lending Survey; 3) recent EBA publications (on anti-money laundering, sustainability, MREL-TLAC eligible instruments and the prudential treatment of legacy instruments); 4) the recent ESMA Wirecard report and similarities with the case of Commerzialbank Mattersburg; 5) the European Court of Justice’s role in shaping the Banking Union; and 6) the European Court of Auditors report on EU agencies.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, MATTIA MARCHIONNI

Sommarju : The paper assesses the institutional interactions between the Recovery and Resilience Facility (RRF) and the European Semester, with the view to establish whether and how the Semester can constitute a governance framework for the RRF. It argues that the RRF and the Semester are mutually beneficial: the EU Semester offers important informational and signaling advantages for the preparation of recovery and resilience plans. The RRF, in turn, offers important implementation benefits for the policy advice issued under the European Semester. Yet, potential synergies are not fully exploited on implementation, ownership, and accountability towards the European Parliament.

Awturi : Manuela MOSCHELLA

Sommarju : The severe economic disruption caused by the COVID-19 pandemic required an urgent, massive and coordinated fiscal and monetary policy response. The fiscal measures will lead to substantially higher public debt-to-GDP levels across the euro area. In order to safeguard the effective transmission of monetary policy, the European Central Bank (ECB) further expanded its asset purchases, in particular of government bonds. This growing nexus between monetary and fiscal policy has raised concerns about possible future policy constraints and trade-offs. Five papers were prepared by the ECON Committee’s Monetary Expert Panel, discussing the implications of such interlinkages between monetary and fiscal policy. 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 19 November 2020.

Awturi : Salomon FIEDLER, Klaus-Jürgen GERN, Ulrich STOLZENBURG, Karl WHELAN, Luigi BONATTI, Andrea FRACASSO, Roberto TAMBORINI, Charles WYPLOSZ, Thomas MARMEFELT

Sommarju : The COVID-19 pandemic has fuelled a significant or even, according to some measures, unprecedented increase in economic uncertainty. For central banks, such uncertainty makes effective calibration of monetary policy challenging. Four papers were prepared by the ECON Committee’s Monetary Expert Panel, presenting the different measures used as proxies of uncertainty and evaluating the effects of the current pandemic-induced uncertainty on economic outcomes in the euro area, in particular on inflation. 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 19 November 2020.

Awturi : Maria Demertzis, Marta DOMINGUEZ-JIMENEZ, Pierpaolo BENIGNO, Paolo CANOFARI, Giovanni DI BARTOLOMEO, Marcello MESSORI, Atanas PEKANOV, Stefan SCHIMAN, Christophe BLOT, Paul HUBERT and Fabien LABONDANCE

Sommarju : This document presents the summaries of three external papers commissioned by EGOV upon request of the Economic and Monetary Committee (ECON). ECON has requested external experts to provide expertise on the wider supervisory implications of the Wirecard case. The summaries were drafted by EGOV in own responsibility.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Sommarju : The paper discusses the policy implications of the Wirecard scandal. The study finds that all lines of defense against corporate fraud, including internal control systems, external audits, the oversight bodies for financial reporting and auditing and the market supervisor, contributed to the scandal and are in need of reform. To ensure market integrity and investor protection in the future, the authors make eight suggestions for the market and institutional oversight architecture in Germany and in Europe.

Awturi : Katja LANGENBUCHER, Christian LEUZ, Jan Pieter KRAHNEN, Loriana PELIZZON

Sommarju : EU banks entered the coronavirus crisis with high capital and liquidity buffers resulting from the reforms undertaken after the global financial crisis of 2007-2009. This allowed a bold and swift response by supervisors oriented towards supporting banks’ ability to provide credit to the real economy. This paper provides an overview and an assessment of the regulatory response to the crisis, and suggests some recommendations for the future design of countercyclical regulation.

Awturi : J.ABAD, R.REPULLO

Sommarju : We analyse the recent policy decisions made by the ECB and the national authorities related to capital, liquidity, and shareholders’ remuneration aimed at promoting credit supply from the banking sector to the coronavirus-afflicted economy. We forecast the impact of the regulatory decisions based on the empirical literature, discuss the factors that reduce the banks’ incentives to expand loan portfolios and develop policy suggestions intended to mitigate the effect of these factors.

Awturi : Alexandra MATYUNINA, Steven ONGENA

Sommarju : While multiple causes underpin accounting scandals such as Wirecard, they often point at deficiencies in the audit profession and its oversight. Currently, the system of national public audit oversight boards (POBSAs) is fragmented and overly complex, characterized by limited responsiveness to red flags, and apparent lack of communication among the POBSAs, and with other supervisors. This suggests supervisory coordination and clear action triggers are imperative. Importantly, pervasively low transparency limits the usefulness of this briefing and hinders evidence-based policy making.

