The European Commission adopted today (Aug 17th) the rules governing the implementation of the Carbon Border Adjustment Mechanism (CBAM) during its transitional phase, which starts on 1 October of this year and runs until the end of 2025.
The Implementing Regulation published today details the transitional reporting obligations for EU importers of CBAM goods, as well as the transitional methodology for calculating embedded emissions released during the production process of CBAM goods.
In the CBAM’s transitional phase, traders will only have to report on the emissions embedded in their imports subject to the mechanism without paying any financial adjustment. This will give adequate time for businesses to prepare in a predictable manner, while also allowing for the definitive methodology to be fine-tuned by 2026.
To help both importers and third country producers, the Commission also published today guidance for EU importers and non-EU installations on the practical implementation of the new rules. At the same time, dedicated IT tools to help importers perform and report these calculations are currently being developed, as well as training materials, webinars and tutorials to support businesses when the transitional mechanism begins. While importers will be asked to collect fourth quarter data as of 1 October 2023, their first report will only have to be submitted by 31 January 2024.
Ahead of its adoption by the Commission, the Implementing Regulation was subject to a public consultation and was subsequently approved by the CBAM Committee, composed of representatives from EU Member States. One of the central pillars of the EU’s ambitious Fit for 55 Agenda, CBAM is the EU’s landmark tool to fight carbon leakage. Carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to take advantage of lower standards, or when EU products are replaced by more carbon-intensive imports, which in turn undermines our climate action.
For more information
Carbon Border Adjustment Mechanism (CBAM)
Compliments of the European Commission.

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The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, and national competent authorities (NCAs) completed an analysis of the cross-border provision of investment services during 2022.

The increase in the cross-border provision of financial services has benefits for consumers and firms, as it fosters competition, expands the offer available to consumers and the market for firms. However, it also requires that NCAs intensify their efforts and focus more on the supervision of cross-border activities and cooperation to tackle the issues arising from these activities.
The data collected and analysed across 29 jurisdictions allows ESMA and NCAs to shed light on various aspects of the market for retail investors that receive investment services by credit institutions and investment firms established in other Member States.
Key findings of the data collection[1] include:

A total of around 380 firms[2] provided services to retail clients on a cross-border basis in 2022. The majority of them (59%) are investment firms, while 41% are credit institutions.
Approximately 7.6 million clients in the EU/EEA received investment services from firms located in other EU/EEA Member States in 2022.
In terms of number of firms, Cyprus is the primary location for firms providing cross-border investment services in the EU/EEA, accounting for 23% of the total firms passporting investment services. Luxembourg and Germany follow with 16% and 13% of all firms, respectively.
Looking at the number of EU/EEA retail clients receiving cross-border investment services, more than 75% are served by firms based in three jurisdictions: Cyprus, Germany, and Sweden. Cyprus-based firms reported activity to around 2.5 million cross-border retail clients, German-based firms to around 2 million retail clients and Sweden-based firms to more than 1 million retail clients. All other firms in the scope of the exercise reported a total of around 1.8 million cross-border retail clients, accounting for about a quarter of the total number of retail clients.
The average number of cross-border retail clients per firm varied from 189 (for the only firm in Italy) to about 140,000 retail clients (for the 8 firms based in Sweden). Overall, the average number of retail clients per firm was about 19,000.
As host Member States, Germany, Spain, France and Italy are the most significant destinations (in terms of number of retail clients) for investment firms providing services cross-border in other Member States.
Approximately 5,700 complaints were recorded by firms relating to the provision of cross-border investment services to retail clients in 2022. The number of complaints received is proportional to the number of clients served by firms providing cross-border investment services.
The data analysis highlighted that clients of cross-border investment services primarily lodged complaints[3] about “terms of contract/fees/charges” and about “issues pertaining to general admin/customer services”. Fewer complaints were reported on the topics of “investment products not appropriate/suitable for the client” and “market event related”.

Next steps
ESMA aims to continue performing the data collection exercise on annual basis and endeavours to publish a Report on the findings at the next iteration of the exercise in 2024.

