Biggest building block of the Next Generation EU stimulus package
€672.5 billion in grants and loans to curb the effects of the pandemic
Funds will support key policy areas such as green transition, digital transformation, crisis preparedness as well as children and youth
Respect for rule of law and the EU’s fundamental values a prerequisite to receive funding

On Wednesday, Parliament approved the Recovery and Resilience Facility, designed to help EU countries tackle the effects of the COVID-19 pandemic.
The regulation on the objectives, financing and rules for accessing the Recovery and Resilience Facility (RRF) was adopted with 582 votes in favour, 40 against and 69 abstentions. The RRF is the biggest building block of the €750 billion Next Generation EU recovery package.
Curbing the effects of pandemic
€672.5 billion in grants and loans will be available to finance national measures designed to alleviate the economic and social consequences of the pandemic. Related projects that began on or after 1 February 2020 can be financed by the RRF, too. The funding will be available for three years and EU governments can request up to 13% pre-financing for their recovery and resilience plans.
Eligibility to receive funding
To be eligible for financing, national recovery and resilience plans must focus on key EU policy areas – the green transition including biodiversity, digital transformation, economic cohesion and competitiveness, and social and territorial cohesion. Those that focus on how institutions react to crisis and supporting them to prepare for it, as well as policies for children and youth, including education and skills, are also eligible for financing.
Each plan has to dedicate at least 37% of its budget to climate and at least 20% to digital actions. They should have a lasting impact in both social and economic terms, include comprehensive reforms and a robust investment package, and must not significantly harm environmental objectives.
The regulation also stipulates that only member states committed to respecting the rule of law and the European Union’s fundamental values can receive money from the RRF.
Dialogue and transparency
To discuss the state of the EU recovery and how the targets and milestones have been implemented by member states, the European Commission, which is responsible for monitoring the implementation of the RRF, may be asked to appear before Parliament’s relevant committees every two months. The Commission will also make an integrated information and monitoring system available to the member states to provide comparable information on how funds are being used.
Quotes
Siegfried MUREŞAN (EPP, RO), one of the lead MEPs involved in the negotiations said during the debate on Tuesday: “Today’s vote means that money will go to people and regions affected by the pandemic, that support is coming to fight this crisis and to build our strength to overcome future challenges. The RRF will help to modernise our economies and to make them cleaner and greener. We have set the rules on how to spend the money but left them flexible enough to meet the different needs of member states. Finally, this money must not be used for ordinary budgetary expenditures but for investment and reforms.”
Eider GARDIAZABAL RUBIAL (S&D, ES), one of the lead negotiators said: “The RRF is the correct response to the impact of the virus. It has two aims: in the short-term, to recover by supporting gross national income (GNI), investments and households. In the long-term, this money is going to bring about change and progress to meet our digital and climate goals. We will ensure that the measures will alleviate poverty and unemployment, and will take into account the gender dimension of this crisis. Our health systems will also become more resilient”.
Dragoș PÎSLARU (Renew, RO), one of the lead MEPs involved, said: “Europe’s destiny is in our hands. We have a duty to deliver recovery and resilience to our youth and children, who will be at the centre of the recovery. One of the RRF’s six pillars is dedicated especially to them, which means investing in education, reforming with them in mind and doing our bit for youth to help them get the skills they will need. We do not want the next generation to be a lockdown generation”.
Next steps
Once Council has also formally approved the regulation, it will enter into force one day after its publication in the Official Journal of the EU.
Contact:

Dorota Kolinska, Press Officer | dorota.kolinska[at]europarl.europa.eu

Compliments of the European Parliament
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The Federal Reserve Board on Tuesday announced the second extension of a rule to bolster the effectiveness of the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). Like the earlier extensions, this one will temporarily modify the Board’s rules so that certain bank directors and shareholders can apply to their banks for PPP loans for their small businesses.
To prevent favoritism, the Board limits the types and quantity of loans that bank directors, shareholders, officers, and businesses owned by these persons can receive from their affiliated banks. However, these limits have prevented some small business owners from accessing PPP loans—especially in rural areas.
The SBA clarified last year that PPP lenders can make PPP loans to businesses owned by their directors and certain shareholders, subject to certain limits, and without favoritism. The Board’s rule extension will allow those individuals to apply for PPP loans, consistent with SBA’s rules and restrictions. The extension only applies to PPP loans.
The Board is providing the rule extension to allow banks to continue to make PPP loans to a broad range of small businesses within their communities. The SBA explicitly has prohibited banks from prioritizing or providing favorable processing time to PPP loan applications from a director or equity holder, and the Board will administer the rule extension accordingly.
The rule extension is effective immediately and applies to PPP loans made through March 31, 2021. Comments will be accepted for 45 days after publication in the Federal Register.
Contact:

For media inquiries, call 202-452-2955

Compliments of the U.S. Federal Reserve.

