The world is producing twice as much plastic waste as two decades ago, with the bulk of it ending up in landfill, incinerated or leaking into the environment, and only 9% successfully recycled, according to a new OECD report.
Ahead of UN talks on international action to reduce plastic waste, the OECD’s first Global Plastics Outlook shows that as rising populations and incomes drive a relentless increase in the amount of plastic being used and thrown away, policies to curb its leakage into the environment are falling short.
Almost half of all plastic waste is generated in OECD countries, according to the Outlook. Plastic waste generated annually per person varies from 221 kg in the United States and 114 kg in European OECD countries to 69 kg, on average, for Japan and Korea. Most plastic pollution comes from inadequate collection and disposal of larger plastic debris known as macroplastics, but leakage of microplastics (synthetic polymers smaller than 5 mm in diameter) from things like industrial plastic pellets, synthetic textiles, road markings and tyre wear are also a serious concern.
OECD countries are behind 14% of overall plastic leakage. Within that, OECD countries account for 11% of macroplastics leakage and 35% of microplastics leakage. The Outlook notes that international co-operation on reducing plastic pollution should include supporting lower-income countries in developing better waste management infrastructure to reduce their plastic leakage.
The report finds that the COVID-19 crisis led to a 2.2% decrease in plastics use in 2020 as economic activity slowed, but a rise in littering, food takeaway packaging and plastic medical equipment such as masks has driven up littering. As economic activity resumed in 2021, plastics consumption has also rebounded.
Reducing pollution from plastics will require action, and international co-operation, to reduce plastic production, including through innovation, better product design and developing environmentally friendly alternatives, as well as efforts to improve waste management and increase recycling.
Bans and taxes on single-use plastics exist in more than 120 countries but are not doing enough to reduce overall pollution. Most regulations are limited to items like plastic bags, which make up a tiny share of plastic waste, and are more effective at reducing littering than curbing plastics consumption. Landfill and incineration taxes that incentivise recycling only exist in a minority of countries. The Outlook calls for greater use of instruments such as Extended Producer Responsibility schemes for packaging and durables, landfill taxes, deposit-refund and Pay-as-You-Throw systems.
Most plastics in use today are virgin – or primary – plastics, made from crude oil or gas. Global production of plastics from recycled – or secondary – plastics has more than quadrupled from 6.8 million tonnes (Mt) in 2000 to 29.1 Mt in 2019, but this is still only 6% of the size of total plastics production. More needs to be done to create a separate and well-functioning market for recycled plastics, which are still viewed as substitutes for virgin plastic. Setting recycled content targets and investing in improved recycling technologies could help to make secondary markets more competitive and profitable.
Some key findings from the Outlook:

Plastic consumption has quadrupled over the past 30 years, driven by growth in emerging markets. Global plastics production doubled from 2000 to 2019 to reach 460 million tonnes. Plastics account for 3.4% of global greenhouse gas emissions.

Global plastic waste generation more than doubled from 2000 to 2019 to 353 million tonnes. Nearly two-thirds of plastic waste comes from plastics with lifetimes of under five years, with 40% coming from packaging, 12% from consumer goods and 11% from clothing and textiles.

Only 9% of plastic waste is recycled (15% is collected for recycling but 40% of that is disposed of as residues). Another 19% is incinerated, 50% ends up in landfill and 22% evades waste management systems and goes into uncontrolled dumpsites, is burned in open pits or ends up in terrestrial or aquatic environments, especially in poorer countries.

In 2019, 6.1 million tonnes (Mt) of plastic waste leaked into aquatic environments and 1.7 Mt flowed into oceans. There is now an estimated 30 Mt of plastic waste in seas and oceans, and a further 109 Mt has accumulated in rivers. The build-up of plastics in rivers implies that leakage into the ocean will continue for decades to come, even if mismanaged plastic waste could be significantly reduced.

Considering global value chains and trade in plastics, aligning design approaches and the regulation of chemicals will be key to improving the circularity of plastics. An international approach to waste management should lead to all available sources of financing, including development aid, being mobilised to help low and middle-income countries meet estimated costs of EUR 25 billion a year to improve waste management infrastructure.

