Consistent with the Principles for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in January 2022, all Committee participants agreed to the following plans for significantly reducing the Federal Reserve’s securities holdings.

The Committee intends to reduce the Federal Reserve’s securities holdings over time in a predictable manner primarily by adjusting the amounts reinvested of principal payments received from securities held in the System Open Market Account (SOMA). Beginning on June 1, principal payments from securities held in the SOMA will be reinvested to the extent that they exceed monthly caps.

For Treasury securities, the cap will initially be set at $30 billion per month and after three months will increase to $60 billion per month. The decline in holdings of Treasury securities under this monthly cap will include Treasury coupon securities and, to the extent that coupon maturities are less than the monthly cap, Treasury bills.
For agency debt and agency mortgage-backed securities, the cap will initially be set at $17.5 billion per month and after three months will increase to $35 billion per month.

Over time, the Committee intends to maintain securities holdings in amounts needed to implement monetary policy efficiently and effectively in its ample reserves regime.

To ensure a smooth transition, the Committee intends to slow and then stop the decline in the size of the balance sheet when reserve balances are somewhat above the level it judges to be consistent with ample reserves.
Once balance sheet runoff has ceased, reserve balances will likely continue to decline for a time, reflecting growth in other Federal Reserve liabilities, until the Committee judges that reserve balances are at an ample level.
Thereafter, the Committee will manage securities holdings as needed to maintain ample reserves over time.

The Committee is prepared to adjust any of the details of its approach to reducing the size of the balance sheet in light of economic and financial developments.