Awturi : Beatriz GARCÍA OSMA, Ana GISBERT, Begoña NAVALLAS

Sommarju : Beginning with a discussion of the Wirecard case, this study highlights several lessons for the regulation and supervision of Fintech companies. Innovation in the financial industry brings both efficiency gains and new risks. To balance these two elements, regulators need a deep understanding of Fintech’s technologies and business models. Because Fintechs can be very complex companies, there is a need for an approach combining the oversight of both entities and activities. The global scope of Fintech’s activities also calls for convergence and coordination of rules and supervisory practices at the European level and beyond.

Awturi : Giorgio BARBA NAVARETTI, Giacomo CALZOLARI, Alberto Franco POZZOLO

Sommarju : This briefing, prepared for a scrutiny session of the ECON Committee, provides background on the International Financial Reporting Standard (IFRS) 17 Insurance Contracts which will have a major impact on the accounting of insurance companies. IFRS 17 was issued by the IASB in 2017; the Parliament adopted a resolution on 3 October 2018. As some remaining issues were raised at EU level, the IASB has issued amendments to IFRS 17 on 25 June 2020. The next step for endorsement was the EFRAG's consultation on its draft endorsement advice of 30 September 2020 (closing on 29 January 2021). The scrutiny session feeds ECON's views into this process.

Awturi : Doris KOLASSA, MARTIN MIKULKA

Sommarju : 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 27 October 2020. The central aim of the meeting is to discuss the SRB 2019 annual report. Following the structure of the SRB 2019 annual report, this briefing addresses (i) COVID-19 response measures taken by the SRB, and the need to consider a COVID-19 exit strategy going forward; (ii) resolution plans for banks under the SRB’s remit; (iii) preparation for the 2020 resolution planning cycle; (iv) resolvability assessments; (v) preparations for the UK’s withdrawal from the EU; (vi) cooperation with the European Parliament; (vii) contributions to the Single Resolution Fund; (viii) investments of these funds; (ix) management of resources; and (x) appeal panel.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Sommarju : 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 27 October 2020. The briefing addresses (i) recent supervisory measures in response to the COVID-19 crisis, including an overview of the ECB’s COVID-19 vulnerability analysis and a discussion on the effectiveness of certain capital relief measures; (ii) the SSM’s response to the European Parliament’s 2019 Banking Union Report; (iii) short-term risks for the banking sector (low profitability, NPLs and Brexit); (iv) longer-term challenges, including consolidation in the banking sector and completing the Banking Union; and (v) supervisory issues, namely anti-money laundering and addressing cyber and IT risks.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Sommarju : This note provides a comparison of some key macroeconomic forecast indicators for the Euro Area as a whole published by the Commission, IMF, ECB and OECD.

Awturi : Javier María VEGA BORDELL

Sommarju : This briefing provides an overview of the European Parliament’s expectations and priorities for the Banking Union as set out in its annual Banking Union reports. The first section of this briefing provides a short overview of the 2019 Banking Union report, the ECB Banking Supervisor’s response, as well as concrete actions expected from the Single Resolution Board, who as yet have not provided a formal response to any of Parliament’s Banking Union reports. In order to better contextualise the themes of latest Banking Union report, the subsequent section addresses the main themes raised in previous Banking Union reports (2015-2018). The annex of the briefing includes a comparison of the positions taken by the European Parliament in its Banking Union reports in the following policy areas: banking developments and structures; institutional and organisational issues; regulatory issues; completing the banking union; risk assessment; supervisory issues and priorities; crisis management; policies related to anti-money-laundering; and climate and sustainability issues.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE, ISABEL LARA MIRANDA

Sommarju : This document provides links to all Briefings produced by the Policy Departments of the Directorate-General for Internal Policies and of the Directorate-General for External Policies of the European Parliament, with salient points and essential commitments made by the Vice-Presidents and Commissioners-designates at their respective hearings before the European Parliament, in September-November 2019 and in October 2020. For an exhaustive list of all commitments made and positions taken by the candidates, the full verbatim report of each public hearing is available on the dedicated hearings website of the European Parliament, as are the written questions and answers.

Sommarju : 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.

Sommarju : The original full study analyses the design and operation of regulatory sandboxes and innovation hubs as part of jurisdictions’ regulatory response to financial innovation, focusing on the models adopted in the EU and the EFTA countries. 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).

Awturi : RADOSTINA PARENTI

Sommarju : In recent years, the phenomenon of common ownership by institutional investors has sparked considerable debate about its impact on competition and companies’ corporate governance. The original full study analyses some specific features of common ownership by institutional investors in the European banking sector, at the intersection between competition policy, financial sector regulation and corporate governance rules. 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).

