EACC

Human Traffickers’ ring busted in France and Bulgaria

An international criminal network involved in the trafficking of 167 people for labour exploitation was taken down by the national authorities of France and Bulgaria in several joint action days. One French and three Bulgarian suspects were arrested and heard in France, and numerous searches were carried out in Bulgaria. Eurojust, the EU’s Judicial Cooperation Unit, supported the simultaneous operations through real-time coordination of the national judicial and law enforcement authorities, and by setting up a joint investigation team (JIT). The JIT allowed the authorities to safely and rapidly exchange vital information on the national investigations, and agree on and implement a common strategy.

In February 2019, the Specialised Jurisdiction (JIRS) of Lyon undertook an investigation into an organised crime group (OCG) and its leaders, involved in trafficking in human beings for the purpose of labour exploitation, as well as in money laundering. At the same time, a parallel investigation into the same criminal gang was initiated by the Bulgarian Specialised Prosecutor’s Office. Due to the transnational dimension of the case, the Public Prosecutor of Lyon immediately referred the case to Eurojust to coordinate and advance the national investigations, leading to the successful joint action days.
The members of the criminal network, which is composed of Bulgarian and French nationals, used a Bulgarian recruitment agency to attract underprivileged Bulgarians to perform allegedly well-paid jobs as seasonal workers in French vineyards. The aspiring workers were also promised free accommodation and transport, the costs of which were unknowingly deducted from their salaries, along with other high charges. The victims of the gang ended up receiving only two thirds of their income, which was not even sufficient to finance their transport back to Bulgaria. The human traffickers are also suspected of using properties in France to launder their ill-gotten gains.
The operation mobilized more than 80 French investigators, as well as several Bulgarian police officers, with the support of Europol  providing analytical and operational support.
Compliments of Eurojust

EACC

Joint Press Statement from Commissioner Věra Jourová and Secretary of Commerce Wilbur Ross on the Third Annual EU-U.S. Privacy Shield Review

A joint statement following the third annual EU-US Privacy Shield review stressed the need for strong and credible enforcement of privacy rules to protect citizens and ensure trust in the digital economy.
Today, U.S. Secretary of Commerce Wilbur Ross and EU Commissioner for Justice, Consumers, and Gender Equality Věra Jourová made the following statement regarding the third annual joint review of the EU-U.S. Privacy Shield Framework:
“Senior officials from the United States Government, the European Commission, and EU data protection authorities gathered in Washington, DC on 12 and 13 September to conduct the third annual joint review of the EU-U.S. Privacy Shield Framework. The broad and senior level participation from both sides underscored the shared and longstanding commitment of the United States and the European Union to the Framework.
The U.S. Department of Commerce hosted the two-day review, which covered all aspects of the functioning of the Privacy Shield Framework from its administration and enforcement to broader U.S. legal developments regarding matters related to commercial data protection and national security data access. The review benefited from input from Privacy Shield participants and civil society stakeholders.
Privacy Shield ensures that participating companies and relevant government authorities provide a high level of protection for the personal data of EU individuals.  Since the Framework’s implementation on 1 August 2016, more than 5,000 companies have made public and legally enforceable pledges to protect data transferred from the EU in accordance with the Privacy Shield Principles.  The rapid and continued growth of the program demonstrates Privacy Shield’s vital role in protecting personal data and contributing to the $7.1 trillion economic relationship between the United States and Europe.
The EU and U.S. welcomed the appointment of several key U.S. officials with Privacy Shield responsibilities. The United States Senate confirmed two additional members to the independent, bipartisan U.S. Privacy and Civil Liberties Oversight Board, as well as Keith Krach, who in his Under Secretary role at the U.S. Department of State serves as the Privacy Shield Ombudsperson.
EU and U.S. officials both stressed the need for strong and credible enforcement of privacy rules to protect our citizens and ensure trust in the digital economy. As provided for in the Framework, the Department of Commerce will revoke the certification of companies that do not comply with Privacy Shield’s vigorous data protection requirements.
The European Commission will publish a report on the functioning of the Privacy Shield. This report will conclude this year’s review process.”
BackgroundOperational since 1 August 2016, the EU-US Privacy Shield protects personal data transferred from the EU to the U.S. for commercial purposes. It brings also legal clarity for businesses relying on the transmission of personal data across the Atlantic. By now, more than 5000 companies are certified under the Privacy Shield and thereby committing to comply with the data protection requirements.
As agreed at the time of its launch, the EU-US Privacy Shield is reviewed on a yearly basis, to assess that it continues to ensure an adequate level of protection of personal data. On 12 September 2019, Commissioner for Justice, Consumers and Gender Equality Věra Jourová, launched with the US Secretary of Commerce Wilbur Ross the discussions over the third annual review of the EU-U.S. Privacy Shield. The reports on the first and second review can be found here. The report of the third review will be made available at a later stage.
Download the full PDF here.
Compliments of the European Commission