For media inquiries, e-mail media@frb.gov or call 202-452-2955
Compliments of the U.S. Federal Reserve.
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Reflections on Monetary Policy in 2021 | Speech by Governor Christopher J. Waller at the 2022 Hoover Institution Monetary Conference, Stanford, California |
I want to thank the organizers for inviting me to speak here today. The discussion has focused on the following question: “How did the Fed get so far behind the curve?” My response is to relate how my view of the economy changed over the course of 2021 and how that evolving view shaped my policy position. When thinking about this question, there are three points that need to be considered. First, the Fed was not alone in underestimating the strength of inflation that revealed itself in late 2021. Second, to determine whether the Fed was behind the curve, one must take a position on the evolving health of the labor market during 2021. Finally, setting policy in real time can create what appear to be policy errors after the fact due to data revisions.
Let me start by reminding everyone of two immutable facts about setting monetary policy in the United States. First, we have a dual mandate from the Congress: maximum employment and price stability. Whether you believe this is the appropriate mandate or not, it is the law of the land, and it is our job to pursue both objectives. Second, policy is set by a large committee of up to 12 voting members and a total of 19 participants in our discussions. This structure brings a wide range of views to the table and a diverse set of opinions on how to interpret incoming economic data and how best to respond. We need to reconcile those views and reach a consensus that we believe will move the economy toward our mandate. This process may lead to more gradual changes in policy as members have to compromise in order to reach a consensus.
Back in September and December 2020, respectively, the Federal Open Market Committee (FOMC) laid out guidance for raising the federal funds rate off the zero lower bound and for tapering asset purchases. We said that we would “aim to achieve inflation moderately above 2 percent for some time” to ensure that it averages 2 percent over time and that inflation expectations stay anchored. We also said that the Fed would keep buying $120 billion per month in securities until “substantial further progress” was made toward our dual-mandate objectives. It is important to stress that views varied among FOMC participants on what was “some time” and “substantial further progress.” The metrics for achieving these outcomes also varied across participants.
A few months later, in March 2021, I made my first submission for the Summary of Economic Projections as an FOMC member. My projection had inflation above 2 percent for 2021 and 2022, with unemployment close to my long-run estimate by the second half of 2022. Given this projection, which I believed was consistent with the guidance from December, I penciled in lifting off the zero lower bound in 2022, with the second half of the year in mind. To lift off from the ZLB in the second half of 2022, I believed tapering of asset purchases would have to start in the second half of 2021 and conclude by the third quarter of 2022.
This projection was based on my judgment that the economy would heal much faster than many expected. This was not 2009, and expectations of a slow, grinding recovery were inaccurate, in my view. In April 2021, I said the economy was “ready to rip,” and it did.1 I chose to look at the unemployment rate and job creation as the labor market indicators I would use to assess whether we had made “substantial further progress.” My projection was also based on the belief that the jump in inflation that occurred in March 2021 would be more persistent than many expected.
There was a range of views on the Committee. Eleven of my colleagues did not have a rate hike penciled in until after 2023. With regard to future inflation, 13 participants projected inflation in 2022 would be at or below our 2 percent target. In the March 2021 SEP, no Committee member expected inflation to be over 3 percent for 2021. As I argued in a speech last December, this view was consistent with private-sector economic forecasts.2
When inflation broke loose in March 2021, even though I had expected it to run above 2 percent in 2021 and 2022, I never thought it would reach the very high levels we have seen in recent months. Indeed, I expected it would eventually fade, due to the nature of these shocks. All the suspected drivers of this surge in inflation appeared to be temporary: the one-time stimulus from fiscal policy, supply chain shocks that previous experience indicated would ease soon, and a surge in demand for goods. In addition, we had very accommodative monetary policy that I believed would end in 2022. The issue in my mind was whether these factors would start fading away later in 2021 or in 2022.
Over the summer of 2021, the labor market and other data related to economic activity came in as I expected, and so I argued publicly that we were rapidly approaching “substantial further progress” on the employment leg of our mandate. In the June Summary of Economic Projections, seven participants had liftoff in 2022 and only five participants projected liftoff after 2023. Also, unlike the March SEP, every Committee participant now expected inflation to be over 3 percent in 2021 and just five believed inflation would be at 2 percent or below in 2022. In addition, the vast majority of participants now saw risks associated with inflation weighted to the upside. The June 2021 minutes also describe the vigorous discussion about tapering asset purchases. Numerous participants said that new data indicated that tapering should begin sooner than anticipated.3 Thus, in June, after observing high inflation for only three months, the Committee was moving in a hawkish direction and was considering tapering sooner and pulling liftoff forward.
At the July FOMC meeting, the minutes show that most participants believed that “substantial further progress” had been made on inflation but not employment.4 Tapering was not viewed as imminent by most participants. Again, individual participants had different metrics for evaluating the health of the labor market, and this approach influenced how each thought about policy. So, in my view, one cannot address the question of “how did the Fed get so far behind the curve?” without taking a stand on the health of the labor market as we moved through 2021.
Based on the incoming data over the summer, my position was that we would soon achieve the substantial further progress needed to start tapering of asset purchases—in particular, our purchases of agency mortgage-backed securities—and that we needed to “go early and go fast” on tapering our asset purchases to position ourselves for rate hikes in 2022 should we need to tighten policy.5 I also argued that, if the July and August job reports came in around the forecast values of 800,000 to 1 million job gains per month, we should commence tapering our asset purchases at the September 2021 FOMC meeting. The July report was indeed over 1 million new jobs, but then the August report shocked us by reporting only 235,000 new jobs when the consensus forecast was for 750,000. I considered this a punch in the gut and relevant to a decision on when to start tapering.6 Nevertheless, the September FOMC statement noted that the economy had made progress toward the Committee’s goals and that, if progress continued, it would soon be time to taper.7
Up until October, monthly core personal consumption expenditures (PCE) inflation was actually slowing. As shown in Figure 1, it went from 0.62 percent in April to 0.24 percent for the month of September. The September jobs report was another shock, with only 194,000 jobs created. So, up until the first week of October 2021, the story of high inflation being temporary was holding up, and the labor market improvements had slowed but were continuing. Based on the incoming data, the FOMC announced the start of tapering at its early November meeting.8
It was the October and November consumer price index (CPI) reports that showed that the deceleration of inflation from April to September was short lived and year-over-year inflation had topped 6 percent. It became clear that the high inflation realizations were not as temporary as originally thought. And the October jobs report showed a significant rebound with 531,000 jobs created and big upward revisions to the previous two months.
It was at this point—with a clearer picture of inflation and revised labor market data in hand—that the FOMC pivoted. In its December meeting, the Committee accelerated tapering, and the SEP showed that each individual participant projected an earlier liftoff in 2022 with a median projection of three rate hikes in 2022. These forecasts and forward guidance had a significant effect on raising market interest rates, even though we did nothing with our primary policy tool, the federal funds rate, in December 2021. It is worth noting that markets had the same view of likely policy—federal funds rate futures in November and December called for three hikes in 2022, indicating an economic outlook that was similar to the Committee’s.
Given this description of how policy evolved over 2021, did the Fed fall far behind the curve?
First, I want to emphasize that forecasting is hard for everyone, especially in a pandemic. In terms of missing on inflation, policymakers’ projections looked very much like most of the public’s. For example, as shown in table 1, the median SEP forecast for 2021 Q4/Q4 PCE inflation was very similar to the consensus from the Blue Chip, which is a compilation of private sector forecasts. In short, nearly everyone was behind the curve when it came to forecasting the magnitude and persistence of inflation.
Second, as I mentioned, you cannot answer this question without taking a stand on the employment leg of our mandate. There was a clear difference in views on this and on what indicators should be looked at to determine whether we had met the ‘substantial further progress” criteria we laid out in our December 2020 guidance. Some of us concluded the labor market was healing fast and we pushed for earlier and faster withdrawal of accommodation. For others, data suggested the labor market was not healing that fast and it was not optimal to withdraw policy accommodation soon. Many of our critics tend to focus only on the inflation aspect of our mandate and ignore the employment leg of our mandate. But we cannot. So, what may appear as a policy error to some was viewed as appropriate policy by others based on their views regarding the health of the labor market.
Third, one must account for setting policy in real time. The Committee was getting mixed signals from the labor market data in August and September. Two consecutive weak job reports didn’t square with a rapidly falling unemployment rate. Later that fall, and then with the Labor Department’s 2021 revisions, we found that payrolls were quite steady over the course of the year. As shown in table 2, revisions to changes in payroll employment since late last summer have been quite substantial. From the original reports to the current estimate, the change in payroll employment has been revised up nearly 1.5 million. As the revisions came in, a consensus grew that the labor market was much stronger than we originally thought. If we knew then what we know now, I believe the Committee would have accelerated tapering and raised rates sooner. But no one knew, and that’s the nature of making monetary policy in real time.
Finally, if one believes we were behind the curve in 2021, how far behind were we? In a world of forward guidance, one simply cannot look at the policy rate to judge the stance of policy. Even though we did not actually move the policy rate in 2021, we used forward guidance to start raising market rates starting with the September 2021 statement, which indicated tapering was coming soon. The 2-year Treasury yield, which I view as a good market indicator of our policy stance, went from approximately 25 basis points in late September 2021 to 75 basis points by late December. That is the equivalent, in my mind, of two 25 basis point policy rate hikes for impacting the financial markets. When looked at this way, how far behind the curve could we have possibly been if, using forward guidance, one views rate hikes effectively beginning in September 2021?
Compliments of the U.S. Federal Reserve.