Distribution of firms across EU/EEA Member States

Shares of firms by home Member State

Number of clients by home Member State

Number of clients by host Member State

Compliments of the European Securities and Markets Authority (ESMA).
Footnotes:
[1] Some country specific figures may have to be interpreted with a note of caution as the firm-level reporting did not always follow the ESMA template.
[2] Firms that provided investment services to less than 50 retail clients in any other Member State where not included in the scope of the data collection exercise. This approach has allowed for clear proportionality in conducting the exercise, with no burden for firms below the materiality threshold.
[3] Firms recorded the most frequent complaint topics among the following eight (8) categories:
– Quality or lack of information provided to the client
– Investment product not appropriate/suitable for the client
– Terms of contract/fees/charges
– General admin/customer services (including custody/safekeeping services)
– Issue in relation to withdrawal of investor’s funds from an account / issue connected to exit from the investment and redemption of funds
– Market event related
– IT issues
– OtherThe post ESMA performs an analysis of the cross-border investment activity of firms first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

In 2013, the Financial Stability Board (FSB) established the Official Sector Steering Group (OSSG) with the view of promoting the effective collaboration of the global official sector towards the end goal of successful transition to robust benchmarks, including the transition away from LIBOR.
After a decade of preparation, the LIBOR transition has entered its final stage. The end of June 2023 marked the final major milestone in the LIBOR transition with the end of the remaining USD LIBOR panel. Only three of the US dollar LIBOR settings will continue in a synthetic form after June 2023 and are intended to cease at end-September 2024. In addition, reform of other interest rate benchmarks and related transition efforts have either been completed or near their planned, final conclusion.1
This monumental undertaking has seen an unprecedented shift in wholesale markets and has required the sustained coordination and dedication of regulators, industry bodies and market participants, and will lead to a more stable financial system. To maintain financial stability, it is important that markets remain anchored in robust benchmarks (for example risk-free or nearly risk-free rates) going forward.
In the post transition landscape, the FSB would like to emphasise the following messages:
1. The FSB continues to encourage firms to consider their choice of reference rates and use benchmarks that are robust, suitable, sustainable and compatible with relevant guidance and regulation.
The FSB encourages market participants to use the most robust reference rates, anchored in deep, credible and liquid markets, in order to avoid the need to repeat this exercise.
The FSB recognises that, in some cases, there may be a role for risk-free rate (RFR) derived term rates and has set out the circumstances where the limited use of RFR-based term rates would be compatible with financial stability.2 However, an over-reliance on term rates outside of these limited circumstances carries risks of undermining the robustness of these rates due to the potential for illiquidity in the underlying markets that enable and sustain term RFRs. As such, the FSB reiterates that their use must be in line with official sector and national working group best practice recommendations in the interest of sustaining robust reference rates and financial stability going forward.
Attempting to recreate rates that are based on LIBOR’s underlying wholesale unsecured markets leads to the same inherent vulnerabilities (e.g., excessive use of expert judgment and limited reliance on anchored transactions) and poses financial stability concerns. Using the more recently created ‘credit sensitive rates’ (CSRs) risks undermining the progress made through the decade-long LIBOR transition. IOSCO recently completed its review of certain CSRs against the 2013 Principles for Financial Benchmarks, related to benchmark design, methodology and transparency. In its 3 July 2023 public statement on alternatives to USD LIBOR, IOSCO highlighted concerns that bank-issued commercial paper and certificates of deposit market data are not sufficiently deep, robust and reliable to underpin a benchmark.3) IOSCO stated that limited reliance on anchored transactions lead to the “inverted pyramid” risk and can pose financial stability concerns. IOSCO also called on the CSRs reviewed to refrain from representing that they are “IOSCO-compliant.” IOSCO recommended that the reviewed administrators (1) consider and clearly disclose how they have considered the “concept of proportionality”; (2) consider licensing restrictions in line with recommendations from National Working Groups and Regulators; (3) consider improving the transparency of their rates.
The FSB welcomes IOSCO’s review of these rates and supports and underscores IOSCO’s message that “market participants should proceed with caution if they are considering using CSRs and take into account the risks identified in the review”.
2. Market participants should continue to incorporate robust contractual fallbacks.
At the outset of the LIBOR transition, it was clear that large numbers of contracts, across asset classes, did not make adequate provisions for the permanent cessation of panel-based LIBOR, or for its loss of representativeness. Whilst some contracts did contain fallback arrangements, many were unsuitable, for example because these fallbacks were linked to LIBOR and/or were often designed to cater for only a temporary outage in LIBOR. Some contracts did not contain any fallback provisions.
The LIBOR transition has underscored the importance of robust, workable fallback provisions. Where standard form contracts are used, relevant trade bodies have shown leadership in improving fallback language and encouraging market participants to adopt robust fallback provisions.
The FSB would like to thank in particular ISDA’s leadership on this work. Working with OSSG members, ISDA incorporated explicit fallback rate mechanisms for both IBORs and RFRs referenced in its IBOR Protocol and new definitional booklet. The OSSG encourages market participants to incorporate similar fallbacks into all contracts referencing RFRs.4
Some FSB jurisdictions have laws and regulations5 obliging market participants to incorporate robust and suitable fallback provisions into their contracts. Notwithstanding this, the FSB encourages all market participants to learn from the LIBOR transition experience and to adopt robust fallback mechanisms in all cases.
The FSB would like to thank the OSSG co-chairs, John C. Williams, President of the Federal Reserve Bank of New York and Nikhil Rathi, Chief Executive of the UK Financial Conduct Authority, as well as all past co-chairs. The FSB would also like to thank all OSSG members for their contributions and dedication to improving financial stability.
The FSB will continue to monitor the reference rate environment, including the ongoing use of Term RFRs and CSRs with the benefit of ongoing insights from IOSCO.
Contact:

Press enquiries | +41 61 280 8486 | press@fsb.org | Ref: 23/2023

Compliments of the Financial Stability Board.
1. For example, in Canada, CDOR will be discontinued after June 28, 2024, however, market participants are expected to transition from CDOR to CORRA well before this date, with new derivatives and securities transactions referencing CORRA after end-June 2023. [←]
2. FSB (2021) Overnight risk-free rates and term rates, June [←]
3. IOSCO (2023) Statement on Alternatives to USD LIBOR (July [←]
4. For contracts referencing Term RFRs, the OSSG encourages incorporation of fallbacks to explicitly referenced, externally produced, and IOSCO compliant alternatives of a similar risk-free nature, including fallbacks to overnight RFRs either in arrears or advance, as the primary fallbacks in any rate waterfall. References to internal cost of funds or issuer or lender discretion should be avoided as primary fallbacks, as should references to fallbacks to be selected by a central bank or other official body unless consent for such reference has been granted by the authority named. [←]
5. For example, Article 28(2) of the EU and UK Benchmarks Regulations require supervised entities to have robust plans in place in the event that a benchmark which they are using materially changes or ceases to be provided. [←]The post FSB | Final Reflections on the LIBOR Transition first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The Council has today approved the regulation to strengthen Europe’s semiconductor ecosystem, better known as the ‘Chips Act’. This is the last step in the decision-making procedure.
The Chips Act aims to create the conditions for the development of a European industrial base in the field of semiconductors, attract investment, promote research and innovation and prepare Europe for any future chip supply crisis. The programme should mobilise €43 billion in public and private investment (€3.3 billion from the EU budget), with the objective of doubling the EU’s global market share in semiconductors, from 10% now to at least 20% by 2030.

With the Chips Act, Europe will be a frontrunner in the world semiconductors race. We can already see it in action: new production plants, new investments, new research projects. And in the long run, this will also contribute to the renaissance of our industry and the reduction of our foreign dependencies.
Héctor Gómez Hernández, Spanish Minister for Industry, Trade and Tourism