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Eurojust helps unravel massive trans-European pay-TV fraud

A multi-country action day coordinated by Eurojust in The Hague led to the dismantling of an international criminal network committing massive fraud with pay-TV, which shows organised crime expanding its illegal activities to large-scale violations of audiovisual copyright. The actions taken in this unique case in the European Union are the result of complex investigations conducted by prosecutors from Naples and Rome, with the support of judicial and police authorities from Bulgaria, Germany, Greece, France, and the Netherlands, as well as Eurojust. The damage caused by the criminal gang amounts to approximately €6.5 million, jeopardising the existence of many legal providers of pay-TV on the market.  More than 200 servers were taken offline in Germany, France and the Netherlands, and over 150 PayPal accounts of the criminals were blocked. Eurojust, the EU’s Judicial Cooperation Unit, set up its 100th coordination centre, since the first in 2011, to support on the spot the national authorities in swiftly disrupting the illicit activities. Today’s simultaneous operation led to the disruption of the signal for illegal pay-TV viewers in Europe, who benefitted from a subscription fee far below market value.

A press conference on the case was held at Eurojust today at 12:00. A link to the recording of the press conference is available here .
OUTCOME OF THE CROSS-BORDER INVESTIGATIONS
● A complex and very technical investigation into the organised crime group (OCG) was conducted by the Public Prosecutor Office (PPO) of Naples, supported by the Nucleo Speciale Tutela Privacy e Frodi Tecnologiche della Guardia di Finanza di Roma.
● Due to the transborder dimension of the criminal activities, a case was opened at Eurojust to advance the Italian investigation. A link was also discovered with another investigation conducted by the PPO of Rome, which was supported by the Polizia di Stato – Servizio Polizia Postale e delle Comunicazioni – Sezione Financial Cybercrime.
● Eurojust ensured quick information exchange with the other Member States involved, as well as the proper and fast execution of judicial orders, including several European Investigation Orders and freezing orders. During the action day, evidence, including servers, digital equipment, payment instruments, record sheets and other infrastructure (Load Balance) were seized. A total number of 22 suspects of different nationalities were identified.
ACTIVITIES OF THE CRIMINAL NETWORK
In 2015, the OCG started illegally re-broadcasting and selling pay-per-view products and services, similar to the ones offered by Sky Italia, Mediaset Premium, Netflix, Dazon, and Infinity in various Member States and third countries. The well-skilled criminals used the most sophisticated and efficient software for the fraud. Several retransmission stations were set up with special servers to disable the encryption of the original programmes and generate the illegal IPTV signal in violation of intellectual property law. The gang members offered to a wide audience of unknowing clients actual pay-tv programmes, cinematographic works and on-demand content at a very low price. The illegally obtained assets were subsequently transferred to foreign bank accounts.
The members of the OCG are suspected of having committed large-scale fraud, cybercrime and money laundering.
Photos: © Polizia di Stato (IT)

NATIONAL AUTHORITIES The following national authorities, among others, were involved in the investigations and the joint action day coordinated by EUROJUST:
Italy● PPO of Naples
● PPO of Rome
● State Police – Servizio Polizia Postale e delle Comunicazioni – Sezione Financial Cybercrime● Nucleo Speciale Tutela Privacy e Frodi Tecnologiche della Guardia di Finanza di Roma
Greece● Extradition and mutual legal assistance (MLA) Office of the Appeals PPO of Athens
● MLA Office of the Court of First Instance of Athens
● First Instance PPO of Athens
● Court of First Instance of Thessaloniki
● First Instance PPO of Thessaloniki
● Hellenic Police – Cybercrime Division
● Hellenic Police – Northern Greece Cybercrime Subdivision
Bulgaria● PPO of the Republic of Bulgaria
● Ministry of Interior of the Republic of Bulgaria
France● Direction Régionale de la Police Judiciaire de Lille● Parquet du Tribunal de Grande Instance de Lille
Germany● General Prosecutor’s Office of Frankfurt am Main – Zentralstelle zur Bekämpfung der Internetkriminalität● PPO of Wuppertal
● Hessian State Police
The Netherlands● International Cooperation Unit (IRC) of the PPO of The Hague and the National Police, The Hague
Compliments of Eurojust

EACC

European Parliament gives green light to Christine Lagarde

Christine Lagarde obtained Parliament’s approval to be the ECB’s next President, in a plenary vote on Tuesday.