1. See Jeff Cox (2021), “Fed’s Waller Says the Economy Is ‘Ready to Rip’ But Policy Should Stay Put,” CNBC, April 16. Return to text

2. See Christopher J. Waller (2021), “A Hopeless and Imperative Endeavor: Lessons from the Pandemic for Economic Forecasters,” speech delivered at the Forecasters Club of New York, New York, December 17. Return to text

3. See Board of Governors of the Federal Reserve System (2021), “Minutes of the Federal Open Market Committee, June 15–16, 2021,” press release. Return to text

4. See Board of Governors of the Federal Reserve System (2021), “Minutes of the Federal Open Market Committee, July 27–28, 2021,” press release. Return to text

5. See Ann Saphir (2021), “Fed’s Waller: ‘Go Early and Go Fast’ on Taper,” Reuters, August 2. Return to text

6. Of course, as we all know, these employment data would be revised upward substantially, but that was not known to policymakers at the time, and it’s important to explicitly make that point now—the data were choppy and did not lend themselves to a clear picture of the outlook. Return to text

7. See Board of Governors of the Federal Reserve System (2021), “FOMC Statement,” press release, September 22. Return to text

8. See Board of Governors of the Federal Reserve System (2021), “FOMC Statement,” press release, November 3. Return to text

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“Check against delivery”
Madam President, dear Roberta,
Honourable Members,
Next week, we will mark Europe Day. The 72nd birthday of our Union. This Europe Day will be all about the Union of the future – how we make it stronger, more resilient, closer to its people. But the answer to all of these questions, we cannot give alone. The answer is also given in Ukraine. It is given in Kharkiv, where Ukrainian first responders venture into the combat zone to help those wounded by Russian attacks. It is given in small towns like Bucha, where survivors are coping with the atrocities committed against civilians by Russian soldiers. And it is given in Mariupol, where Ukrainians are resisting a Russian force, which greatly outnumbers them. They are fighting to reaffirm basic ideas: That they are the master of their own future – and not some foreign leader. That it is the international law that counts and not the right of might. And that Putin must pay a high price for his brutal aggression.
Thus, the future of the European Union is also written in Ukraine. And therefore, today, I would like to speak about two topics. First about sanctions and second about relief and reconstruction. Today, we are presenting the sixth package of sanctions. First, we are listing high-ranking military officers and other individuals who committed war crimes in Bucha and who are responsible for the inhuman siege of the city of Mariupol. This sends another important signal to all perpetrators of the Kremlin’s war: We know who you are, and you will be held accountable. Second, we de-SWIFT Sberbank – by far Russia’s largest bank, and two other major banks. By that, we hit banks that are systemically critical to the Russian financial system and Putin’s ability to wage destruction. This will solidify the complete isolation of the Russian financial sector from the global system. Third, we are banning three big Russian state-owned broadcasters from our airwaves. They will not be allowed to distribute their content anymore in the EU, in whatever shape or form, be it on cable, via satellite, on the internet or via smartphone apps. We have identified these TV channels as mouthpieces that amplify Putin’s lies and propaganda aggressively. We should not give them a stage anymore to spread these lies. Moreover, the Kremlin relies on accountants, consultants and spin doctors from Europe. And this will now stop. We are banning those services from being provided to Russian companies.
My final point on sanction: When the Leaders met in Versailles, they agreed to phase out our dependency on Russian energy. In the last sanction package, we started with coal. Now we are addressing our dependency on Russian oil. Let us be clear: it will not be easy. Some Member States are strongly dependent on Russian oil. But we simply have to work on it. We now propose a ban on Russian oil. This will be a complete import ban on all Russian oil, seaborne and pipeline, crude and refined. We will make sure that we phase out Russian oil in an orderly fashion, in a way that allows us and our partners to secure alternative supply routes and minimises the impact on global markets. This is why we will phase out Russian supply of crude oil within six months and refined products by the end of the year. Thus, we maximise pressure on Russia, while at the same time minimising collateral damage to us and our partners around the globe. Because to help Ukraine, our own economy has to remain strong.
With all these steps, we are depriving the Russian economy from its ability to diversify and modernise. Putin wanted to wipe Ukraine from the map. He will clearly not succeed. On the contrary: Ukraine has risen up in unity. And it is his own country, Russia, he is sinking.
Honourable Members,
We want Ukraine to win this war. But we also want to set the conditions for Ukraine’s success in the aftermath of the war. The first step is immediate relief. This is about short-term economic support to help Ukrainians cope with the fallout of the war, like we do with our macro-financial assistance package and with direct support to the Ukrainian budget. In addition, we recently proposed to suspend all import duties on Ukrainian exports to our Union for one year. I am sure the European Parliament will put its weight behind this idea. But this is not enough for the short-term relief. Ukraine’s GDP is expected to fall by 30% to 50% this year alone. And the IMF estimates that, from May on, Ukraine needs EUR 5 billion each month, plain and simply, to keep the country running, paying pensions, salaries and basic services. We have to support them, but we cannot do it alone. I welcome that the United States announced massive budgetary support. And we, as Team Europe, will also do our share.
But then, in a second phase, there is the wider reconstruction effort. The scale of destruction is staggering. Hospitals and schools, houses, roads, bridges, railroads, theatres and factories – so much has to be rebuilt. In the fog of war, it is difficult to come up with a precise estimate. Economists are talking about several hundred billion euros. And costs are rising with each day of this senseless war.
Honourable Members,
Europe has a very special responsibility towards Ukraine. With our support, Ukrainians can rebuild their country for the next generation. That is why today I am proposing to you that we start working on an ambitious recovery package for our Ukrainian friends. This package should bring massive investment to meet the needs and the necessary reforms. It should address the existing weaknesses of the Ukrainian economy and lay the foundations for sustainable long-term growth. It could set a system of milestones and targets to make sure that European money truly delivers for the people of Ukraine, and is spent in accordance with EU rules. It could help fight corruption, align the legal environment with European standards and radically upgrade Ukraine’s productive capacity. This will bring the stability and certainty needed to make Ukraine an attractive destination for foreign direct investment. And eventually, it will pave the way for Ukraine’s future inside the European Union.
Slava Ukraini and long live Europe.
Compliments of the European Commission.
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The European Commission has today proposed a debt-equity bias reduction allowance, or DEBRA, to help businesses access the financing they need and to become more resilient. This measure will support businesses by introducing an allowance that will grant to equity the same tax treatment as debt. The proposal stipulates that increases in a taxpayer’s equity from one tax year to the next will be deductible from its taxable base, similarly to what happens to debt.
This initiative is part of the EU strategy on business taxation, which aims to ensure a fair and efficient tax system across the EU, and contributes to the Capital Markets Union, making financing more accessible to EU business and promoting the integration of national capital markets into a genuine single market.
The current pro-debt bias of tax rules, where businesses can deduct interest attached to a debt financing – but not the costs related to equity financing – can incentivise companies  to take on debt rather than increase equity to finance their growth. Excessive debt levels make companies vulnerable to unforeseen changes in the business environment. The total indebtedness of non-financial corporations in the EU amounted to almost €14.9 trillion in 2020 or 111% of GDP. Against this background, it is worth stressing that businesses with a solid capital structure may be less vulnerable to shocks, and more prone to make investments and innovate. Therefore, reducing the over-reliance on debt-financing, and supporting a possible rebalancing of companies’ capital structure, can positively affect competitiveness and growth. The combined approach of equity allowance and limited interest deduction is expected to increase investments by 0.26% of GDP and GDP by 0.018%.
Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, said: “Europe’s companies should be able to choose the financing source that is best for their growth and business model. By making new equity tax-deductible, just as debt is at present, this proposal reduces the incentive to add to their borrowing and allows them to make financing decisions based on commercial considerations alone. As part of the EU’s agenda to ensure a fair and efficient tax system, it will make financing more accessible for EU businesses, particularly start-ups and SMEs, and help to create a genuine single market for capital. This will be important for the green and digital transitions, which require new investments in innovative technologies that could be funded by increased equity.”
Paolo Gentiloni, Commissioner for Economy, said: “In these dark and uncertain times, we must act not only to help our companies cope with their immediate challenges, but also to support their future development. Today we are taking action to make the tax advantages of equity comparable to those of debt for firms wanting to raise capital. We want to give a shot in the arm to innovative start-ups and SMEs throughout the EU. This harmonised solution to the debt-equity bias will make Europe’s business environment more predictable and competitive, spurring the development of our capital markets union. Our proposal will help companies build up more solid capital, making them less vulnerable and more likely to invest and take risks. And that will be good news for jobs and growth in Europe.”
The green and digital transition requires new investments in innovative technologies. Taxation has an important role to play in encouraging and enabling businesses to develop and grow sustainably. An allowance for equity financing can facilitate bold investments in cutting-edge technologies, notably for start-ups and SMEs.  Equity is particularly important for fast-growing innovative companies in their early stages and scale-ups willing to compete globally.
Background
DEBRA is a follow-up to the Communication on Business Taxation for the 21st Century, which sets out a long-term vision to provide a fair and sustainable business environment and EU tax system, as well as targeted measures to promote productive investment and entrepreneurship and ensure effective taxation. The proposal also contributes to the EU’s Capital Markets Union Action Plan (CMU), which aims at helping companies raise the capital they need, particularly as they navigate the post-pandemic period. The CMU incentivises long-term investments to foster the sustainable and digital transition of the EU economy.
Compliments of the European Commission.
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Today, the European Commission has adopted a reform of the current EU rules on Distance Marketing of Consumer Financial Services, which govern financial services sold at a distance. The Proposal will strengthen consumer rights and foster the cross-border provision of financial services in the single market. This market has significantly evolved in light of the overall digitalisation of the sector and the new types of financial services that have been developed since the rules were first introduced in 2002. These developments have been further enhanced by the impact of the COVID 19 pandemic, which greatly contributed to an increase in online transactions.
Vice-President for Values and Transparency, Věra Jourová, said: “Consumers increasingly turn to online services, also when it comes to finances, and that is a good thing. But we also need to ensure that the rules of the game are up to speed with the latest developments. Consumers need clear information and a safety net in case something goes wrong”.
Commissioner for Justice, Didier Reynders, added: “As the world of financial services evolves, so must our rules: it is that simple. Digitisation and the multiplication of new financial products  have fundamentally changed this sector in the past twenty years, and the recent lockdowns brought by the Covid crisis have evidenced that a more  efficient and up-to-date regulatory framework for distance financial services is more relevant than ever. Although the risks and challenges may vary, our spotlight is invariably set on the safety of consumers”.
Modernisation of EU rules
To ensure the fostering of the provision of financial services in the internal market and to ensure a high level of consumer protection, the Proposal introduces actions across several areas:

Easier access to 14-day withdrawal right for distance contracts for financial services: with a view of easing the exercise of this right, traders will have to provide a withdrawal button when selling through electronic means. Furthermore, the trader is obliged to send a notification of the right of withdrawal if the pre-contractual information is received less than a day before conclusion of the contract.

Clear rules on what, how and when pre-contractual information is to be provided: the Proposal modernises the rules, for example with regards to electronic communication, imposing obligations on the seller to provide certain information upfront, including for instance the e-mail address of the trader, any potential hidden costs or the risk related to the financial service. Information must also be displayed prominently in the screen, and rules are introduced regarding the use of pop-ups or layered links to provide information. The new rules will also ensure that the consumer is given sufficient time to understand the information received, at least a day before the actual signature.

Special rules to protect consumers when concluding financial services contracts online: financial services contracts might be complex to understand, in particular, if negotiated at a distance. The Proposal obliges traders to set up online systems which are fair and transparent and to provide an adequate explanation when using online tools (e.g. roboadvice or chat boxes). The rules also empower the consumer by introducing the option to request human intervention, if the interaction with such online tools is not fully satisfactory.

Enforcement: the Proposal will give teeth to the competent authorities. Stronger penalties will apply to financial service contracts concluded at a distance in case of widespread cross-border infringements, with a maximum penalty of at least 4% of annual turnover.

Full harmonisation to ensure the same high level of consumer protection across the internal market: the Proposal introduces full legal harmonisation, establishing similar rules for all providers across Member States.