Next steps
Following the Council’s approval today of the European Parliament’s position, the legislative act has been adopted.
After being signed by the President of the European Parliament and the President of the Council, the regulation will be published in the Official Journal of the European Union and will enter into force on the third day following its publication.
The Council has also passed an amendment to the regulation establishing the joint undertakings under Horizon Europe, to allow the establishment of the chips joint undertaking, which builds upon and renames the existing key digital technologies joint undertaking. The amendment was approved by the Council today following consultation with the Parliament. Both texts will be published in the Official Journal at the same time.
Background
Chips are small devices composed of semiconductors (materials capable of allowing or blocking the flow of electricity) and able to store large quantities of information or perform mathematical and logical operations. They are essential for a wide range of daily-use products, from credit cards to cars or smartphones. With the development of artificial intelligence, 5G networks and the internet of things, demand and market opportunities for chips and semiconductors are expected to grow substantially.
Currently, Europe is too dependent on chips produced abroad, which became even more evident during the COVID-19 crisis. Industry and other strategic sectors such as health, defence and energy faced supply disruptions and shortages. The Chips Act aims to reduce the EU’s vulnerabilities and dependencies on foreign actors while reinforcing the EU’s industrial base for chips, maximising future business opportunities and creating good-quality jobs. This will improve the EU’s security of supply, resilience, and technological sovereignty in the field of chips.
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Higher interest rates soon would prevent more economic pain later
The European Central Bank could prevent inflation expectations from becoming unmoored and drifting upwards by continuing to raise its policy rate, as discussed in our recent report on the euro area. A further tightening of monetary policy in the near term would prevent much more costly measures later to bring inflation back to target.
As the Chart of the Week shows, the ECB Governing Council has raised its deposit-facility rate eight times, by a total of 400 basis points, since it started to tighten policy in mid-2022. These decisive actions have helped keep longer-term expectations well anchored so far.
If the ECB were to raise its policy rate further and possibly above the 3.75 percent peak that markets expect now, depending on incoming data, this would help significantly to prevent high inflation from becoming entrenched. In fact, inflation would converge more rapidly towards the 2 percent target and interest rates could then fall at a faster pace.
The original shocks to energy and food prices that catapulted inflation above target are dissipating. But inflation is still high, with prices in the euro area rising by 5.5 percent from a year earlier in June. Core prices—a more reliable measure of underlying inflationary pressures—were up by 5.4 percent. Core inflation in the three months to June was also still much higher than the ECB’s target, at 4.6 percent on an annualized basis.
Inflation pressures are likely to persist for some time. Workers will try to recoup losses in purchasing power by pushing for higher wages, while businesses are likely to seek to protect their profits by setting their retail prices to reflect higher labor costs. We do not see inflation coming back to target before mid-2025—and inflation could possibly prove more persistent if, for instance, inflation expectations shift upwards or the share of wage contracts containing backward-indexation clauses increases.
In the face of persistent inflation, the ECB should persevere in keeping monetary policy tight. For a while, the ECB should react more strongly when inflation comes in above expectations than it does when inflation is below expectations—adopting a so-called tightening bias.
A tightening bias would help prevent high inflation from becoming entrenched—a bad outcome that would ultimately force the ECB to tighten more and for longer to return inflation to target, causing a sharper economic downturn later.
Of course, the ECB should remain flexible given the economic uncertainties ahead and be ready to adjust course depending on the flow of data. The ECB’s meeting-by-meeting approach to making policy decisions rightly allows it to set rates based on the evolving inflation outlook, and incoming information on the drivers of underlying inflation and the strength of monetary policy transmission.
Authors:

Alfred Kammer is the Director of the European Department at the International Monetary Fund
Luis Brandao Marques is a Deputy Chief in the Advanced Economies Unit of the European Department

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The Council today adopted a decision authorising the Commission to open negotiations, on behalf of the EU, with the United States on a Critical Minerals Agreement (CMA) and the related negotiating directives.
This agreement seeks to strengthen critical minerals supply chains and mitigate some of the negative repercussions of the US Inflation Reduction Act (IRA) on EU industry.

The Critical Minerals Agreement will be key in diversifying international supply chains of critical minerals. It will also help to strengthen our cooperation in the context of the green transition. The agreement will grant the EU an equivalent status to US free trade agreement partners for the purpose of the Clean Vehicle Credit under the US IRA.
Héctor Gómez Hernández, Industry, Trade and Tourism Minister of Spain

Key elements of the decision
According to the directives for negotiation, the CMA should:

contain provisions on strengthening international supply chains of critical minerals and related sectors
be fully consistent with World Trade Organization rules and fully in line with the objectives pursued in the EU Critical Raw Materials Act, in terms of ensuring the EU’s access to a secure and sustainable supply of critical raw materials, and with the European Battery Alliance
strengthen the trade in and diversification of international supply chains of critical minerals and promote the adoption of electric vehicle battery technologies by formalising the shared commitment to facilitate trade, and promote fair competition and market-oriented conditions for trade in critical minerals
promote high levels of environmental protection and protection of workers in the critical minerals sector and encourage corporate social responsibility across critical minerals supply chains
aim to prevent distortive and protectionist practices in critical minerals supply chains
encourage cooperation on international standards for critical minerals lifecycle assessment, extraction, labelling, recycling and transparency, with a view to supporting sustainable supply chains, and help to prevent future barriers to EU-US trade