The post Federal Reserve Board announces the second extension of a rule to bolster the effectiveness of the Small Business Administration’s Paycheck Protection Program (PPP) first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Speech by Fabio Panetta, Member of the Executive Board of the ECB, at a Bruegel online seminar |

Throughout history, innovations in money have challenged and altered the structure of the financial system. Time and time again, innovations have given rise to debates about the risks they pose and the rewards they bring, as well as the role of central banks in building confidence in money.
Paper banknotes are a case in point. As they were easy to carry, they made commerce more straightforward. But their success did not come easily. Attempts by central banks to issue banknotes in the 17th century resulted in too many being issued and even defaults, raising questions about their effects on stability and, ultimately, on the credibility of the sovereign. Yet modern banknotes eventually enhanced the benefits of central banking for society at large.[1]
Similar debates emerged with the rise of bank deposits in the 19th century. Advances in recording and communication technologies helped deposits become popular, consolidating the role of banks in money creation. But this also raised awareness that confidence in money depends on the stability of bank deposits, leading central banks to take on the role of lender of last resort.
In today’s discussion on the digitalisation of payments, these debates sound familiar. Some fear that digitalisation, if not properly governed, could crowd out cash over time, create instability and even threaten monetary sovereignty. Central banks are therefore considering whether they should innovate themselves, by offering sovereign money in digital form to the public at large.
At the ECB we are considering whether to issue – alongside euro banknotes – a digital euro: a digital form of money that, just like cash and unlike other means of payment, would be a claim on the central bank instead of a claim on a private intermediary.
But we must fully understand the economic, financial and societal implications of issuing a digital euro: we should consider how we can achieve the benefits while preserving the stability of the financial system and meeting the needs of Europeans.
Today, I will discuss the main effects a digital euro could have on banking intermediation, financial stability and the international financial system. And I will consider some key design options that could address the risks involved.
Benefits in the context of the digitalisation of financial services
The increased use of the internet, supported by rapidly growing computing power, has affected the entire economy. In the field of payments and financial services, the past decade has seen a rising number of providers and innovative technologies and products.[2]
At the same time, we have seen a profound shift in payment preferences, with the use of cash in retail payments declining.[3] Even before the pandemic, one in two Europeans said they would prefer to pay digitally in a shop.[4] The pandemic has accelerated this trend.[5] This is the first reason why we are working on a digital euro: combining the safety of central bank money and the convenience of a digital means of payment in order to satisfy consumer preferences.
Another reason is that while digitalisation generates greater efficiency and lower costs, it may also pose risks for consumers and the financial sector.
The global tech giants – or big techs – are setting the pace of change in the provision of financial services in various ways. They are seeking to sidestep traditional distribution networks – including payment systems – through their control of social media, online marketplaces and mobile technologies.[6] This could lead to the rapid and large-scale take-up of the financial services offered by big techs, both domestically and across borders.[7] Big techs are also seeking to expand the reach and improve the quality of financial intermediation through the large-scale processing of proprietary consumer data generated by their core activities.[8] They could use such data to reduce the information asymmetry that lies at the heart of financial intermediation.[9]
Data-driven models could jeopardise privacy and pose the risk of personal information being misused. Moreover, integration with other services provided by big tech companies may threaten competition through tying, bundling, cross-subsidisation and winner-takes-all dynamics.[10] This could crowd out traditional intermediaries and reduce competition in financial markets, limiting consumer choice. In Europe, the expansion of big tech companies could make us dependent on technologies governed elsewhere.[11] Finally, big techs may contribute to a rapid take-up of stablecoins both domestically and across borders, which could create systemic risks and even endanger monetary sovereignty.[12]
A potential answer to these trends – higher demand for digital payments and a possible dominant role of large, foreign service providers – is for central banks themselves to go digital in order to preserve money as a public good.[13]
A digital euro would aim to support digitalisation while continuing to give people choice in how they pay and ensuring their payments remain competitive and secure. It would be designed to be safe, costless, easily accessible and simple to use, thereby supporting financial inclusion. It would have the protection of privacy as a key priority, thereby helping to maintain trust in payments. We have in fact already analysed privacy-enhancing techniques, and we will continue to do so in the coming months.[14]
A digital euro would be available to households, firms, merchants and financial intermediaries for payments across the euro area, thereby helping to unify the European market. And it would increase consumer choice, reduce transaction costs and support the digitalisation of the economy, while making sure that central bank money remains at the core of the financial system, underpinning stability.
Our objective would be to make a digital euro interoperable with private payment solutions, so that it could be accessed through them. It would thus level the playing field by making it possible for all market participants – bank and non-bank intermediaries and fintechs – to offer, at a lower cost, products that allow people to pay instantly.
A digital euro could also act as a catalyst at the international level. By ensuring interoperability with foreign digital currencies, including other central bank digital currencies (CBDCs), it could create much needed efficiency gains in cross-border payments[15], lowering their costs.
Potential unwarranted effects on the financial system
In the broader debate and in some responses to our public consultation[16], a number of concerns have been raised about the potential impact of a digital euro on the financial system.
Paradoxically, a digital euro may prove too successful.[17] If it is not properly designed, its main strengths – safety and liquidity – could affect monetary and financial stability on three fronts: first, financial intermediation and capital allocation in normal times; second, financial stability in times of crisis; and third, the functioning of the international financial system. Let me consider each of these in turn.
Effects on financial intermediation and capital allocation in normal times
A digital euro could affect financial intermediation in several ways. It could attract payments activity from banks and reduce their payments-related income and customer information. It could also attract deposits, especially if it were offered without limits on individual holdings and at such attractive conditions that the public moved large amounts of deposits from commercial banks to central banks.
The concern is that this could lead to less stable and more costly funding, lower bank profitability and, ultimately, lower lending, constraining the financing of the real economy. I would make two points here.
First, the risk of bank disintermediation depends on the design features of a digital euro. We can and should design it in ways that prevent this risk. I will come back to this crucial issue in more detail.
Second, the ECB does not plan to interact directly with potentially hundreds of millions of users of a digital euro. We simply would not have the capacity or the resources to do so. Financial intermediaries – in particular banks – would provide the front-end services, as they do today for cash-related operations. We would provide safe money, while financial intermediaries would continue to offer additional services to users.
Furthermore, beyond such design adaptations, economic thinking on the possible impact of a digital euro on financial intermediation is not clear cut. In fact, recent analyses emphasise that we should look at the broader economic implications of adopting a CBDC.