Awturi : S. FRAZZANI, K. NOTI, M. P. SCHINKEL, J. SELDESLACHTS, A. BANAL ESTAÑOL, N. BOOT, C. ANGELICI

Sommarju : This briefing paper argues that the political imperative to ensure that the economic stimulus from the EU’s new commonly funded facilities is provided expeditiously will prevail against desires to create a robust governance framework for these funds within the European Semester process. The pandemic-related suspension of the Stability and Growth Pact creates a need to reform the Pact ahead of its future reintroduction. This presents an opportunity to incorporate more of the Semester’s reform implementation agenda directly into the Pact’s policy prescriptions.

Awturi : Jacob Funk KIRKEGAARD

Sommarju : The Recovery and Resilience Facility (RRF) constitutes an unprecedented EU-wide resource to address the impact of the COVID-19 crisis on the EU economies. As the governance of the RRF is integrated in the European Semester, it fundamentally changes its character from a non-binding structure for policy coordination to a vehicle for the allocation of a major economic impetus. In light of this, this paper analyses the ways that parliamentary control and oversight of the RRF can be best secured at the EU-level.

Awturi : Ben CRUM

Sommarju : The Commission Executive Vice-President/Commissioner-designate, Valdis Dombrovskis, appeared before the European Parliament on 02 October 2020 to answer questions put by MEPs from the Committee on International Trade, in association with the Committees on Foreign Affairs, on Economic and Monetary Affairs, on Development and on Budgets. During the hearing, he made a number of commitments which are highlighted in this document. These commitments refer to his portfolio as Trade Commissioner, as described in the mission letter sent to him by Ursula von der Leyen, President-elect of the European Commission, including: - A level playing field for all; - Strengthening Europe’s global leadership; - Trade for sustainable development and climate action

Awturi : Mario DAMEN, WOLFGANG IGLER

Sommarju : This document presents the summaries of some papers in the area of EU economic governance, recently published by the European Parliament upon a request of the Economic and Monetary Committee (ECON). The thematic papers presented in this digest provides hopefully information and suggestions which will be useful for the on-going debate among policy makers, namely on the review of the EU legal framework for economic governance. They are written by external experts and supervised by the Economic Governance Support Unit.

Awturi : DONELLA BOLDI

Sommarju : This briefing gives an overview of the repercussions of the United Kingdom’s withdrawal from the EU on financial services, followed by the most recent guidance from the ECB Banking Supervisor, the Single Resolution Board and the three European Supervisory Authorities: the European Banking Authority, the European Securities and Markets Authority; and the European Insurance and Occupational Pensions Authority. The work of the European Systemic Risk Board on Brexit is also highlighted.

Awturi : Marcel MAGNUS, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Sommarju : The Commissioner-designate, Mairead McGuinness, appeared before the European Parliament on 02 October 2020 to answer questions put by MEPs from the Committee on Economic and Monetary Affairs. During the hearing, she made a number of commitments which are highlighted in this document. These commitments refer to her portfolio, as described in the mission letter sent to her by Ursula von der Leyen, President-elect of the European Commission and include Banking Union, Capital Markets Union and SMEs access to finance, sustainable finance, FinTech strategy and cryptocurrencies, comprehensive approach to fighting money laundering and more resilience to extraterritorial sanctions.

Awturi : RADOSTINA PARENTI, CRISTINA SOFIA PACHECO DIAS, REBECCA SARAH FANNY SEGALL, KRISTINA GRIGAITE

Sommarju : This fourth 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.

Awturi : Kajus HAGELSTAM, WOLFGANG LEHOFER

Sommarju : In the context of the review of the EU economic governance framework, this study recommends a multi-year ahead expenditure rule anchored in an appropriate public debt target, augmented with an asymmetric golden rule that provides extra fiscal space only in times of a recession. An improved governance framework should strengthen national fiscal councils and include a European fiscal council, while financial sanctions should be replaced with instruments related to surveillance, positive incentives, market discipline and increased political cost of non-compliance.

Awturi : Zsolt Darvas, Julia Anderson - Bruegel

Sommarju : 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.

Awturi : Kajus HAGELSTAM, WOLFGANG LEHOFER, CRISTINA SOFIA PACHECO DIAS

Sommarju : Accessing funds of the EU’s Recovery and Resilience Facility (RRF) depends on detailed national Recovery and Resilience Plans (RRPs) being agreed upon, and projects meeting implementation milestones. The RRPs will be embedded in the European Semester, the EU’s framework for economic policy coordination. This paper suggests that there are risks to the implementation of the RRPs, and/or to an objective evaluation of their progress. While the Treaty specifies that the execution of economic policy coordination shall be done by the Member States within the Council, the involvement of the European Parliament would potentially increase transparency and accountability for national policy makers (as well as the Commission and Council), which could improve project delivery and thus benefit the recovery.