In the secret vote, MEPs voted 394 in favour, 206 against and 49 abstentions to recommend Ms Lagarde to head up the European Central Bank.
The European Parliament gives a non-binding opinion on whether or not a candidate is suitable to fill the role of President of the ECB, with the final decision taken by the European Council. She is due to replace the current incumbent, Mario Draghi on 1 November.
Earlier on Tuesday, the plenary held a debate on her suitability for the position.
Next steps
Ms Lagarde’s candidature will now be put on the agenda of October’s European Council summit.
Compliments of European Parliament

EACC

Committed to Accelerated Climate Action

Climate change is a defining challenge of our generation and the European Union (EU)  has been at the forefront of negotiating a multilateral framework to respond to this global challenge. In 2015, the EU diplomacy played a leading role in brokering the historic and global Paris Climate Agreement. 195 countries agreed on a simple goal: to hand over to future generations a healthier planet and more prosperous, modern and fair societies.

The EU has acted domestically with speed and decisiveness to put real actions behind the Paris Agreement commitments. Today, the EU has arguably the most comprehensive and ambitious legislative framework in place, underpinned by its long-standing democratic and inclusive decision-making process.
The rapidly changing climate is a global problem and it calls for global responsibility. We in Europe have claimed leadership in this and we assume it in full. We have acted, we continue to act, but to meet our long term temperature goals we know we must do more and act faster in cooperation with our partners.
The EU will therefore call for greater climate ambition at the Climate Action Summit in New-York (September 23rd) and throughout the Climate Diplomacy Week (September 24th-October 6th).

Compliments of the European Commission

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IMF: Sluggish Global Growth Calls for Supportive Policies