Next steps
The Commission’s Proposal will now be discussed by the Council and the European Parliament.
Background
Over the last 20 years, distance marketing of consumer financial services has changed rapidly. Financial providers and consumers have abandoned the fax machine, mentioned in the Directive, and since then new players (such as fintech companies) with new business models and new distribution channels (e.g. financial services sold online) have emerged. In addition, the impact of the COVID-19 pandemic and related lockdowns has accelerated the use of online shopping in general.
The Directive has been subject to a full evaluation. The main outcomes were: (i) following the entry into application of the Directive, a number of EU product-specific legislative acts (e.g. the Consumer Credit Directive) and EU horizontal legislation (the General Data Protection Regulation) have been enacted, reducing the Directive’s relevance and its added value subsequently decreased; (ii) a number of developments such as the increasing digitalisation of services have affected the Directive’s effectiveness in reaching its principal objectives; (iii) however, the Directive remained useful since its horizontal application ensured that consumers had a certain level of protection for contracts concluded at a distance for those financial products that were not yet subject to any EU legislation (e.g. in the absence of EU rules on crypto-assets, the Directive applies).
The Impact Assessment accompanying the Proposal explored a number of possible options. The preferred option has led to the repeal of Directive 2002/65/EC, the modernisation and subsequent inclusion of the still relevant articles (right to pre-contractual information and right of withdrawal) into Directive 2011/83/EU (Consumer Rights Directive), the extension of the application of certain rules of Directive 2011/83/EU to consumer financial services concluded at a distance (e.g. rules on additional payments and rules on enforcement and penalties) and the introduction of targeted new provisions to ensure online fairness when consumers conclude financial services online. In this light, the Proposal tackles the identified problems and addresses the objectives in an effective, efficient and proportionate way.
Compliments of the European Commission.
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Today, EU Member States, with the support of the European Commission and ENISA, the EU Agency for Cybersecurity, published a report on the cybersecurity of Open RAN. This new type of 5G network architecture will in the coming years provide an alternative way of deploying the radio access part of 5G networks based on open interfaces. This marks another major step in the coordinated work at EU level on the cybersecurity of 5G networks, demonstrating a strong determination to continue to jointly respond to the security challenges of 5G networks and to keep abreast of developments in the 5G technology and architecture.
EU citizens and companies using advanced and innovative applications enabled by 5G and future generations of mobile communication networks should benefit from the highest security standard. Following up on the coordinated work already done at EU level to strengthen the security of 5G networks with the EU Toolbox on 5G Cybersecurity, Member States have analysed the security implications of Open RAN.
Margrethe Vestager, Executive Vice-President for a Europe Fit for the Digital Age, said: “Our common priority and responsibility is to ensure the timely deployment of 5G networks in Europe, while ensuring they are secure. Open RAN architectures create new opportunities in the marketplace, but this report shows they also raise important security challenges, especially in the short term. It will be important for all participants to dedicate sufficient time and attention to mitigate such challenges, so that the promises of Open RAN can be realised.”
Thierry Breton, Commissioner for the Internal Market, added: “With 5G network rollout across the EU, and our economies’ growing reliance on digital infrastructures, it is more important than ever to ensure a high level of security of our communication networks. That is what we did with the 5G cybersecurity toolbox. And that is what – together with the Member States – we do now on Open RAN with this new report. It is not up to public authorities to choose a technology. But it is our responsibility to assess the risks associated to individual technologies. This report shows that there are a number of opportunities with Open RAN but also significant security challenges that remain unaddressed and cannot be underestimated. Under no circumstances should the potential deployment in Europe’s 5G networks of Open RAN lead to new vulnerabilities.”
Guillaume Poupard, Director General of France’s National Cyber Security Agency (ANSSI), said: “After the EU Toolbox on 5G Cybersecurity, this report is another milestone in the NIS Cooperation Group’s effort to coordinate and mitigate the security risks of our 5G networks. This in-depth security analysis of Open RAN contributes to ensuring that our common approach keeps pace with new trends and related security challenges. We will continue our work to jointly address those challenges.”
The report found that Open RAN could bring potential security opportunities, provided certain conditions are met. Through greater interoperability among RAN components from different suppliers, Open RAN could allow greater diversification of suppliers within networks in the same geographic area. This could contribute to achieving the EU 5G Toolbox recommendation that each operator should have an appropriate multi-vendor strategy to avoid or limit any major dependency on a single supplier. Open RAN could also help increase visibility of the network thanks to the use of open interfaces and standards, reduce human errors through greater automation, and increase flexibility through the use of virtualisation and cloud-based solutions.
However, the Open RAN concept still lacks maturity and cybersecurity remains a significant challenge. Especially in the short term, by increasing the complexity of networks, Open RAN would exacerbate a number of security risks. Those risks include a larger attack surface and more entry points for malicious actors, an increased risk of misconfiguration of networks and potential impacts on other network functions due to resource sharing. The report also notes that technical specifications, such as those developed by the O-RAN Alliance, are not sufficiently mature and secure by design. Open RAN could lead to new or increased critical dependencies, for example in the area of components and cloud.
To mitigate these risks and leverage potential opportunities of Open RAN, the report recommends a number of actions based on the EU 5G Toolbox, in particular:

Using regulatory powers to be able to scrutinise large-scale Open RAN deployment plans from mobile operators and if needed, restrict, prohibit and/or impose specific requirements or conditions for the supply, large-scale deployment and operation of the Open RAN network equipment;
Reinforcing key technical controls such as authentication and authorisation, and adapting the monitoring design to a modular environment where each component is monitored;
Assessing the risk profile of Open RAN providers, external service providers related to Open RAN, cloud service/infrastructure providers and system integrators, and extending the controls and restrictions on MSPs (Managed Service Providers) to those providers;
Addressing deficiencies in the development of technical specifications: the process should satisfy the World Trade Organisation (WTO)/Technical Barriers to Trade (TBT) founding principles for the development of international standards[1] and security deficiencies should be addressed;
Including Open RAN components into the future 5G cybersecurity certification scheme, currently under development, at the earliest possible stage.