One consideration is that introducing a CBDC is by itself neutral in terms of the allocation of capital in the economy.[18] In fact, a shift from bank deposits into CBDC would merely change the composition of banks’ funding sources, with fewer private sector deposits and more central bank funding.[19]
Another consideration is that a digital euro could improve the allocation of capital by facilitating access to payments and reducing transaction costs, thereby helping to unlock business opportunities.[20] It could also enhance competition in banks’ funding markets. To the extent that funding markets are not perfectly competitive, a central bank digital currency could reduce the market power of commercial banks and improve contractual terms for customers, with little effect on the volume of outstanding deposits and loans.[21]
Potential effects in times of crisis
The risks to financial intermediation of issuing a digital euro are potentially more pronounced in times of crisis. This is the second way in which a digital euro could affect the financial system.
A digital euro would give access to a safe liquid asset which – unlike cash and in the absence of design-related constraints – could potentially be held in large volumes and at no cost. Indeed, if not properly designed, in times of crisis a digital euro could accelerate “digital runs” away from commercial banks towards the central bank. This risk could even be self-fulfilling, leading savers to reduce their bank deposits and amplifying volatility in normal times too.[22]
For this risk to materialise, a number of lines of defence – such as deposit insurance, supervision and the lender of last resort – would have to fail or be perceived to be insufficient in the light of how easy it would be to convert deposits into safe central bank money. Moreover, a digital euro could provide additional tools to counter such risks to financial stability. For example, it could provide the central bank with real-time information on deposit flows, enabling a swift reaction if needed.
But overall, the risk that a digital euro could have adverse effects in times of crisis cannot be ruled out. A digital euro should therefore be designed in a way that enables this risk to be strictly controlled, as I will discuss in more detail shortly.
Impact on the international monetary system
The third way in which a digital euro could have an impact on the financial system is at the cross-border level. Depending on whether it would be accessible to non-residents and interoperable with non-euro payment systems, a digital euro could also have far-reaching implications for the rest of the world.
A digital euro accessible to non-residents could make the single currency more attractive as a safe means of payment for retail transactions across borders. It could help tackle inefficiencies in cross-border payment infrastructures and make it easier to transfer remittances.
But if a digital euro were not designed in a way that prevented it from being used as a form of investment, these benefits would come with the risk of amplifying international shocks. The fact that a digital euro would be very liquid may lead to foreign investors using it disproportionately and rebalancing much more forcefully into or away from it in response to shocks. Indeed, recent research suggests that, in the presence of a CBDC, shocks could result in greater exchange rate fluctuations and have a stronger effect on foreign financial conditions. This, in turn, could force foreign central banks to become more responsive to international spillovers.[23]
Conversely, these dynamics mean that the absence of a digital euro could make Europe more vulnerable to international developments: widespread adoption of digital currencies by foreign central banks could make the European economy and financial system more sensitive to shocks from abroad.
Design and policy options
To obtain the benefits of a digital euro – such as the ability to guarantee privacy in digital payments, financial inclusion and universal access – it would need to be carefully designed. Potential design features were reviewed in the Eurosystem’s report[24] and will be assessed in depth by the Task Force that is studying the launch of a digital euro. Only when all issues have been addressed will we make a decision about whether or not to issue a digital euro.
A comprehensive analysis of such design features goes beyond the scope of this seminar. I will therefore limit my comments today to the features that are necessary to preserve the stability of the financial system, leaving comments on other crucial issues for another time.
A digital euro should be an efficient means of payment, domestically and internationally. But crucially, in order to preserve stability, it should be designed in a way that prevents it from being used as a form of investment. A number of possible design features could satisfy these principles.
One option would be to limit the amount of digital euro individual users can hold.[25] This would prevent large inflows of bank deposits – as well as volatile portfolio inflows from abroad – into the central bank. One way of doing this, while allowing the digital euro to be used for large transactions, would be to require incoming funds in excess of a user’s limit to be redirected to a bank account. The link between private money and digital euro accounts would avoid fragmentation of a user’s liquidity and would also be useful for outgoing payments. Large outgoing transactions could be conducted by transferring a combination of digital euro and private money.
Another option would be to set a penalising remuneration on individual users’ digital euro holdings above a certain threshold.[26] Up to that threshold, amounts held in digital euro would never be subject to negative interest rates and would thus never be treated less favourably than cash. Above that threshold, remuneration would be set so that larger digital euro holdings are only worthwhile to make larger payments and not on an ongoing basis as a form of investment.
In identifying the appropriate threshold, one would need to strike the right balance between unlocking the benefits of a digital euro as a means of payment and mitigating risks of disintermediation or even bank runs. As a yardstick, a threshold of €3,000 would be more than the amount of cash most citizens hold today[27] and would be above the average monthly wage in most euro area countries.
Tiered remuneration could provide a less distorting way to disincentivise large digital euro holdings. At the same time, it could present implementation challenges. For example, in times of crisis it could be necessary to adjust the remuneration of the digital currency, but this could signal that the central bank is anticipating financial tensions, leading to self-fulfilling instability.
Similar design features would have to be applied to the use of a digital euro by non-residents. This would stop a digital euro replacing other forms of investment and facilitating currency substitution in countries outside the euro area. In any event, international cooperation on design, cross-border use and interoperability would be key to reap the potential benefits of CBDCs for cross-border payments, while addressing risks to the international financial system.
Conclusion
Let me conclude. Just as banknotes were an important innovation for central banks and bank deposits gave commercial banks a greater role in intermediation, the ongoing digitalisation of money and payments is challenging the established structure of the financial system.
A digital euro represents a natural evolution in response to this transformation – not only to underpin efficiency and innovation, but also to preserve the role of the central bank in offering safe means of payment. Throughout history, this safety has proven to be crucial in maintaining public confidence in money and, ultimately, in the State. A key goal of a digital euro should therefore be to preserve a fine balance between sovereign and private money to ensure payments remain stable and efficient.
But as the past has taught us, if innovations in central bank money are not well designed, they can become a source of financial disruption. To avoid any unintended effects and reap the full benefits of a digital form of central bank money, we will carefully consider all aspects of its design.
Our recent public consultation on a digital euro is part of this exercise. In the spring we will publish an analysis of the replies we received. This analysis will provide important input into our decision, towards the middle of the year, about whether or not to formally launch a project to prepare for the issuance of a digital euro.
As our work on a digital euro moves forward, the views of citizens, businesses, banks and all stakeholders will continue to be of utmost importance in ensuring that a digital euro would be optimally designed and, ultimately, serve Europeans well.