Background
In August 2022, the US enacted the Inflation Reduction Act (IRA), introducing the Clean Vehicle Credit. This is a subsidy for the purchase of qualifying battery or fuel-cell operated vehicles in the form of a tax credit. To qualify for the full subsidy, a vehicle must, among other things, be equipped with a battery that has had at least some of its critical mineral content either recycled in North America or extracted and processed in the US or a country with which the US has a Free Trade Agreement or a CMA.
In the absence of a comprehensive free trade agreement between the EU and the US, the conclusion of a targeted critical minerals agreement should enable relevant critical minerals extracted or processed in the EU to count towards certain IRA clean vehicle tax credit requirements, and contribute to fostering EU-US supply chains.
The CMA represents an opportunity to increase the attractiveness of investment in the EU’s mining and processing industry.
Next steps
Following the adoption of the mandate, the Commission will be able to engage in formal negotiations with the US with a view to concluding the agreement in the near term.
Once the negotiations have been finalised, the agreement would need to be adopted by the Council. The CMA would also require the consent of the European Parliament.

Infographic – An EU critical raw materials act for the future of EU supply chains

See full infographic

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A huge majority of Europeans believe climate change is a serious problem facing the world (93%), according to a new Eurobarometer survey published today. Over half think that the transition to a green economy should be sped up (58%) in the face of energy price spikes and concerns over gas supplies after Russia’s invasion of Ukraine. From an economic perspective, 73% of Europeans agree that the cost of damage due to climate change is much higher than the investment needed for a green transition. And three quarters (75%) of Europeans agree that taking action on climate will lead to innovation.
Support for emissions reductions, renewables and energy efficiency
Almost nine in ten EU citizens (88%) agree that greenhouse gas emissions should be reduced to a minimum, while offsetting the remaining emissions to make the EU climate-neutral by 2050. Close to nine in ten Europeans (87%) think it is important that the EU sets ambitious targets to increase renewable energy use, and a similar number (85%) believe that it is important for the EU to take action to improve energy efficiency, for example by encouraging people to insulate their home, install solar panels or buy electric cars. Seven in ten respondents (70%) believe that reducing fossil fuel imports can increase energy security and benefit the EU economically.
Citizens committed to individual action and structural reform
A large majority of EU citizens are already taking individual climate action (93%) and consciously making sustainable choices in their daily lives. However, when asked who is responsible for tackling climate change, citizens underlined the need for other reforms to accompany individual action, pointing also to the responsibility of national governments (56%), the EU (56%) and business and industry (53%).
European citizens also feel the threat of climate change in their daily lives. On average, over a third of Europeans feel personally exposed to environmental and climate-related risks and threats, with more than half feeling this way in 7 Member States, mostly in Southern Europe but also in Poland and Hungary. 84% of Europeans agree that tackling climate change and environmental issues should be a priority to improve public health, while 63% of those surveyed agree that preparing for the impacts of climate change can have positive outcomes for EU citizens.
Background
Special Eurobarometer 538 on Climate Change surveyed 26,358 EU citizens from different social and demographic groups across all 27 EU Member States. The survey was carried out between 10 May and 15 June 2023. All interviews were conducted face to face, either physically in people’s homes or through remote video interaction.
The results of the latest “Spring 2023 – Standard Eurobarometer” recently published on 10 July are fully in line with those in this dedicated survey on Climate Change. The standard Eurobarometer showed that EU citizens continue to back overwhelmingly the energy transition, consider environment and climate change as one of the important issues facing the EU, and expect massive investment in renewables.
The European Green Deal has the highest priority for the European Commission. It will transform the EU into a modern, resource-efficient and competitive green economy, leaving no person and no place behind. The European Climate Law sets a legally binding climate neutrality objective by 2050 and introduces the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels, with the so-called ‘Fit for 55′ package of legislative proposals. This legislative package is currently well advanced toward adoption. Recent progress on the Nature Restoration Law, the Deforestation Regulation, and initiatives to promote Sustainable Products and reduce Packaging Waste will likewise ensure that the European Union halts biodiversity loss and transitions to a circular economy.
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With a view to ensuring that products with digital components, such as connected home cameras, smart fridges, TVs, and toys, are safe before entering the market, member states’ representatives (Coreper) reached a common position on the proposed legislation regarding horizontal cybersecurity requirements for products with digital elements (cyber resilience act).