By Gita Gopinath IMF
In our July update of the World Economic Outlook we are revising downward our projection for global growth to 3.2 percent in 2019 and 3.5 percent in 2020. While this is a modest revision of 0.1 percentage points for both years relative to our projections in April, it comes on top of previous significant downward revisions. The revision for 2019 reflects negative surprises for growth in emerging market and developing economies that offset positive surprises in some advanced economies.
Growth is projected to improve between 2019 and 2020. However, close to 70 percent of the increase relies on an improvement in the growth performance in stressed emerging market and developing economies and is therefore subject to high uncertainty.
Global growth is sluggish and precarious, but it does not have to be this way because some of this is self-inflicted. Dynamism in the global economy is being weighed down by prolonged policy uncertainty as trade tensions remain heightened despite the recent US-China trade truce, technology tensions have erupted threatening global technology supply chains, and the prospects of a no-deal Brexit have increased.
The negative consequences of policy uncertainty are visible in the diverging trends between the manufacturing and services sector, and the significant weakness in global trade. Manufacturing purchasing manager indices continue to decline alongside worsening business sentiment as businesses hold off on investment in the face of high uncertainty. Global trade growth, which moves closely with investment, has slowed significantly to 0.5 percent (year-on-year) in the first quarter of 2019, which is its slowest pace since 2012. On the other hand, the services sector is holding up and consumer sentiment is strong, as unemployment rates touch record lows and wage incomes rise in several countries.
Among advanced economies—the United States, Japan, the United Kingdom, and the euro area—grew faster than expected in the first quarter of 2019. However, some of the factors behind this—such as stronger inventory build-ups—are transitory and the growth momentum going forward is expected to be weaker, especially for countries reliant on external demand. Owing to first quarter upward revisions, especially for the United States, we are raising our projection for advanced economies slightly, by 0.1 percentage points, to 1.9 percent for 2019. Going forward, growth is projected to slow to 1.7 percent, as the effects of fiscal stimulus taper off in the United States and weak productivity growth and aging demographics dampen long-run prospects for advanced economies.
In emerging market and developing economies, growth is being revised down by 0.3 percentage points in 2019 to 4.1 percent and by 0.1 percentage points for 2020 to 4.7 percent. The downward revisions for 2019 are almost across the board for the major economies, though for varied reasons. In China, the slight revision downwards reflects, in part, the higher tariffs imposed by the United States in May, while the more significant revisions in India and Brazil reflect weaker-than-expected domestic demand.
For commodity exporters, supply disruptions, such as in Russia and Chile, and sanctions on Iran, have led to downward revisions despite a near-term strengthening in oil prices. The projected recovery in growth between 2019 and 2020 in emerging market and developing economies relies on improved growth outcomes in stressed economies such as Argentina, Turkey, Iran, and Venezuela, and therefore is subject to significant uncertainty.
Financial conditions in the United States and the euro area have further eased, as the US Federal Reserve and the European Central Bank adopted a more accommodative monetary policy stance. Emerging market and developing economies have benefited from monetary easing in major economies but have also faced volatile risk sentiment tied to trade tensions. On net, financial conditions are about the same for this group as in April. Low-income developing countries that previously received mainly stable foreign direct investment flows now receive significant volatile portfolio flows, as the search for yield in a low interest rate environment reaches frontier markets.
Increased downside risks
A major downside risk to the outlook remains an escalation of trade and technology tensions that can significantly disrupt global supply chains. The combined effect of tariffs imposed last year and potential tariffs envisaged in May between the United States and China could reduce the level of global GDP in 2020 by 0.5 percent. Further, a surprise and durable worsening of financial sentiment can expose financial vulnerabilities built up over years of low interest rates, while disinflationary pressures can lead to difficulties in debt servicing for borrowers. Other significant risks include a surprise slowdown in China, the lack of a recovery in the euro area, a no-deal Brexit, and escalation of geopolitical tensions.
With global growth subdued and downside risks dominating the outlook, the global economy remains at a delicate juncture. It is therefore essential that tariffs are not used to target bilateral trade balances or as a general-purpose tool to tackle international disagreements. To help resolve conflicts, the rules-based multilateral trading system should be strengthened and modernized to encompass areas such as digital services, subsidies, and technology transfer.
Policies to support growth
Monetary policy should remain accommodative especially where inflation is softening below target. But it needs to be accompanied by sound trade policies that would lift the outlook and reduce downside risks. With persistently low interest rates, macroprudential tools should be deployed to ensure that financial risks do not build up.
Fiscal policy should balance growth, equity, and sustainability concerns, including protecting society’s most vulnerable. Countries with fiscal space should invest in physical and social infrastructure to raise potential growth. In the event of a severe downturn, a synchronized move toward more accommodative fiscal policies should complement monetary easing, subject to country specific circumstances.
Lastly, the need for greater global cooperation is ever urgent. In addition to resolving trade and technology tensions, countries need to work together to address major issues such as climate change, international taxation, corruption, cybersecurity, and the opportunities and challenges of newly emerging digital payment technologies.