Compliments of the European Central Bank.
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Rule Expected to Protect the Economic Interests of American Workers |
WASHINGTON—U.S. Citizenship and Immigration Services has announced a final rule that will modify the H-1B cap selection process, amend current lottery procedures, and prioritize wages to protect the economic interests of U.S. workers and better ensure the most highly skilled foreign workers benefit from the temporary employment program.
Modifying the H-1B cap selection process will incentivize employers to offer higher salaries, and/or petition for higher-skilled positions, and establish a more certain path for businesses to achieve personnel needs and remain globally competitive.
“The H-1B temporary visa program has been exploited and abused by employers primarily seeking to fill entry-level positions and reduce overall business costs,” said USCIS Deputy Director for Policy Joseph Edlow. “The current H-1B random selection process makes it difficult for businesses to plan their hiring, fails to leverage the program to compete for the best and brightest international workforce, and has predominately resulted in the annual influx of foreign labor placed in low-wage positions at the expense of U.S. workers.”
This effort will only affect H-1B registrations (or petitions, if the registration process is suspended) submitted by prospective petitioners seeking to file H-1B cap-subject petitions. It will be implemented for both the H-1B regular cap and the H-1B advanced degree exemption, but it will not change the order of selection between the two as established by the H-1B registration final rule.
The final rule will be effective 60 days after its publication in the Federal Register. DHS previously published a notice of proposed rulemaking on Nov. 2, 2020, and carefully considered the public comments received before deciding to publish the proposed regulations as a final rule.
Compliments of the U.S. Citizenship & Immigration Services.
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The global regulatory environment for services trade became more restrictive in 2020, with new barriers compounding the shock of the COVID-19 pandemic on exporters, according to a new OECD report.
OECD Services Trade Restrictiveness Index (STRI): Policy trends up to 2021 shows an increasing pace in the erection of new barriers to services trade across all major sectors. New restrictions are affecting services traded through a range of commercial establishments, in sectors including computer services, commercial banking and broadcasting. Global services trade fell by 24% in the third quarter of 2020 compared to a year ago, a small uptick from the 30% year-on-year decline registered in the second quarter.
While the overall trend was toward greater restrictiveness, governments around the world did lower barriers to cross-border digital trade in 2020, as part of the overarching policy response to the COVID-19 pandemic. More facilitation measures for digital trade were issued than in previous years, helping remote working and online business operations.
“We have experienced a major shift in trade during the pandemic,” OECD Secretary-General Angel Gurría said. “Transport and travel have collapsed, but digitally-delivered trade and enabling services such as telecommunications have contributed to the resilience of our economies. Lifting restrictions to trade in services will be critical as governments seek to put the global economy on the road to a strong, inclusive and sustainable recovery.”
The report, which covers services trade regulations in 48 countries, representing more than 80% of global services exports, identifies top performers in terms of regulatory best practices, including Czech Republic, Latvia, the Netherlands, Japan, Lithuania and the United Kingdom. It also highlights recent reform efforts in Brazil, China, Iceland, Indonesia and Kazakhstan.
National and collective action to ease barriers to services trade can reduce trade costs for firms that provide services across borders. On average across sectors and countries, services trade costs could decline by more than 15% after 3-5 years if countries could close half of the regulatory gaps with best performers. An ambitious services trade agenda, including new services market access commitments in comprehensive trade and investment agreements, can drive such gains, the report said.
Contacts:

John Drummond, Head of the Trade in Services Division of the OECD Trade and Agriculture Directorate| John.Drummond@oecd.org

Lawrence Speer, OECD Media Office | lawrence.speer@oecd.org

Compliments of the OECD.
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The Portuguese IP office (INPI) is organising a virtual high-level conference on Intellectual Property and Digital Transition, on 11 February 2021.
Under the theme of ‘The Intellectual Property metamorphosis in the Age of Digital Transition – Remember the past, Act in the Present, and Reflect on the challenges of the Future’, the conference will focus on two central themes: digital transition and intellectual property. The event has been organised within the framework of activities of Portugal’s presidency of the Council of the European Union.
The EUIPO’s Executive Director, Christian Archambeau, will give an opening speech at the conference.
On 1 January 2021, Portugal was entrusted with the rotating presidency of the Council of the EU. With the official motto of ‘Time to deliver: a fair, green and digital recovery’, the presidency believes that it is essential to reflect on the importance of intellectual property in the European context.
All information related to the conference can be found on the dedicated website of the event.
Compliments of the European Union Intellectual Property Office.
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To relaunch and strengthen the strategic partnership between the European Union and its Southern Neighbourhood partners, the European Commission and the High Representative today adopted a joint communication proposing an ambitious and innovative new Agenda for the Mediterranean.
The new Agenda is based on the conviction that by working together and in a spirit of partnership, common challenges can be turned into opportunities, in the mutual interest of the EU and its Southern neighbours. It includes a dedicated Economic and Investment Plan to spur the long-term socio-economic recovery in the Southern Neighbourhood. Under the new EU’s Neighbourhood, Development and International Cooperation Instrument (NDICI), up to €7 billion for the period 2021-2027 would be allocated to its implementation, which could mobilise up to €30 billion in private and public investment in the region in the next decade.
High Representative/Vice-President Josep Borrell said: “This Communication sends a crucial message about the importance we attach to our Southern Neighbourhood. A strengthened Mediterranean partnership remains a strategic imperative for the European Union. 25 years after the Barcelona Declaration and 10 years after the Arab Spring, challenges in the Mediterranean – many of which resulting from global trends – remain daunting. To address these challenges, we need to renew our mutual efforts and act closely together as partners, in the interest of all of us. This is what this new Agenda is all about. We are determined to work together with our Southern Partners on a new Agenda that will focus on people, especially women and youth, and help them meet their hopes for the future, enjoy their rights and build a peaceful, secure, more democratic, greener, prosperous and inclusive Southern Neighbourhood.”
Commissioner for Neighbourhood and Enlargement Olivér Várhelyi added: “With the Renewed Partnership with the Southern Neighbourhood we are presenting a new beginning in our relations with our Southern partners. Based on common interests and common challenges; developed together with our neighbours. It shows that Europe wants to contribute directly to a long-term vision of prosperity and stability of the region, especially in the social and economic recovery from the COVID-19 crisis. In close dialogue with our partners, we have identified a number of priority sectors, from creating growth and jobs, investing in human capital or good governance. We consider migration to be a common challenge, where we are ready to work together to fight irregular migration and smugglers together with our partners as it is a risk for all of us. We will work together to bring real change on the ground for the benefit of both our neighbours and Europe!”
The new agenda draws on the full EU toolbox and proposes to join forces in fighting climate change and speeding up the twin green and digital transition and harness their potential, to renew our commitment to shared values, to jointly address forced displacement and migration, and to strengthen the unity and resolve of the EU, its Member States and Southern neighbourhood partners in promoting peace and security in the Mediterranean region. It focuses on five policy areas:

Human development, good governance and the rule of law: Renew the shared commitment to democracy, the rule of law, human rights and accountable governance;

Resilience, prosperity and digital transition: Support resilient, inclusive, sustainable and connected economies that create opportunities for all, especially women and youth;

Peace and security: Provide support to countries to address security challenges and find solutions to ongoing conflicts,

Migration and mobility: Jointly address the challenges of forced displacement and irregular migration and facilitate safe and legal pathways for migration and mobility,

Green transition: climate resilience, energy, and environment: Taking advantage of the potential of a low-carbon future, protect the region’s natural resources and generate green growth.

A dedicated Economic Investment Plan for the Southern Neighbours aims at ensuring that the quality of life for people in the region improves and the economic recovery, including following the COVID-19 pandemic, leaves no one behind. The plan includes preliminary flagship initiatives to strengthen resilience, build prosperity and increase trade and investment to support competitiveness and inclusive growth. Respect for human rights and the rule of law are an integral part of our partnership and essential to ensure citizens’ trust in the institutions.
Background
In 1995, the Barcelona Declaration launched the Euro-Mediterranean Partnership with the objective to create an area of peace, shared prosperity, and human and cultural exchanges. The last European Neighbourhood Policy review took place in 2015.
25 years on, the Mediterranean region is facing a number of governance, socio-economic climate, environmental and security challenges, exacerbated by the COVID-19 pandemic. The European Council in December 2020 highlighted the need to develop a new Agenda for the Southern neighbourhood and looked forward to the Joint Communication.
The new Agenda for the Mediterranean will guide the EU’s policy towards the region and the multi-annual programming under the EU’s new Neighbourhood, Development and International Cooperation Instrument (NDICI) at the regional and bilateral levels. The EU will carry out a mid-term review of the Joint Communication by 2024.
For More Information
Joint Communication on the renewed partnership with the Southern Neighbourhood
Economic and Investment Plan for the Southern Neighbours 
Compliments of the European Commission.
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Interview with Le Journal du Dimanche |