We are to celebrate the agreement reached today in the Council. An agreement that advances EU’s commitment towards a safe and secure digital single market. IoT and other connected objects need to come with a baseline level of cybersecurity when they are sold in the EU, ensuring that businesses and consumers are effectively protected against cyber threats. This is an important milestone for the Spanish presidency, and we hope to bring forward negotiations with the Parliament as much as possible.
Carme Artigas Brugal, State Secretary for digitalisation and artificial intelligence

Objectives of the proposal
The draft regulation introduces mandatory cybersecurity requirements for the design, development, production and making available on the market of hardware and software products to avoid overlapping requirements stemming from different pieces of legislation in EU member states.
The proposed regulation will apply to all products that are connected either directly or indirectly to another device or network. There are some exceptions for products, for which cybersecurity requirements are already set out in existing EU rules, for example on medical devices, aviation, or cars.
The proposal aims to fill the gaps, clarify the links, and make the existing cybersecurity legislation more coherent by ensuring that products with digital components, for example ‘Internet of Things’ (IoT) products, become secure throughout the whole supply chain and throughout their whole lifecycle.
Finally, the proposed regulation also allows consumers to take cybersecurity into account when selecting and using products that contain digital elements by providing users the opportunity to make informed choices of hardware and software products with the proper cybersecurity features.
Main elements retained from the Commission’s proposal
The Council’s common position maintains the general thrust of the Commission’s proposal, namely as regards:

rules to rebalance responsibility for compliance towards manufacturers, who must ensure conformity with security requirements of products with digital elements that are made available on the EU market, including obligations like cybersecurity risk assessment, declaration of conformity, and cooperation with competent authorities
essential requirements for the vulnerability handling processes for manufacturers to ensure the cybersecurity of digital products, and obligations for economic operators, such as importers or distributors, in relation to these processes
measures to improve transparency on security of hardware and software products for consumers and business users, and a market surveillance framework to enforce these rules

The Council’s amendments
However, the Council’s text amends various parts of the Commission’s proposal, including on the following aspects:

the scope of the proposed legislation, including with regard to the specific categories of products that should comply with the regulation’s requirements
reporting obligations of actively exploited vulnerabilities or incidents to the competent national authorities (‘computer security incident response teams’ – CSIRTs) instead of the EU agency for cybersecurity (ENISA) with the latter establishing a single reporting platform
elements for the determination of the expected product lifetime by manufacturers
support measures for small and micro enterprises
a simplified declaration of conformity

Next steps
Today’s agreement on the Council’s common position (‘negotiating mandate’) will allow the Spanish presidency to enter negotiations with the European Parliament (‘trilogues’) on the final version of the proposed legislation.
Background
In its conclusions of 2 December 2020 on the cybersecurity of connected devices, the Council underlined the importance of assessing the need for horizontal legislation in the long-term to address all relevant aspects of cybersecurity of connected devices, such as availability, integrity and confidentiality, including specifying conditions for the placement on the market.
First announced by Commission’s President Von der Leyen in her state of the Union address in September 2021, the idea was reflected in the Council conclusions of 23 May 2022 on the development of the European Union’s cyber posture, which called upon the Commission to propose common cybersecurity requirements for connected devices by the end of 2022.
On 15 September 2022, the Commission adopted the proposal for a regulation of the European Parliament and of the Council on horizontal cybersecurity requirements for products with digital elements and amending regulation (EU)2019/1020 (‘cyber resilience act’), which will complement the EU cybersecurity framework: the directive on the security of network and information systems (NIS directive), the directive on measures for a high level of cybersecurity across the Union (NIS 2 directive) and the EU cybersecurity act.
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During today’s EU-LAC Business Round Table as part of the EU-CELAC Summit, President Ursula von der Leyen has presented the EU-LAC Global Gateway Investment Agenda (GGIA), which revolves around the following pillars: a fair green transition, an inclusive digital transformation, human development and health resilience and vaccines. She also announced that Team Europe has committed over  €45 billion to support the reinforced partnership with Latin America and the Caribbean until 2027.
President of the European Commission, Ursula von der Leyen, said: “I am pleased to announce that Team Europe will invest over €45 billion in Latin America and the Caribbean until 2027 via our programme Global Gateway. We shaped a high-quality investment agenda together, to the benefit of both our regions. We agreed on sectors and value chains to prioritize, from clean energy and critical raw materials to health and education. And it’s not just about how much we are spending, but also how we are investing. Global Gateway comes with the highest environmental and social standards, and with transparency. This is Europe’s way of doing business.”
The GGIA includes a list of more than 130 projects to make the fair green and digital transition a reality on both sides of the Atlantic. The list has been composed in close cooperation with the Spanish Presidency and is the basis for further dialogues with the Latin American and Caribbean partners.
Some examples of projects