As regards preserving and consolidating EU capacities in this market, a technology-neutral regulation to foster competition should be maintained. In this framework, EU and national funding for 5G and 6G research and innovation could be used to support opportunities for EU players to compete on a level playing field. Beyond the RAN, it is also important to address potential dependencies or lack of diversity across the whole communication value chain for the diversification of supply.
Overall, the report recommends a cautious approach to moving towards this new architecture. Any transition from and coexistence with existing, reliable technologies should be done by allowing sufficient time and resources to assess risks in advance, implement appropriate mitigations and clearly define responsibilities in case of failure or incident.
Background
The timely deployment of secure 5G networks is a high priority for the European Union. To contribute to this objective, EU Member States, with the support of the European Commission and ENISA, have developed a concerted approach to the cybersecurity of 5G networks. Through this concerted approach, EU Member States jointly assessed the main risks related to 5G networks (‘EU Coordinated risk assessment’) and defined a comprehensive and risk-based approach in the form of the EU 5G Toolbox adopted in January 2020. The EU 5G Toolbox recommends a set of common risk mitigating measures.
The EU 5G Toolbox includes strategic and technical measures and corresponding actions to reinforce their effectiveness. Key measures of the EU 5G Toolbox include strengthening security requirements, assessing the risk profiles of suppliers, applying relevant restrictions for suppliers considered to be high-risk including necessary exclusions for key assets considered as critical and sensitive (such as the core network functions), and having strategies in place to promote the diversification of suppliers and avoid dependencies.
To continue and deepen the EU coordination process on 5G cybersecurity, the EU Cybersecurity Strategy of December 2020 identified three key objectives: (1) ensuring further convergence in risk mitigation approaches across the EU, (2) supporting continuous exchange of knowledge and capacity building, and (3) promoting supply chain resilience and other EU strategic security objectives.
As part of these key objectives, the NIS Cooperation Group will continue to monitor and assess issues related to new trends and developments in the 5G supply chain. As Open RAN is a market trend in the evolution of 5G and 6G architectures, Member States have decided to conduct an in-depth analysis of the security implications of Open RAN to complement the coordinated risk analysis on 5G.
Compliments of the European Commission.
The post Cybersecurity of 5G networks: EU publishes report on the security of Open RAN first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Daily average borrowing turnover in the unsecured segment decreased from €138 billion in the first maintenance period of 2022 to €137 billion in the second maintenance period of 2022

Weighted average overnight rate on borrowing transactions in the unsecured segment remained stable at -0.56% for the wholesale sector and decreased from -0.57% to -0.58% for the interbank sector

Daily average borrowing turnover in the secured segment decreased from €429 billion to €404 billion, with a weighted average overnight rate of -0.64%

Chart 1
Daily average nominal borrowing and lending turnover in the secured and unsecured wholesale markets by maintenance period (MP)

(EUR billions)

Data for daily average nominal borrowing and lending turnover in the secured and unsecured markets

Unsecured market

Chart 2
Weighted average rate for wholesale sector borrowing in the unsecured segment by tenor and maintenance period

(percentages)

Data for weighted average rate for unsecured wholesale sector borrowing

In the second maintenance period of 2022, which started on 16 March 2022 and ended on 19 April 2022, the borrowing turnover in the unsecured segment averaged €137 billion per day. The total borrowing turnover for the period as a whole was €3,150 billion. Borrowing from credit institutions, i.e. on the interbank market, represented a turnover of €252 billion, i.e. 8% of the total borrowing turnover. Lending to credit institutions amounted to €183 billion. Overnight borrowing transactions represented 70% of the total borrowing nominal amount. The weighted average overnight rate for borrowing transactions was -0.58% for the interbank sector and -0.56% for the wholesale sector, compared with -0.57% and -0.56% respectively in the previous maintenance period.
Secured market

Chart 3
Weighted average rate for wholesale sector borrowing and lending in the secured segment by tenor

(percentages)

Data for weighted average rate for secured wholesale sector borrowing and lending

In the second maintenance period of 2022, the borrowing turnover in the secured segment averaged €404 billion per day, while the total borrowing turnover for the period as a whole was €9,298 billion. Cash lending represented a turnover of €7,752 billion and the daily average amounted to €337 billion. Most of the turnover was concentrated in tenors ranging from overnight to up to one week, with overnight transactions representing around 27% and 23% of the total nominal amount on borrowing and lending side respectively. The weighted average overnight rate for borrowing and lending transactions was, respectively, -0.64% and -0.68% for the wholesale sector, compared with -0.63% and -0.68% in the previous maintenance period. In the second maintenance period of 2022, the weighted average rate for spot/next borrowing transactions ranged from -0.63% for operations based on collateral issued in Italy to -0.86% for operations based on collateral issued in Germany.

Chart 4
Weighted average rate for spot/next borrowing in the secured segment for collateral issued by maintenance period (MP)

(percentages)

Data for weighted average rate for secured wholesale sector borrowing by collateral issuer country

Table 1
Euro money market statistics

 
 
Turnover (EUR billions)
Average rate O/N (percentages)

 
 
Daily average
Total
 
 

 
 
MP 1 2022
MP 2 2022
MP 1 2022
MP 2 2022
MP 1 2022
MP 2 2022

Unsecured
Borrowing, wholesale
138
137
3,455
3,150
-0.56
-0.56

Of which, interbank
12
11
292
252
-0.57
-0.58

Lending, interbank
7
8
178
183
-0.43
-0.42

Secured
Borrowing, wholesale
429
404
10,723
9,298
-0.63
-0.64

Lending, wholesale
351
337
8,764
7,752
-0.68
-0.68

Contact:

For media queries, please contact Philippe Rispal | philippe.rispal@ecb.europa.eu

Notes

The money market statistics are available in the ECB’s Statistical Data Warehouse.

The Eurosystem collects transaction-by-transaction information from the 47 largest euro area banks in terms of banks’ total main balance sheet assets, broken down by their borrowing from and lending to other counterparties. Unsecured transactions include all trades concluded via deposits, call accounts or short-term securities with financial corporations (except central banks where the transaction is not for investment purposes), general government as well as with non-financial corporations classified as “wholesale” under the Basel III LCR framework. Secured transactions cover all fixed-term and open-basis repurchase agreements and transactions entered into under those agreements, including tri-party repo transactions, denominated in euro with a maturity of up to one year, between the reporting agent and financial corporations (except central banks where the transaction is not for investment purposes), general government as well as non-financial corporations classified as wholesale under the Basel III liquidity coverage ratio framework. As of the first maintenance period of 2019, the wholesale sector covers all counterparties in the sectors listed above. More information on the methodology applied, including the list of reporting agents, is available in the statistics section of the ECB’s website.