Compliments of the IMF – International Monetary Fund

EACC

Remarks by Mário Centeno following the Eurogroup meeting

Good afternoon, let me start by thanking our Finnish friends for hosting us here in Helsinki.
Today we welcomed two newcomers in our group. Christos Staikouras from Greece and Roberto Gualtieri from Italy. We heard their policy priorities for the near future and their commitment with policies that contribute to preserving the stability of the euro. I should note that Roberto is no stranger to the group as he attended the Eurogroup before in his previous capacity as ECON Chair in the European Parliament.
Today was not the moment to discuss details of their presentations. We will discuss Greece again in December when we look at the fourth enhanced surveillance report. Italy will only come up in the context of the Draft Budgetary Plans, together with all other countries.
Still on new names, I launched today the call for candidates for the upcoming ECB Executive Board vacancy. We want to ensure a smooth succession of Benoit Coeuré, whose term ends on 31 December. Countries should present their names until 25 September and we will aim to agree on a name in our October meeting.
For our first discussion item today we welcomed Dag Detter, who is an expert in the management of public assets. He joined us for one of our regular exchanges of best practices on spending reviews. Our discussion this time focused on boosting the efficiency of public investment. Euro area governments are making increasingly better use of spending reviews but investment spending remains a difficult area to review, due in part to the long timespans of projects.  
We moved on to a valuable discussion about how we work, in the Eurogroup, so that our proceedings are as transparent as possible. Last year I launched a review of the transparency arrangements that were put in place in 2016. Many good practices are already in place, such as the publication of draft annotated agendas, summing-up letters and relevant meeting documents, not to mention these press conferences. Following this review, we considered next steps today.
We need to strike a balance between sharing with the public what we discuss and decide upon and, at the same time, protecting candid and open discussions both at the Eurogroup and at our preparatory body, the EWG. I think we reached that balance and there was broad support to this initiative.
Let me outline some examples:
We agreed to the creation of an online repository of publicly available Eurogroup documents;
We will expand – whenever possible – the summing-up letters, which is a detailed description of our proceedings.
We will also increase the transparency of our preparatory work in the EWG, by publishing the EWG meeting calendar and improving its webpage.
Overall, this is another step in increasing the transparency of the Eurogroup. It will be important to review these arrangements at regular intervals to ensure they remain fit for purpose.
Next up, we discussed the post-programme surveillance of Ireland. The European Commission, the ECB, the ESM and the IMF debriefed us on the main findings of their respective missions.
Ireland continues to show a very strong economic and fiscal performance. We encouraged Ireland to keep pursuing sound policies to enhance protection against downside risks, such as Brexit.
I will let Valdis and Klaus expand on the outcome of the mission.
Back in July, I attended the G7 Finance Ministers’ meetings in Chantilly, France, and today I reported briefly to Ministers on these discussions. That led the way to a forward-looking exchange on the economic outlook, going into the autumn. I asked the ECB to present its staff macroeconomic projections from yesterday.
On the G7 agenda, ministers highlighted the risks of digital currencies and Libra in particular, calling for a reflection on how we can take advantage of technological developments to reduce the costs of international financing transactions.
Regarding the economic situation, we are following developments very closely and stand ready to act if risks materialise and things get worse. At the Eurogroup we will coordinate our response. I should add that overall, and despite all the uncertainty looking, we remain positive about the euro area economy, which is still growing, albeit at a slower pace.
In the last crisis, we were able to find a balance in our comprehensive response, combining fiscal policy, structural reforms at national and EU levels and also monetary policy. Going forward, in the face of a downturn, we need to find a new balance and fiscal policy will surely play a part on this.
Another important element of a new balance of policies is the need to reinforce our institutions. This is why we have been reforming the euro area. A key innovation in that debate is the Budgetary Instrument for Convergence and Competitiveness for the euro area, which by now we call BICC – yes, another acronym.
Last June we agreed on a term sheet describing the main features of this tool. Leaders asked us to further work on some open issues, specifically on financing, asking us to report swiftly on appropriate solutions. Swiftly means October, with a view to integrate the broader debate on the next EU budget that will ensue.
Today we reviewed all the open issues under the BICC on the basis of work developed by the Commission during the break: the governance aspects, the financing, the allocation methodology, the modulation procedure and arrangements for the non-participating Member States.
Let me go through, briefly, each of these issues one-by-one.
On the governance, what we want to achieve is a Euro Area governance framework for the BICC, which will be linked with our well-tested European Semester.
One distinctive feature of the BICC is the prominent role of the Eurogroup and the Euro summit in particular in providing strategic guidance and identifying the priorities for investment and reform . Further work will take place at technical level on this subject.
Second, the financing of the BICC. This remains a tricky issue. While some would like to use only the EU budget own resources for the time being, many others reiterate the importance of adding external assigned revenues via an intergovernmental agreement.
We would need to insert a specific enabling clause in the underlying BICC legislation to foresee the possibility of such additional revenues.
Today, I heard broad support to pursue this option of an enabling clause, without prejudging an agreement on the actual intergovernmental agreement.
Third, we also reviewed various options for the allocation key. By this I mean the way the money will be distributed among member states. Given the goal of the instrument, its legal basis and the guidance we got from Leaders, the allocation key must reflect the size and the income or the economic position  of each member state. We should be able to come to an agreement by October, following further technical discussions.
Fourth, we also discussed the idea of “modulation” – this is a process whereby national co-financing rates may be reduced. The specific cases where this could happen have yet to be agreed and clarified .
Finally, there is consensus that the BICC should not come at the expense of non-euro area members. We are exploring several options for making this possible, including a different and dedicated instrument.
We will come back to all this at our next meeting in Luxembourg in October to deliver solutions as was requested by Leaders. That means it will probably be a longer meeting.
Compliments of the European Commission

EACC

World Bank Group Debars Ingeniería Especializada Obra Civil e Industrial S.A.U.