There’s been a glut of bad news throughout Europe recently. How can we hold to the economic projections?
Uncertainties are indeed multiplying. As far as the economists at the ECB can remember, there have never been as many. Our projections are published every three months. One way of preserving a degree of optimism despite the current circumstances is simply to think back to the ECB’s projections released in September 2020 and the multiple uncertainties they took into account. What were the salient facts back then? The terms of the final Brexit deal were not yet known. The risks of a no-deal exit were still present, as much for the European Union as for the United Kingdom. On the pandemic front, no vaccines had been found and it was impossible to predict when they might become available. The US elections, of crucial importance for the whole world, had not yet been held. All of these major uncertainties have now been resolved, notably the most important one of all – the availability of reliable vaccines – because several have since been authorised by the competent international health authorities. That’s a new situation and it’s certainly a reason to be optimistic.
But is it enough to hope that 2021 will be a better year than the one before?
At the ECB we remain convinced that 2021 will be a recovery year. The economic recovery has been delayed, but not derailed. People are obviously waiting impatiently for it. We expect the upswing to gather pace around the middle of the year, even if the uncertainties persist. We are not immune to unknown risks surfacing. Let’s be clear: we will not see a return to pre-pandemic levels of economic activity before mid-2022.
What rate of growth do you expect for the euro area this year?
Around 4%. Maybe a little lower. This would already be a sharp increase relative to the contraction of 6.8% registered in the euro area in 2020. Everything will depend on the vaccination policies and the rollout of the campaigns. And on the economic measures taken by governments in response to health requirements.
On 21 July 2020, the European Heads of State and Government agreed on an exceptional recovery plan worth €750 billion. Are you concerned about the plan’s implementation?
There is no doubt that the current crisis has strengthened the European Union. The decision taken by the Member States to borrow jointly for the first time marks a moment of exceptional cohesion in the history of the European project. But the momentum must absolutely be kept up. The pandemic has an accelerating impact on everything: so we, too, need to speed up. You fight fire with fire. It’s better to act quickly, even if you might then have to backtrack to correct things that may have gone wrong.
The plan needs to be ratified in time for the European Commission to borrow as planned next June, and to then distribute the funds among the Member States of the European Union. In order for it to do so, all of the national recovery plans, comprising measures to promote green and digital transitions, will have to be submitted to the Commission very soon.
How will the ECB continue to act?
For its part, the ECB has been supporting households, firms and the Member States’ economies since the outset of the crisis. It acted extremely quickly, unveiling an initial €750 billion programme on 18 March 2020, followed by two other expansions amounting today to a total envelope of €1.85 trillion. Faced with the spread of the virus, it was important to prevent a fragmentation of financing conditions across euro area countries. We committed ourselves to remaining active in the markets until at least March 2022 in order to support and preserve financing conditions in Europe. Our preferred tool is the pandemic emergency purchase programme (PEPP), which differs from the ECB’s other asset purchase programmes, for two reasons: it is an emergency programme targeted to this crisis, and it gives us the option of deviating from the usual limits if they stand in the way of the support we need to provide to euro area economies. It’s an exceptional and temporary tool. As I have been saying since March 2020, our commitment to the euro has no limits. We will act for as long as the pandemic is causing a crisis situation in the euro area. We think that the time horizon of March 2022 is reasonable and that the PEPP envelope is appropriate. But if the ECB’s Governing Council thinks there is a need to do more, over a longer period, we will do more. However, if the whole envelope does not need to be used, we will not use it in full. That’s the principle of flexibility.
Doesn’t this accommodative monetary policy stance create risks?
We don’t see anything that gives us cause for concern. We do not yet see property bubbles at the euro area level, but we see signs of overvaluations in some of the euro area’s major cities in France, Germany, Luxembourg and Belgium, for example.
That said, it is vital that we continue to support lending across the entire economic system. Banks provide assets as collateral to the ECB and in return they receive funds at very low rates. They then use these funds to lend to firms. The priority is to ensure businesses have access to the funding they need. There is no alternative: when the economy is protected in this way, the ECB’s role is not to give one business priority over another. Collectively, we must give priority to growth, competition and innovation. At that point, the natural selection of companies will set in.
How should we react once the crisis is over?
Once the pandemic is over and the immediate economic crisis is behind us, we will have a tricky situation on our hands. We will have to be well organised. And not repeat past mistakes, like closing all the taps at once, cutting off both fiscal and monetary stimulus. Instead, we need to offer flexible support to our economies, and then reduce this support gradually as and when the pandemic subsides, and the recovery takes hold. Economies will then have to learn how to function again without the help of any of the exceptional measures that had to be introduced as a result of the crisis. I am not worried about this, because the capacity for recovery is strong. Our economies are resilient. To convince ourselves of this, we only have to look at the remarkable improvement recorded by the French economy in the third quarter of 2020, when quarterly growth rebounded by 18.5%.
Don’t the gaps between euro area Member States make it difficult to come up with a common monetary policy?
Above all else, the coronavirus (COVID-19) crisis has exacerbated any pre-existing gaps. That is why the Next Generation EU recovery plan is even more crucial, particularly the support it will provide through the grants given to each Member State, tailored precisely to their specific national situations. For example, Italy will receive around €200 billion in grants and loans. It is therefore vital that this exceptional solution is not wasted and that it is rolled out as soon as possible.
Concerns are surfacing about the very high debt levels of Member States. Is there any basis for these concerns?
There is no denying that our monetary policy would be more effective if there was a greater convergence of Member States’ economic policies. All euro area countries will emerge from this crisis with high levels of debt. There is no doubt that they will manage to repay this debt. Debt is managed over the long term. Investments made in sectors that are vital for the future will bring stronger growth. The recovery will create jobs and will therefore have a unifying effect. We are transitioning to a different economy, one that is more digital, greener, more committed to combatting climate change and to protecting biodiversity. It will also be driven by new values – which young people are already expressing through their job and career demands – which will meet a new set of parameters. Healthcare in particular is one of their main areas of focus.
A letter signed by 100 economists is calling for cancellation of the public debt owned by the ECB. How would you respond to them?
Cancelling this debt is inconceivable. It would be in violation of the EU Treaty which strictly prohibits monetary financing. This rule is a fundamental pillar of the common framework underpinning the euro. The EU Treaty has been agreed and ratified freely and voluntarily by EU Member States. Rather than expending so much energy asking for debt to be cancelled, it would be much more worthwhile to focus instead on how this debt should be used, on how public funds will be allocated, on which sectors we should invest in for the future. Those are the things we should currently be talking about.
Your predecessor Mario Draghi has been asked to form a new government in Italy. What is your view of his nomination?
Italy and Europe are fortunate that Mario Draghi has accepted the challenge of helping to end Italy’s economic and social crisis at a time when it is the euro area country hardest hit by the pandemic.
I have full confidence in Mario Draghi’s ability to rise to this challenge. He has all the requisite qualities: he has the knowledge, courage and humility needed to complete his new task, i.e. to restart the Italian economy with help from Europe.
Janet Yellen, the former chair of the US Federal Reserve, has become US treasury secretary. Is it good news?
Having a woman hold this position for the first time is wonderful news! What’s more, Janet Yellen has the ideal profile given the circumstances: she is an economist and a labour market specialist. Employment will play a crucial role in restarting the economy. She is also very warm and pleasant. She is as humble as she is brilliant. Her appointment will also help promote smooth economic relations between Europe and the United States. We will once again see a cooperative approach being taken in key areas, such as international trade and how to deal with the challenges of climate change.
You have called for the “greening” of monetary policy. Is this really part of a central bank’s mandate?
Absolutely. We all have a role to play in combatting climate change. The ECB is acting in accordance with its price stability mandate; climate change poses a risk to price stability, since it has an impact on growth, price levels and the economy in general. There is a legitimate legal basis for our stance. Public opinion is in favour of taking environmental, social and good governance criteria into account.
Compliments of the European Central Bank.