The weighted average rate is calculated as the arithmetic mean of the rates weighted by the respective nominal amount over the maintenance period on all days on which TARGET2, the Trans-European Automated Real-time Gross settlement Express Transfer system, is open.

Borrowing refers to transactions in which the reporting bank receives euro-denominated funds, irrespective of whether the transaction was initiated by the reporting bank or its counterpart.

Lending refers to transactions in which the reporting bank provides euro-denominated funds, irrespective of whether the transaction was initiated by the reporting bank or its counterpart.

The tenors O/N, T/N, S/N, 1W, 3M, 6M and 12M refer to, respectively, overnight, tomorrow/next, spot/next, one week, three months, six months and twelve months.

The collateral issuer country refers to the jurisdiction that issues the collateral used for transactions secured by single collateral identified by an International Securities Identification Number.

The missing values for tenors in some of the reserve maintenance periods may be due to confidentiality requirements.

In addition to the developments in the latest maintenance period, this press release incorporates minor revisions to the data for previous periods.

Data are published 15 working days after the end of each maintenance period. The release calendar and the indicative calendars for the Eurosystem’s reserve maintenance periods are available on the ECB’s website.

The next press release on euro money market statistics will be published on 5 July 2022.

Compliments of the European Central Bank.
The post ECB | Euro money market statistics: Second maintenance period 2022 first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The European Committee of the Regions and European Commission held the 4th meeting of the Broadband Platform on 6 May, focusing on ways to improve the digital infrastructure in the European Union by adding the concept of digital cohesion to the ones of social, economic and territorial cohesion recognised by the Treaties.
The Covid-19 pandemic and the worsening geopolitical context caused by the Russian invasion of Ukraine have shown how important technology and digital tools are to help citizens to adapt to challenging circumstances and to provide them with the latest information and key support. The European Committee of the Regions (CoR) and European Commission highlighted in their 4th Broadband Platform meeting that digitalisation is key to close digital gaps in access and use of digital services, thus promoting cohesion in Europe.
Michael Murphy (IE/EPP), Mayor of Clonmel Borough District, Chair of the CoR’s Commission for Economic Policy (ECON) and of the Broadband Platform, said: ” Today nearly all aspects of work and private life are concerned by digital transformation, and those who have no access to digital will be missing opportunities and lose out in the long run. In addition to that, the Russian invasion of Ukraine has shown that our societies need to be digitally resilient. Only a society without gaps in the access to and use of latest technology can provide its citizens with the latest information as well as key support tools for those in need, such as those provided through digital platforms. We need to make sure that citizens have equal access to digital technologies and the digital way of life. ”
The digital divide may jeopardise the achievement of the digital decade goals set for 2030, and hamper the cohesion in the EU. During the meeting, Gaetano Armao (IT/EPP), Vice-President of the Region of Sicily and CoR’s rapporteur of the opinion on digital cohesion, examined the causes and challenges of the digital divide for cities and regions. The CoR is seeking to add the digital dimension to the definition of economic, social and territorial cohesion recognised by the EU Treaties. In the era of connectivity, urban and rural areas are still lacking high technological networks and citizens often have insufficient digital skills. For this reason, it is crucial to develop a clear understanding of the digital concept for regions that are less developed in order for them to catch up with the rapid digital transformation.
The rapporteur Armao, stated: ” The acceleration of digitalization during the COVID-19 pandemic did not guarantee improved access and use of e-services. In terms of connectivity and digital infrastructure, rural areas are still lagging. The gap between individuals living in cities and urban areas increased, especially in the provision of digital public services. ”
His opinion is scheduled to be discussed and voted by the ECON Commission on 8 July, and then by the CoR Plenary in October.
Members of the Broadband Platform also discussed that public authorities in particular should be increasingly involved in the European Commission’s 5G Smart Community approach. The strategy aims to provide unprecedented opportunities for local communities to accelerate the deployment of 5G connectivity and enable their citizens and businesses to reap its benefits for services of general interest. In addition, digital global gateways and backbone connectivity, which play an essential role in ensuring very high capacity and performance of digital connectivity across the Union, are necessary for the EU to ensure the competitive availability, reliability and resilience of these vital infrastructures.
Background:
In 2017, the Committee of the Regions and the European Commission jointly launched the Broadband Platform with the aim to help high-speed broadband reach all European regions, including rural and sparsely populated areas where there is not enough market-driven development. Since then, the Platform has been a key instrument in making the voice of local and regional authorities heard through the important added value of the CoR and its members, feeding into the European Commission’s policymaking process. The full list of CoR members can be found here .
The European Committee of the Regions is part of the Join Boost Sustain initiative. Interested cities can find more information here.
On 12 May, members of the ECON Commission will discuss and vote the draft opinion on the EU Data Act prepared by the Chair of the Kerava City Council Anne Karjalainen (FI/PES), and have a first exchange of views on the draft opinion “European Chips Act to strengthen the European semiconductor ecosystem”, of which is rapporteur Thomas Schmidt (DE/EPP), Minister for Regional Development of the Free State of Saxony. More information on the meeting can be found here.
Contact:

Theresa Sostmann | Theresa.Sostmann@cor.europa.eu

Compliments of the European Committee of the Regions.
The post The Broadband Platform discusses ways to improve digital cohesion in Europe first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