The World Bank today announced the 28-month debarment of Spanish engineering company Ingeniería Especializada Obra Civil e Industrial S.A.U. in connection with corrupt, collusive and fraudulent practices in the World Bank-financed National Roads and Airport Infrastructure Project in Bolivia. At the time of the misconduct, the firm’s name was Acciona Ingeniería S.A., and it operated in Bolivia through a branch office.

The debarment makes Ingeniería Especializada Obra Civil e Industrial S.A.U. ineligible to participate in World Bank-financed projects. The debarment is part of a settlement agreement under which the company does not contest the findings of the World Bank’s investigation. The firm agrees to meet specified corporate compliance conditions as a condition for release from debarment.
The project was designed to improve year-round use of the San Buenaventura–Ixiamas National Road, and the safety, security and operational reliability of the Rurrenabaque Airport in Bolivia. The World Bank’s Integrity Vice Presidency (INT) found that Ingeniería Especializada Obra Civil e Industrial S.A.U. engaged in a corrupt practice to secure the award of a World Bank-financed contract for the supervision of a road construction under the project. The company engaged in a collusive practice when arranging to replace a bid form following bid submission. Finally, while executing the contract, the Bolivian branch engaged in a fraudulent practice by approving certificates inflating the progress of work.
The settlement agreement provides for a reduced period of sanction in light of the company’s extensive cooperation and voluntary remedial actions. These actions include conducting independent internal investigations, voluntarily restraining from bidding on new World Bank-financed projects, and taking internal action against responsible employees.
As a condition for release from sanction under the terms of the settlement agreement, the company commits to developing an integrity compliance program consistent with the principles set out in the World Bank Group Integrity Compliance Guidelines. To that end, Corporación Acciona Infraestructuras S.L., a related entity responsible for overseeing compliance at Ingeniería Especializada Obra Civil e Industrial S.A.U., also signed the settlement agreement. Ingeniería Especializada Obra Civil e Industrial S.A.U. commits to continue to fully cooperate with INT. 
The debarment of Ingeniería Especializada Obra Civil e Industrial S.A.U. qualifies for cross-debarment by other multilateral development banks (MDBs) under the Agreement for Mutual Enforcement of Debarment Decisions that was signed on April 9, 2010.
Compliments of the Worldbank

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A Capital Market Union for Europe: Why It’s Needed and How to Get There

When savers and firms invest and borrow beyond their national borders, they enjoy opportunities to diversify their portfolios and lower their funding costs, respectively. In Europe, this idea—of an integrated financial system that offers a richness of financing choice—remains an elusive goal: capital markets are far from integrated.

Our recent research finds that European finance is still sharply segmented along national lines, with savers and investors depending heavily on national banking systems. Although the landscape is dotted with many different types of investors and intermediaries, their focus is mostly domestic—“home bias” is pervasive.
 
Our recent research finds that European finance is still sharply segmented along national lines, with savers and investors depending heavily on national banking systems. Although the landscape is dotted with many different types of investors and intermediaries, their focus is mostly domestic—“home bias” is pervasive.
An unlevel playing field
This is a problem because it results in an uneven playing field: the financing costs companies pay depend hugely on their country of incorporation, collateral-constrained startups find it hard to get any funding at all, and consumption is not shielded from local economic shocks.

Lowering barriers to a European Capital Markets Union offers the prospect of powerful macroeconomic benefits.

Firms in, say, Greece, pay a 2.5 percent higher rate of interest on their debt than similar firms in the same industry in France; Italian firms pay 0.8 percent higher interest on debt than comparable firms in Belgium. And Greek and Italian firms are not alone in fighting this uphill battle on funding costs—there is no level playing field.
In addition, firms with limited plants and machinery to offer as collateral—think of an IT start-up—face hurdles accessing bank loans. Such companies grow significantly faster in more developed capital markets, where venture capital funds with diversified portfolios thrive and are more willing to take the risk of providing unsecured financing to innovative players.
Finally, private cross-border risk sharing is severely limited, with local consumption being four times more sensitive to local shocks in the 28 EU countries than in the 50 US states. For every 1 percentage point drop in national GDP growth, consumption drops by 80 basis points, on average, if the country is in the EU, compared to only 18 basis points for the average US state.
Obstacles to capital market integration
Our study included a survey of national market regulators and some of the largest institutional investors in the EU, which identified important obstacles to greater capital market integration in Europe.
Responses flagged shortcomings in information on both listed and unlisted firms, in insolvency practices, and to a slightly lesser extent, in capital market regulation. Some countries were also seen to have weak audit quality, overly complex procedures for retrieving withholding taxes on investments in other countries, and unduly high tax rates.

