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The EU is actively exploring how AI technologies can be developed and adopted in order to improve border control and security. A number of applications for biometric identification, emotion detection, risk assessment and migration monitoring have already been deployed or tested at EU borders. AI technologies may bring important benefits for border control and security, such as increased efficiency, better fraud-detection and risk analysis. However, these powerful technologies also pose significant ...

This note is prepared in view of a regular public hearing with the Chair of the European Systemic Risk Board (ESRB), Christine Lagarde, which will take place on 1 July 2021. The aim of the meeting is to present the ESRB Annual Report and to discuss recent developments in macroprudential policy field, potential systemic risks looming ahead, notably the impact of the pandemic. The briefing takes stock of (i) the ESRB and national macroprudential authorities’ response to the pandemic outbreak; (ii ...

The UK enters the post-Brexit period with a regulatory framework that is closely aligned with that of the UK, and stronger in some areas. This paper highlights that the changes in regulatory strategy and the institutional framework that have been announced by the UK will make its bank regulation more responsive, and greater use of proportionality the sector will become more competitive. Competition for EU banks in international markets will intensify, though not due to an erosion of regulatory standards ...

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 ...

A widespread concern about negative policy rates is that they might depress bank profits and encourage risk-taking. We find that the impact of negative rates per se is limited. Other policy measures (TLTROs, tiered deposits) have largely neutralised the impact of NIRP on bank profits. Asset purchases might have been more important by compressing the yield curve. Any small positive impact of negative rates on lending and aggregate demand may have been swamped by the negative impact of low rates on ...

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 ...

As the second wave of the coronavirus passes, numbers of new infections and the death rate are currently both in decline globally. At the same time, countries across the world have begun vaccination programmes. In parallel, fears that the impact of the disease will continue, as some new, highly contagious mutations of the virus have spread, have lead governments to adopt additional preventive border restrictions and lockdowns. Among many debates on the subject, two stand out – the slower vaccination ...

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.

This briefing finds that the European Commission's impact assessment (IA), which accompanies the directive proposal on the resilience of critical entities, provides a good evidence-based problem definition and a sufficiently broad range of options. The assessment is mostly qualitative, due to difficulties in quantification. The IA could have been more transparent in its description of stakeholder views, and could have provided due references and a link to the feasibility study which has supported ...

Drawing on the findings of an evaluation of the NIS directive, the IA generally seems to provide a clear and relevant analysis of the shortcomings of the existing NIS Directive and the available policy options for their improvement by a new legal act. It appears that the IA's assumptions are based on a thorough stocktaking exercise involving the consultation of a big number of stakeholders. The IA could however have explained in closer detail practical implications of the proposed initiative. It ...