Awturi : Thomas Wieser

Sommarju : (Updated 25 September 2020) 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.

Awturi : Drazen RAKIC

Sommarju : The COVID-19 recession is different from previous downturns because it originates in demand and supply disturbances which are highly specific to certain sectors (contact-intensive services). This sectoral nature renders aggregate demand policies, including monetary policy, much less effective. The PEPP was essential to prevent a financial crisis in the Spring of 2020; but there is no need to increase its size. In a sectoral recession, one should not expect much impact from central bank bond buying on inflation. This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs (ECON).

Awturi : Angela CAPOLONGO, Daniel GROS

Sommarju : We present the set of measures that the ECB has undertaken to fight the pandemic crisis by outlining the deep impact that COVID-19 is having on economic structures, and by highlighting the differences between the current policy package and previous ECB’s programmes. Moreover, we discuss what are the challenges that await the ECB in the medium to long run, contingent on different post-COVID scenarios concerning economic growth and inflation, considering its peculiar multinational jurisdiction. This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs (ECON).

Awturi : Luigi BONATTI, Andrea FRACASSO, Roberto TAMBORINI

Sommarju : We summarise the empirical evidence on effects of asset purchases in the euro area, including the PEPP programme launched in response to the COVID-19 crisis. We conclude that QE is particularly effective during times of high financial stress, i.e. at the peak of a crisis, but tends to lose impact over time. At the same time, QE policies come with prominent risks which may materialise only in the longer term. We suggest a scheme of rule-based intervention in sovereign debt markets that preserves the role of yield spreads as a market signal, while containing the risk of bad equilibria. This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs (ECON).

Awturi : Joscha BECKMANN, Salomon FIEDLER, Klaus-Jürgen GERN, Stefan KOOTHS, Josefine QUAST, Maik WOLTERS

Sommarju : ECB’s asset purchase programmes have been implemented at different times in different economic environments and may pursue different objectives. From the point of view of removing financial fragmentation and taming sovereign stress in the euro area, the PEPP has been successful so far. Moreover, this outcome was obtained without fully using its potential resources. To date and contingent on the available set of information, the current monetary stance has not gone too far and it retains some ammunitions. This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs (ECON).

Awturi : Christophe BLOT, Jérôme CREEL and Paul HUBERT

Sommarju : This paper reviews the independence and accountability of the ECB and the Federal Reserve. While the ECB makes significant efforts to be accountable for its actions, there are several improvements that could be made to European institutions to improve its independence and accountability. These include reforming the process of appointing ECB Executive Board members, improving the transparency of ECB decision-making and reforming aspects of the Monetary Dialogue to make the questioning more effective. This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs (ECON).

Awturi : Karl WHELAN

Sommarju : In response to the COVID-19 crisis, the ECB has relaunched a massive asset purchase programme within its combined-arms monetary strategy. This paper presents and discusses the theory and the evidence of the central bank’s asset purchases, mainly in the euro area. It analyses the role of asset purchase programmes in the ECB’s toolkit and the potential associated risks, focusing specifically on the problems of the programmes’ unwinding. Finally, the paper offers some possible alternatives to the asset purchase programmes. This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs (ECON).

Awturi : Pierpaolo BENIGNO, Paolo CANOFARI, Giovanni DI BARTOLOMEO, Marcello MESSORI

Sommarju : This paper assesses how the European Parliament (EP) holds the European Central Bank (ECB) accountable. The same exercise is done for the Bank of Japan, in order to identify possible lessons for the ECB and the EP. Possible improvements to the ECB accountability framework include procedural changes to the Monetary Dialogue to increase its effectiveness, the release of detailed minutes and votes from ECB governing council meetings, and the establishment of a ranking by the EU legislators of the ECB’s secondary objectives. This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs (ECON).

Awturi : Grégory CLAEYS, Marta DOMÍNGUEZ-JIMÉNEZ

Sommarju : Until this year, governments in the single currency area appeared to be ‘missing in action’. There is belated recognition that monetary and fiscal policies must coordinate especially in crisis conditions. The euro area has experienced crisis or near crisis conditions for over a decade. Lessons are being learned late but there continue to be several gaps that the euro area and its members need to close. The paper highlights these and the continuing threats to the single currency area. This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs (ECON).

Awturi : Pierre L. SIKLOS

Sommarju : This paper analyses the accountability mechanisms of the European Central Bank and of the Bank of England and focuses on parliamentary accountability for the monetary policy functions. The paper suggests ways to improve the Monetary Dialogue between the ECB and the Committee on Economic and Monetary Affairs (European Parliament). This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs (ECON).

Awturi : Rosa M. LASTRA