Some of the benefits of lowering such barriers can be quantified. Using publicly available data, and guided by the survey results, we found that lowering identified barriers offers the prospect of powerful macroeconomic benefits: lower funding costs for firms, larger intra-EU portfolio capital flows, and more risk sharing across borders.
If Italy, for example, were to improve its insolvency practices to best-in-class standards, it could reduce its firms’ average debt funding cost by some 0.25 percentage points. Similarly, Estonia and Greece could see interest cost reductions of some 0.50 percentage points.
Bilateral portfolio asset holdings would double if insolvency regimes and regulatory quality in destination countries were to improve by 1 standard deviation—this is equivalent to Portugal improving its insolvency practices to the UK standard and improving its regulatory quality to that seen in Belgium.
Such improvements in regulatory quality and insolvency regimes would improve individual countries’ shock-absorption, halving the sensitivity of local consumption to local shocks.
Three targeted initiatives
Based on these findings—and building on the achievements of the EU’s Capital Market Union Action Plan—we would urge European policymakers to consider three targeted sets of initiatives in pursuit of greater capital market integration.
To improve transparency and disclosure, we propose introducing centralized, standardized, and compulsory electronic reporting for all issuers of bonds and equities, irrespective of size, on an ongoing basis. This would be a major change to the European reporting framework. And digital technologies can be used to streamline cross-border withholding tax procedures.
To contain systemic risk and improve investor protection where it lags, we propose a series of actions to sharpen regulatory quality, guided by a principle of proportionality. First, systemic entities such as central clearinghouses and large investment firms should be brought under centralized oversight. Second, the European Securities and Markets Authority can and should be strengthened by introducing independent board members. Third, the new pan-European pension product could be pepped-up with design changes to enhance portability and cost-efficiency. Fourth, recognizing the global nature of capital markets, the EU should aim for maximum regulatory cooperation with non-EU countries.
To upgrade insolvency regimes, the European Commission should, first, carefully collect data in an area where the existing information is unreliable; second, develop a code of good standards for corporate insolvency and debt enforcement processes; and, third, systematically follow up on EU member states’ progress toward observing such standards.
Larger intra-EU portfolio flows would help move the EU toward realizing its full economic potential. The relatively technical steps we recommend for removing identified barriers to such flows should be feasible without high-level political deliberations.
Compliments of IMF

EACC

Higher education needs to step up efforts to prepare students for the future

Demand for tertiary education continues to rise, but its further expansion will only be sustainable if it matches the supply of graduates with labour market and social needs and gives them the skills required to navigate the future, according to a new OECD report.
Education at a Glance 2019, which is part of the Organisation’s “I am the Future of Work” campaign, finds that 44% of 25-34 year-olds held a tertiary degree in 2018, compared to 35% in 2008, on average across OECD countries. The employment rate of tertiary-educated adults is 9 percentage points higher than for those with upper secondary education and they earn 57% more.