The post Interview with Christine Lagarde, President of the ECB, conducted by Marie-Pierre Gröndahl and Hervé Gattegno first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Decision follows successful completion of pilot phase
First round of survey results to be published on 18 June 2021
Survey runs eight times a year, ahead of each Governing Council monetary policy meeting

The European Central Bank (ECB) announces today that it will begin publishing aggregate results of its Survey of Monetary Analysts (SMA) in June 2021. The survey, an ECB staff-level exercise, collects information on market participants’ expectations about the future evolution of key monetary policy parameters, financial market variables and the economy. The survey runs eight times a year and is aligned with the six-week schedule of the monetary policy meetings of the Governing Council.
Following the successful completion of a pilot phase, which ran from April 2019, the ECB will start publishing the survey results in aggregate form for each round on the Friday the week after the Governing Council. The first survey results to be published on 18 June 2021 will be those of the June 2021 SMA.
The ECB selects survey respondents through selection criteria that include market relevance, geographical representativeness, commitment to participating regularly in subsequent rounds of the survey, and whether the institution is actively involved in the areas of activity covered by the survey. The list of survey respondents is published on the ECB’s website.
Contact:

Silvia Margiocco, e.: silvia.margiocco@ecb.europa.eu | tel.: +49 69 1344 6619

Compliments of the European Central Bank.
The post ECB to publish results of the Survey of Monetary Analysts first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Today, the Commission opened infringement procedures against 24 Member States for failing to enact new EU telecom rules. The European Electronic Communications Code modernises the European regulatory framework for electronic communications, to enhance consumers’ choices and rights, for example by ensuring clearer contracts, quality of services, and competitive markets. The Code also ensures higher standards of communication services, including more efficient and accessible emergency communications. Furthermore, it allows operators to benefit from rules incentivising investments in very-high capacity networks, as well as from enhanced regulatory predictability, leading to more innovative digital services and infrastructures.
The deadline for transposing the Code into national legislation was 21 December 2020. So far only Greece, Hungary and Finland have notified to the Commission that they adopted all necessary measures for transposing the Directive, thus declaring their transposition complete.
Therefore, the Commission sent letters of formal notice to Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Ireland, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, and Sweden, requesting them to adopt and notify the relevant measures. The Member States have two months to reply.
Background
The European Electronic Communications Code that brings the regulatory framework governing the European telecom sector up to date with the new challenges came into force in December 2018, and Member States have had two years to implement its rules. It is a central piece of legislation to achieve Europe’s Gigabit society and ensure full participation of all EU citizens in the digital economy and society.
To support Member States in transposing the Directive into national law, the Commission has been monitoring the transposition process and has been providing them with extensive guidance and assistance. Furthermore, the Body of European Regulators of Electronic Communications (BEREC) has developed and published guidelines to work towards the successful implementation of the new rules.
In line with the Code, in December 2020, the Commission adopted the following legislation to reinforce competition, regulatory harmonisation and a level playing field for all market players, as well as protect consumers and allow fair rates and varied offers for internet and telephone services.

A new Delegated Regulation setting single maximum Union-wide voice termination rates that operators are allowed to charge each other for delivering fixed and mobile calls between their networks.
An updated Recommendation on Relevant Markets, updating the list of predefined markets which European National Regulatory Authorities are required to regularly review.

Compliments of the European Commission.
The post EU Commission opens infringement procedures against 24 Member States for not transposing new EU telecom rules first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.