The EU will work with LAC partners on Critical Raw Materials (such as lithium and others) in the region (Argentina, Chile), as well as with the Critical Raw Materials Club to strengthen sustainable supply chains.
Brazil: the EU will collaborate with the Brazilian government and EU private sector to expand telecoms networks in the Amazon region.
Costa Rica: The EU and will help with the electrification of public transport. Conversion of urban bus fleet to electric: 40 public e-vehicles contributing to a reduction of 5000 CO2 ktons per year.
Colombia: Construction of a metro line.
Jamaica: Deployment of 5G to reach island-wide broadband access.
Paraguay: Upgrade of the electricity networkwith support to the Administración Nacional de Electricidad.
EU-LAC Digital Alliance: EU-LAC digital cooperation activities are underway such as the extension of the BELLA cable and the creation of two regional Copernicus centres for disaster risk reduction, climate change, land and marine monitoring.
In Chile, the EU has developed a Team Europe Initiative (TEI) on Green Hydrogen (GH2), to promote investment opportunities.
The GGIA will support LAC countries’ policies towards a climate-neutral economy and a resilient society that lives in harmony with nature. The EU and its Member States have pooled their resources to jointly establish the Team Europe Initiative ‘Brazil Tropical Forests’. The EU will also contribute to the Amazon Fund.
LAC-Health Resilience initiative, supporting the development of local medicines and vaccine manufacturing and health systems resilience, including regulatory frameworks.
LAC-Global Green Bonds Initiative, fostering the development of the green bond market in LAC, thus mobilisingcapital for financing a sustainable transition.
In Panama, the EU supports a joint project on universal access to energy.
‘Inclusive Societies’ programme to tackle inequalities, reduce poverty and social exclusion, and enhance social cohesion within Latin American and Caribbean countries. It will promote gender and social policies, education and skills development, protection and social inclusion, with a specific emphasis on women and youth and focus.

Background
The European Union, Latin America and the Caribbean (LAC) are key partners in strengthening the rules-based international order, standing together for democracy, human rights and international peace and security.
This is more true in 2023 than ever before: The fast-changing global context, with its increasing geopolitical challenges, makes this a critical moment to renew this partnership and enhance bi-regional cooperation to tackle the global climate and environmental crises, to harness technological changes and to combat rising inequalities.
The EU-LAC Global Gateway Investment Agenda will be delivered through Team Europe initiatives:  the EU, its Member States, development financing institutions including the European Investment Bank (EIB), export credit agencies and all other public sources of funding will be working together in public-private partnerships with the private sector.
The EU-LAC Business Round Table was co-organised with the Inter-American Development Bank and the Development Bank of Latin America, who have also been crucial in preparing the GG IA with the Spanish government and the Commission.
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Establishing effective policies has become a priority for authorities amid the failure of some exchanges and collapse of certain crypto assets
The global push for clearer policies on crypto assets has gained momentum under the Indian G20 Presidency. As this work continues, it’s important to recognize the progress already achieved, but more is needed, especially in implementing global standards.
Last year’s failures of the FTX crypto trading platform and the Terra Luna stablecoin highlighted the urgency of establishing clear policies to protect investors and prevent abuse. Despite recent industry challenges, investor optimism continues to revive periodically, as evidenced by Bitcoin’s near doubling this year. Without robust safeguards, the increased risk of fraud and misconduct could adversely impact investors’ expected returns.
While some policymakers have taken necessary steps to safeguard consumers and ensure financial integrity, it is equally important to consider the broader implications of crypto. Such assets, particularly stablecoins denominated in hard currencies, could potentially replace official currencies, and significantly impact countries’ monetary and fiscal policies. This is especially true in emerging markets and developing economies, underscoring the need for a comprehensive, consistent, and coordinated policy approach to crypto.
That’s why we presented an assessment of the macro implications of crypto assets to the G20 presidency earlier this year, building on recommendations outlined in the Elements of Effective Policies for Crypto Assets endorsed by the IMF Executive Board in February.
Our approach features three key pillars: a sound macro-policy foundation, clear legal treatment and granular rules, and effective implementation.
These are our key policy recommendations:

The defense against the substitution of sovereign currencies is the maintenance of robust, trusted, and credible domestic institutions. Transparent, consistent, and coherent monetary policy frameworks are crucial for an effective response to the challenges posed by crypto assets.
To protect national sovereignty, it is important not to grant crypto assets official currency or legal tender status. Doing so would require accepting them in many jurisdictions for tax payments, fines, and debt settlements, and could generate fiscal risks for government finances, and could threaten financial stability or rapid inflation.
To address the volatility of capital flows associated with crypto, policymakers should integrate them within existing regimes and rules that manage capital flows. This will help ensure stability and minimize potential disruptions.

Finally, tax policies should ensure unambiguous treatment of crypto assets, and administrators should strengthen compliance efforts. Specific regulations are needed to clarify the tax treatment of crypto, including value-added taxes or levies on income or wealth.

 
Clear legal treatment
Building on a sound macro-policy foundation, clear legal treatment and granular rules are crucial. The principle of “same activity, same risk, same regulations” should guide regulatory efforts.
Consistent with the recommendations by standard setters such as the Basel Committee on Banking Supervision, Financial Action Task Force, Financial Stability Board, and the International Organization of Securities Commissions, our recommendations are:

A comprehensive legal foundation is essential to effectively regulate crypto, addressing both private law and financial law aspects. This includes ensuring predictability and enforceability of rights while appropriately classifying crypto.
Strong anti-money laundering and combating the financing of terrorism (AML/CFT), prudential and conduct rules should be implemented to cover all entities and activities related to the issuance, trading, custody, or transfer of crypto.
For systemic stablecoin arrangements, additional requirements such as the Principles for Financial Market Infrastructures—standards that aim to ensure the safety, efficiency, and resilience of FMIs—should be applied.

Significantly, the FSB in July established a set of high-level recommendations for crypto regulation, focusing on financial stability. They include ensuring authorities’ regulatory powers and sound governance and risk management practices by providers. It also features revised high-level recommendations for effectively addressing financial stability risks associated with “global stablecoin” arrangements.
Overall, the recommendations promote the consistency and comprehensiveness of regulatory, supervisory and oversight approaches to crypto.
Effective implementation
Finally, ensuring effective policies requires several measures including strong coordination, at the domestic and international level:

National authorities must align their frameworks to the emerging guidelines, and standards being developed by standard setting bodies. This alignment is critical to achieve consistent treatment of crypto assets and may require legislative changes.
Developing strong supervisory capacity is vital for monitoring and enforcing rules effectively. Authorities must have the necessary skills and resources to oversee the evolving crypto asset landscape.
Given the borderless nature of the crypto-assets ecosystem, international collaboration and information sharing are crucial. Cooperation among supervisors and competent authorities will enable the monitoring of crypto asset service providers and maintain the efficacy of regulatory policies.
Going beyond crypto polices,public authorities should take advantage in the progress in digital technology to enhance public policy objectives and must actively collaborate to address ongoing cost, trust, and speed issues, particularly for cross-border payments. New multilateral platforms could improve the efficiency of transactions.

The IMF will continue to support the G20 by delivering to the Leaders’ Summit in September a joint IMF-FSB synthesis paper highlighting the building blocks for effective crypto policies. In addition, we are committed to providing tailored capacity building to our 190 members based on the above recommendations and emerging guidelines from standard setters. Our surveillance program will also assess the effectiveness of policy frameworks including crypto.
By embracing a comprehensive approach and implementing these recommendations, policymakers can safeguard monetary sovereignty, protect investor interests, and promote financial stability in the digital age.
Authors:

Tobias Adrian is the Financial Counsellor and Director of the IMF’s Monetary and Capital Markets Department
Dong He is Deputy Director of the Monetary and Capital Markets Department (MCM) of the International Monetary Fund
Arif Ismail is currently a Deputy Division Chief in the Payments and Infrastructure Division of the IMF’s Monetary and Capital Markets Department
Marina Moretti heads the Financial Crisis Preparedness and Management Division in the IMF’s Monetary and Capital Markets Department

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