However, some sectors in high demand may struggle to find the skills they need. Less than 15% of new entrants to bachelor’s programmes study engineering, manufacturing and construction and less than 5% study information and communication technologies, despite these sectors having among the highest employment rates and earnings. Women are particularly under-represented, making up fewer than one in four entrants, on average, across OECD countries.
“It is more important than ever that young people learn the knowledge and skills needed to navigate our unpredictable and changing world,” said OECD Secretary-General Angel Gurría, launching the report in Paris. “We must expand opportunities and build stronger bridges with future skills needs so that every student can find their place in society and achieve their full potential.”
Many institutions are evolving to meet changing job market demands by promoting flexible pathways into tertiary education, balancing academic and vocational skills, and working more closely with employers, industry and training organisations. But they must also balance larger enrolments with the need to contain costs, while maintaining the relevance and quality of their courses, says the report.
Between 2005 and 2016, spending on tertiary institutions increased at more than double the rate of student enrolments to about USD 15 600 per student on average across OECD countries. Private sources have been called on to contribute more as countries introduce or raise tuition fees.
This year’s edition of Education at a Glance also assesses how youth are moving from education into work, as part of its ongoing analysis of where OECD and partner countries stand on their way to meeting the Sustainable Development Goal for education by 2030. It finds that some countries have made significant progress in reducing the numbers of out-of-school youth in the past decade. Rates fell by 20 percentage points in the Russian Federation, 18 percentage points in Mexico, 16 percentage points in Portugal and 10 percentage points in Australia and New Zealand between 2005 and 2017.
The report finds that, on average across OECD countries, about one in six 15-24 year-olds are enrolled in vocational programmes. The attainment gap among young tertiary-educated adults and those with upper secondary has narrowed. In 2018, the share of young adults with an upper secondary or post-secondary non-tertiary qualification, 41%, is almost equal to the share attaining tertiary education, 44%.
Education at a Glance provides comparable national statistics measuring the state of education worldwide. The report analyses the education systems of the OECD’s 36 member countries, as well as of Argentina, Brazil, China, Colombia, Costa Rica, India, Indonesia, the Russian Federation, Saudi Arabia and South Africa.
Other key findings:
Educational attainment and outcomes
 
The proportion of tertiary-educated 25-34 year-olds increased by 9 percentage points, on average, across OECD countries between 2008 and 2018, while the share of adults with less than upper secondary education fell from 19% to 15%. (Indicator A1)
The gender gap in earnings persists across all levels of educational attainment and the gap is wider among tertiary-educated adults. Women earn less than men, even with a tertiary degree in the same broad field of study. (A1)
On average across OECD countries, 14.3% of 18-24 year-olds are neither employed nor in education or training (NEET). In Brazil, Colombia, Costa Rica, Italy, South Africa and Turkey, over 25% of 18-24 year-olds are NEET. (A2)
 
Access to education
 
On average across OECD countries, around 70% of 17-18 year-olds are enrolled in upper secondary education and more than 40% of 19-20 year-olds are enrolled in tertiary programmes in almost half of OECD countries. (B1)
In almost all OECD countries, the enrolment rate among 4-5 year-olds in education exceeded 90% in 2017, with about one-third of countries achieving full enrolment for 3‑year‑olds. (B1)
Current estimates indicate that, on average, 86% of people across OECD countries will graduate from upper secondary education in their lifetime, and 81% of people will do so before the age of 25. (B3)
 
Education spending
 
Across the OECD, countries spend, on average, USD 10 500 per student on primary to tertiary educational institutions. Average spending is 1.7 times more per student at the tertiary level than other levels. (C1)
Expenditure continues to increase at a higher rate than student enrolments at all levels, particularly tertiary since 2010. Average spending per student at non-tertiary levels increased by 5% between 2010-2016 while the number of students remained unchanged. At the tertiary level, spending increased by 9% while the number of students rose by 3%. (C1)
Total public expenditure in 2016 on primary to tertiary education as a percentage of total government expenditure for all services averaged 11% in OECD countries, ranging from 6.3% in Italy to 17% in Chile. (C4)
In the classroom
Students in OECD countries and economies receive an average of 7 590 hours of compulsory instruction during their primary and lower secondary education, ranging from 5 973 hours in Hungary to almost double that in Australia (11 000 hours) and Denmark (10 960 hours). (D1)
The proportion of the compulsory curriculum devoted to mathematics at the primary level ranges from 12% in Denmark to 27% in Mexico; at the lower secondary level, it ranges from about 11% in Hungary, Ireland and Korea to 16% in Chile, Latvia and the Russian Federation (and 20% in Italy, including natural sciences). (D1)
On average across OECD countries, there are 15 students for every teacher in primary education and 13 students per teacher in lower secondary education. The average school class has 21 students in primary education and 23 students in lower secondary education. (D2)
The teaching workforce is ageing: on average across OECD countries, 36% of primary to secondary teachers were at least 50­ years old in 2017, up 5 percentage points from 2005. Only 10% of teachers are aged under 30. The profession is also still largely dominated by women, who comprise seven out of ten teachers, on average, across OECD­ countries. (D5)
Further information on Education at a Glance, including country notes, multilingual summaries and key data, is available at: http://www.oecd.org/education/education-at-a-glance/
Compliments of OECD