Compliments of the OECD.
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Keynote speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, Industry outreach on the thematic review on climate-related and environmental risks| Frankfurt am Main, 18 February 2022 |
Welcome to this industry outreach event organised by ECB Banking Supervision on the management and supervision of climate-related and environmental risks, or C&E risks for short. Our focus today is the current state of C&E risk management practices in the banking sector, and the ECB’s upcoming thematic review of these risks.
Over the last couple of years, we have launched several targeted actions in this direction. In 2020 we issued the ECB guide on C&E risks and in 2021 we conducted a supervisory review of banks’ approaches to managing these risks based on their own assessments. The ECB has progressively taken C&E risks into greater account in its supervision, as have banks in their business.
2022 will be the year that C&E risks become integrated in the day-to-day activities of our joint supervisory teams, who are in constant contact with banks. These risks will come to form an integral part of our ongoing dialogue with supervised entities and the supervisory review and evaluation process, the SREP. This will ultimately influence banks’ minimum capital requirements. The encompassing and integrated approach – which supervisors and banks are already very familiar with for traditional risk categories – is what I call the immersive supervisory approach to C&E risks.
Along with the 2022 ECB supervisory stress test, the thematic review forms part of the ECB Banking Supervision roadmap to ensure that banks adequately incorporate C&E risk management. These supervisory activities complement the ECB’s broader C&E agenda, which includes publishing the results of an economy-wide climate change stress test, and our 2021 action plan to include climate change considerations in our monetary policy.
The state of C&E risk management
Climate and environmental risks are impossible to avoid. The public knows it and the ECB knows it. The banks themselves now know it, as reflected in the outcome of their internal assessments. All banks that thoroughly assessed their exposure to C&E risks concluded that these risks are material. By contrast, not a single materiality assessment submitted by banks that reported no material risk exposure was deemed adequate.
In the overwhelming majority of cases, the banks that acknowledged the materiality of the C&E risks they faced did so for both transition and physical risks. And they acknowledged that these risks are material in both the short and the long term. Despite this broad acknowledgement of the materiality of these risks, and thus the need to adequately manage them, we see that most banks still have a considerable way to go in developing their risk management capabilities. As the findings we published last year show, banks reported that 90% of their practices are only partially or not at all in line with ECB supervisory expectations. Let me repeat: 90%.
This is both bad news and good news. Bad news because, at the time of their assessment, banks were a long way away from where they needed to be. But good news because half the banks we supervise already acknowledge that climate risks are an inevitable part of their day-to-day business. We therefore expect banks to analyse how C&E risks can or will affect their portfolios and products over the short, medium and long term, and under various scenarios, too. This type of forward-looking analysis of C&E risk should be basic practice, just as it would be for any other type of risk.
Moreover, beyond merely formally attributing responsibilities, we still see banks making little progress towards more actively managing the C&E risks they face. Even certain banks that recognise the materiality of C&E risks have not reported any practices to either reduce or manage their level of risk.
This year we want to see firm progress in how banks incorporate C&E risks in their risk management. In doing so, banks should adopt a strategic approach to managing these risks, using the full array of the risk management instruments at their disposal. This includes strategically realigning portfolios, setting clear risk appetites, developing mitigation strategies, adjusting qualitative credit criteria and quantifying and holding capital. Another key area in which banks can make progress is by actively supporting their clients in mitigating and adapting to the different types of climate and environmental risks. Moreover, banks can draw on the industry’s good practices that we shared last year in our report. In the face of data challenges and methodological uncertainties, banks have an even stronger imperative to get moving.
To be clear, banks should not misconstrue the ECB’s actions as an outright call for divesting from carbon-intensive activities or from geographical regions vulnerable to physical risk. Rather, we are asking banks to fully grasp the physical and transition risks and to actively start managing them, with the aim of making their portfolios more resilient to C&E risks. Not all sectors will decarbonise overnight. For example, the International Energy Agency (IEA) scenarios show that certain sectors will continue to rely on carbon-intensive technologies for some time. We as prudential supervisors merely need banks to understand what the transition entails for their risk exposures to those sectors, and to reflect it in their overall risk management strategy.
What we do not expect is an outright withdrawal from carbon-intensive industries, nor do we expect it to happen for every single sector or counterparty – but we do expect banks to harbour the capacity to manage the risks emerging from climate change. To draw a comparison with traditional risk exposures, we, as supervisors, would of course not expect banks to divest from all assets that entail credit risks, but we do insist that these risks are managed appropriately. C&E risks are to be managed just like any other risk; and their sound management requires sound risk controls. This is precisely one of our focus areas in the upcoming thematic review on C&E risks.
Supervisory roadmap for C&E risks
For several years, the ECB has identified banks’ exposure to C&E risks as one of the main vulnerabilities in the European banking sector. Assessing and helping banks address risks stemming from climate change and environmental degradation will be one of our supervisory priorities from now until 2024, albeit these risks have been on our minds for far longer. I remember giving my first speeches on this topic in late 2015 when still an executive board member of De Nederlandsche Bank.
So, we have already come a long way and our supervision of C&E risks will now take more concrete form. The 2022 SREP cycle will be marked by several key initiatives, which represent the next level of maturity for our supervision of C&E risks.
The first of these initiatives was the climate risk stress test, launched in January and currently being conducted by a dedicated supervisory team. This stress test was designed, first and foremost, as a learning exercise – for supervisors, for banks, and for the financial industry as whole. We are adamant about the importance of raising awareness of C&E risks. And this stress test constitutes an unprecedented effort, also on our part, to understand more fully how far the banks we supervise are exposed to these risks. It will also give us a clearer picture of their resilience on this front.