What are the results of the Conference on the Future of Europe?
The results of the Conference are presented in the report on the outcome of the Conference, handed over to the Presidents of the European Parliament, the Council and the European Commission on 9 May 2022. The centrepiece is the 49 proposals for the future of Europe set out in that report, covering nine topics: climate change and the environment; health; a stronger economy, social justice and jobs; EU in the world; values and rights, rule of law, security, digital transformation, European democracy, migration, education, culture, youth and sport. These proposals include general objectives and more than 300 concrete measures for the institutions to follow up on. Besides these proposals, the report includes a factual overview of the architecture of the Conference, focusing on its citizen-driven and innovative dimension, an overview of the Conference Plenary, as well as the recommendations of citizens’ panels and references to national events and the report on the Multilingual Digital Platform.
How was the consensus reached on the results of the Conference?
The 49 proposals were formulated by the Conference Plenary on a consensual basis and then put forward to the Executive Board. At the Plenary meeting on 29 and 30 April 2022, representatives of the European Parliament, the Council, the Commission, representatives from national parliaments reached a consensus on the final proposals of the Conference plenary and approved and the process that led to them.  The 108 members of the citizens’ component expressed their final say on the basis of this consensus. At its meeting on 6 May 2022, the Executive Board drew up the Conclusions of the Plenary and endorsed by consensus the report on the outcome of the Conference.
Why and when was the Conference launched?
The Conference was launched to allow, by way of a citizens-focused, bottom-up, grass roots exercise, all Europeans to have a say on what they expect from the European Union and have a greater role in shaping the future of the Union.
The signing of the Joint Declaration on the Conference on the Future of Europe on 10 March 2021 by the Presidents of the three EU institutions paved the way for this unprecedented, open and inclusive European democratic exercise, which places citizens at its very heart. On 19 April 2021, the Multilingual Digital Platform of the Conference was launched, and on 9 May 2021, an inaugural event of the Conference took place in the European Parliament’s premises in Strasbourg.
Who participated in the Conference and what were its main elements?

The Multilingual Digital Platform was set up as the main hub of the Conference. It gave everyone the chance to participate, by putting forward and debating ideas, as well as participating in events across Europe and reporting on their outcomes.
A central and particularly innovative feature of the Conference was the European Citizens’ Panels. A total of some 800 randomly selected citizens, representative of the EU’s sociological and geographical diversity, organised into four Panels of 200 citizens, met for three deliberative sessions each and made recommendations. A third of each Panel is composed of young people (age 16 – 25).
Member States organised National Citizens’ Panels based on the same principles. In addition, they contributed to the Conference through a wide range of events and initiatives.
A Conference Plenary was set up to debate the recommendations from the National and European Citizens’ Panels, and the input gathered from the Multilingual Digital Platform, grouped by themes. Together with citizens representing European Citizens’ Panels and national panels/events, it gathered representatives of EU institutions and advisory bodies, elected representatives at national, regional and local level, and representatives of social partners and civil society.
An Executive Board oversaw the organisation of the Conference.

What was the input of the Multilingual Digital Platform to the results of the Conference?
The Multilingual Digital Platform allowed to gather ideas from participants on the platform, as well as input from the multitude of original and innovative events taking place under the umbrella of the Conference in the Member States. By May 2022, close to 5 million individual visitors had visited the Multilingual Digital Platform and there were over 50,000 active participants, 18,000 ideas debated, and over 6,500 events registered on the Platform.
Throughout the Conference, reports were drawn up on the contributions submitted on the Platform. The reports, including the thematic mind maps, provided valuable input to the work of the European Citizens’ Panels. Many ideas on the Platform are therefore reflected in the recommendations of the European Citizens’ Panels. Contributions gathered through the Platform were also debated and discussed in the Conference Plenary and its Working Groups.
What was the input of the European Citizens Panels and national panels to the final results of the Conference?
Each of the four European Citizens’ Panels covered different topics in their work, focusing on (1) Stronger economy, social justice, jobs/education, youth, culture, sport/digital transformation; (2) European democracy/values and rights, rule of law, security; (3) Climate change, environment/health; and (4) EU in the world/migration. Each panel came up with a set of recommendations, and selected 20 ambassadors to the Conference Plenary to present and debate these recommendations.
In addition, six Member States – Belgium, France, Germany, Italy, Lithuania and the Netherlands – organised National Citizens’ Panels under the same principles as European Citizens’ Panels.
Altogether, the four European Citizens’ Panels and six National Panels adopted 178 recommendations, which were the main basis for the proposals prepared in the Conference Plenary and Working Groups.
What was the role of the Conference Plenary?
The Conference Plenary met seven times from June 2021 to April 2022. It ensured that the recommendations from the National and European Citizens’ Panels, and input gathered from the Multilingual Digital Platform, were debated and turned into proposals. After the recommendations were presented by and discussed with citizens, the Plenary put forward its proposals on a consensual basis to the Executive Board. Nine Plenary Working Groups were also established, to prepare the debates and the proposals of the Conference Plenary. The Working Groups held lively and constructive debates in their meetings ahead of the Conference Plenaries, as well as online.
At the 7th Conference Plenary, 49 proposals of the Plenary, covering nine topics, were on a consensual basis put forward to the Executive Board.
What was the impact of the Russian aggression against Ukraine on the Conference?
The geopolitical developments during the Conference, and especially the Russian invasion of Ukraine, gave a new perspective to the Conference process. They underlined the importance of upholding democratic values in EU Member States and in the world, while continuing to engage with citizens and nurturing the democratic legitimacy of the EU, which is a peace project in its origin. Ukrainian citizens and Members of the Parliament were heard during the Plenary and invited to the closing event of the Conference. Several citizens’ recommendations became more prominent in the light of these developments and Plenary discussions frequently considered the proposals in the new geopolitical context.
How will the results of the Conference be followed up and how will the participants be informed about it?
The Conference allowed the EU institutions to listen carefully to the concerns, ambitions, and ideas expressed by citizens across Europe. The next step in this process is to come up with concrete EU action building on the outcome of the Conference, contained in the final report. The EU institutions will now examine swiftly how to follow up effectively on this report, each within their own sphere of competences and in accordance with the Treaties. A feedback event will take place to update citizens in autumn 2022.
Compliments of the European Commission.
The post Questions and Answers – Conference on the Future of Europe first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.