The second of these initiatives is a comprehensive review of banks’ practices related to strategy, governance and risk management – the thematic review on C&E risks, which is a key topic of the session today. Two years after we launched the supervisory guide on C&E risks, we are conducting this thematic review to follow up on the self-assessment exercise conducted last year. Our main goal will be to assess the evolution of the soundness, effectiveness and comprehensiveness of banks’ C&E risk management practices, as well as their ability to steer their C&E risk strategies and risk profiles. Do all banks’ processes and analyses have visible consequences? Does the way in which banks actually steer their balance sheets and risk profiles reflect the materiality of C&E risks? These will be some of the core questions of this review.
As part of this exercise, we will monitor banks’ alignment with the supervisory expectations set out in the guide, and encourage banks’ progress towards the industry’s best practices. Fortunately, those practices were identified across different European banks over the last two years. They show that some banks are already doing what we are asking. The ECB is doing its part by guiding banks in their climate journey, setting forth supervisory expectations and sharing updates on good practices in the industry. In light of the efforts banks have already made in devising their action plans, as well as all the information on this topic published to date – by both the ECB and several other public and private organisations we expect to see material progress in banks’ implementation deadlines and concrete actions.
As part of the thematic review, we will also be looking more closely at the risk management practices for environmental risks such as risks to biodiversity, water stress and pollution. All have similar features and warrant a coordinated approach. Banks can make significant savings if, taking advantage of the momentum, they extend the range of their preparations to cover all these risks, and are thus ready for a new, more concrete, supervisory and regulatory environment. Our benchmark from last year shows that, as of early 2021, very few banks were looking into environmental risks beyond climate. We have highlighted this gap to banks. This year, we will assess how banks are managing their exposures to environmental risks beyond climate and follow up accordingly.
As we build our joint supervisory teams’ capacity to help banks understand and incorporate C&E risks, our supervisors will treat these risks just like any other. Last year’s review was conducted by a central team of experts, with the joint supervisory teams conducting the follow-up dialogue with the bank. By contrast, this thematic review will be fully embedded in the work of every joint supervisory team. While still backed by a central team of experts, the review will be driven from the engine room of supervision. And this is where the supervision of C&E risks will stay.
Following up on the thematic review, all banks under our direct supervision will receive comprehensive feedback setting out any shortcomings identified. Combined with the observations from the climate stress test, this will also be qualitatively integrated in the SREP scores, which may have an indirect impact on minimum capital requirements. Targeted qualitative requirements may also be imposed. As part of the review, we will also carefully check whether banks have followed up on any requirements we issued last year. The thematic review is a full-on supervisory review. As such, we also have the full set of supervisory measures at our disposal to address shortcomings. Those banks that continue to fail to conduct a materiality assessment of C&E risks or have not followed-up on earlier requirements will start noticing just that.
Regulatory and supervisory framework
The ECB is taking action under its mandate and under the current prudential framework to get banks to where they need to be in terms of incorporating C&E risks into their business. Our supervisory activities are thus keeping in line with the rapidly evolving regulatory and supervisory framework.
For example, the revisions to the Capital Requirements Regulation and Directive proposed by the European Commission will further articulate the integration of C&E risks in the legal framework and will require banks to develop transition plans and supervisors to scrutinise them. This is the next important step in risk management, which I have mentioned on previous occasions, and which will require banks to look thirty years ahead and devise intermediate targets for their risk exposures that can render their risk management practices fit for an economy that will transition to net zero emissions by 2050 at the latest.
And finally, disclosure frameworks and taxonomies are also developing rapidly to create an information architecture to enable banks to manage the risks and scale up green finance. Both the Basel Committee on Banking Supervision and the European Banking Authority (EBA) have intensive work programmes to ensure that the regulatory and supervisory framework can better cater for climate-related risks. One concrete example is the EBA’s recently published implementing technical standards for the disclosure of Environmental Social and Governance risks, which also require large banks to start disclosing their alignment with the IEA pathways by June 2024 at the latest for all relevant portfolios. Banks are running out of time to complete their preparations.
On all these fronts, the sooner banks act, the smoother the transition will be for them, and for the economy they help support.
Conclusion
For ECB Banking Supervision, 2022 marks the third year of dedicated C&E risk activities. First, we issued our guide with supervisory expectations. Next, we asked banks to share with us their self-assessments on how their practices match our expectations. And they have indeed been very open and candid in these self-assessments, for which I am truly grateful.
Together we have learnt that there is a lot of room for improvement. Considering the importance, urgency and long-lasting nature of climate change, we are asking banks to intensify their efforts in measuring and managing C&E risks in line with our expectations. With the exercises that we are conducting this year, the prudential supervision of climate-related risks is moving closer to maturity. The thematic review is the next step in fully immersing C&E risks in the work of the joint supervisory teams and marks key progress towards their integration in the SREP. It crystalises our commitment to ensuring that the prudential supervision of C&E risks is here to stay.
Compliments of the European Central Bank.
The post ECB | Frank Elderson: Towards an immersive supervisory approach to the management of climate-related and environmental risks in the banking sector first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Opening remarks by Philip R. Lane, Member of the Executive Board of the ECB, at MNI Market News Webcast | Frankfurt am Main, 17 February 2022 |

In these brief opening remarks, I wish to discuss the forces shaping near-term and medium-term inflation dynamics.
On near-term inflation, I emphasised in a blog post last week that the current high inflation rates have been largely shaped by a pandemic cycle that has generated global bottlenecks for manufactured goods over the last year and, most importantly for the euro area, has seen a very substantial surge in energy prices in recent months.[1]
A comprehensive analysis of the implications of high energy prices for near-term and medium-term inflation dynamics should take into account four factors: first, the direct impact through the energy component of the HICP; second, the indirect impact, since energy is an important input for many other components of the HICP, such as food, transportation, goods and many consumer services; third, the potential for second-round effects on wages, with due differentiation between a one-off or catch-up wage adjustment and a revision in inflation expectations that would have persistent effects on wage growth; and, fourth, the macroeconomic impact, with high energy prices operating through negative income and wealth effects, while also affecting energy-sensitive production and investment plans. At a global level, the macroeconomic impact of an energy shock differs between energy-producing and energy-using regions. Since the euro area is a significant net importer of energy, a surge in energy prices constitutes a significant adverse terms of trade shock. Higher import prices for energy reduces the disposable incomes of households and the cash flows of energy-intensive firms. The impact of this terms of trade shock on euro area macroeconomic dynamics will warrant close monitoring in the coming quarters.
Moving from near-term to medium-term inflation dynamics, there is a clear potential linkage: if currently-high inflation causes a rethink about the likely level of medium-term inflation, a persistent shift in inflation expectations can play a significant role in determining inflation dynamics. There are several mechanisms at work here.
First, at any given time, the recent history of inflation is an important input in shaping the beliefs of households, firms and investors. Before the pandemic, there were widespread concerns that a long period of below-target inflation in the euro area had led to a downside de-anchoring of inflation expectations. In particular, there was a widely-held conjecture that myriad structural forces (combined with the effective lower bound for monetary policy) would keep inflationary pressures low for an extended period, with persistent monetary accommodation only gradually returning inflation to the two per cent target. The currently-high inflation rate calls this into question this conjecture through a stark demonstration that inflation is not destined to be always super low.
Of course, precisely how much medium-term inflation expectations might be affected by the current burst of inflation will depend on the intensity and duration of this spell of above-target inflation, the nature of its underlying drivers (in particular, the balance between external supply shocks versus domestic demand shocks) and the extent to which the central bank is trusted to deliver the two per cent target over the medium term.
It is especially important that the central bank is seen as symmetric in its commitment to the two per cent target – being fully prepared to react proportionately if there is a threat that inflation will settle above two per cent in the medium term, while also making sure not to over-react to the extent that there is a risk that high near-term inflation might induce an excessive monetary tightening that pushes inflation persistently below the two per cent target over the medium term.
Moreover, it should also be recognised that medium-term inflation expectations have been increasing from a low base towards the two per cent inflation target over the last year, even before the energy shock. In the specific context of the euro area, there are several factors indicating that the excessively-low inflation environment that prevailed from 2014 to2019 (a period over which inflation averaged just 0.9 per cent) might not re-emerge even after the pandemic cycle is over.
First, the scale of the fiscal and monetary response to the pandemic demonstrated the strength of the commitment to delivering macro-financial stability, rather than seeing a return of the pre-pandemic dynamics that acted as a powerful anti-inflationary force after the global financial crisis and the euro area sovereign debt crisis (the twin crises between 2008 and 2013). Importantly, this included substantial policy action at both EU and national level; with the former including the SURE programme, extra funding for the European Investment Bank and, most significantly, the NGEU initiative. In particular, the medium-term nature of the NGEU programme has provided an important anchor for medium-term economic prospects, especially for the main beneficiaries.
At the national level, we have witnessed the deployment of large-scale government interventions to buffer the impact of the pandemic shock on household and corporate incomes – through temporary employment protection schemes and tax cuts, among other initiatives – and to facilitate the normal financing of economic activity – especially through large-scale public loan guarantees. All this stands in contrast to the macroeconomic configuration that characterised the period after the twin crises which involved very muted aggregate demand, with many governments, households, firms and banks focused on sustained deleveraging after a period of excessive imbalances.
Second, the re-anchoring of medium-term inflation expectations towards two percent has also been supported by the clarity of the ECB’s new monetary policy strategy, which was finalised in July 2021 and backed up by its revised interest rate forward guidance. The revised strategy makes it clear that the monetary policy of the ECB is dedicated to delivering the two per cent target over the medium term, with a symmetric aversion to below-target and above-target deviations. The simplicity and transparency of the two per cent target increases accountability and improves clarity compared to the previous target of “below, but close to, two per cent.”
Third, in relation to structural forces, some revisions to beliefs about the operation of the world economy might also be contributing to a shift in inflation expectations. In particular, the level of excess capacity in global manufacturing might be structurally diminishing to the extent that China has embarked on a transition from an export-led to a domestically-focused economy. In related fashion, rising wages and incomes in emerging economies mean that demand-side factors might be more powerful than supply-side factors in relation to the impact of globalisation in the coming years. In parallel, the increasing visibility of aging dynamics in some Western economies – a trend that is also becoming visible in some emerging areas (especially China) – may result in a less dynamic labour supply at the global level. The net impact of demographic change on inflation dynamics is not straightforward: while a lower labour supply may potentially have a direct impact on labour costs, it could also have adverse implications for the potential growth rate of the world economy. Furthermore, the net impact on labour supply in individual regions will also depend on international migration policies that can amplify or mitigate regional imbalances in labour supply. Moreover, in relation to structural forces, the pandemic may also have accelerated the digitalisation of the world economy, which could operate as an anti-inflationary force by increasing national and international competition, including in previously-sheltered services sectors.
The carbon transition constitutes an important structural force that will be a primary contributor to macroeconomic dynamics in this decade and in the decades to come. The net impact of the carbon transition on inflation dynamics will depend on the exact transition path that emerges and the time horizon considered. In particular, the mechanical impact of the carbon transition on energy prices (which, in turn, will depend on the evolving mix between fossil fuels and renewables in energy production) must be assessed jointly with the implications of a sustained phase of transition-focused corporate, household and public investment. In particular, the impact on inflation dynamics must take take into account the shift in the composition of economic activity between investment and consumption and the wealth effects of the transition on the value of carbon-intensive assets, including housing. Moving towards a longer horizon, massive investment in renewable energy technologies should deliver sizeable efficiency gains in the production and use of energy over time, reducing overall expenditure on energy. Clearly, an orderly transition will have a more benign macroeconomic impact than a deferred process that requires sharper policy adjustment at a later stage.
Charts 1-7 show the evolution of inflation expectations across a range of indicators. Taken together, these indicators signal that the current high inflation rate is not expected to persist. At the same time, at a lower frequency, these indicators also support increasing confidence that the pre-pandemic below-target inflation pattern will not re-emerge as a medium-term equilibrium, with inflation expected to settle around the two per cent target.[2]

Chart 1
Euro area HICP inflation: Consensus Economics forecasts and Eurosystem staff projections
(annual percentage changes)
Sources: Consensus Economics, Eurostat, Haver Analytics and ECB staff calculations.
Note: The shaded blue and yellow areas denote the ranges of forecasts included in Consensus Economics surveys.

Chart 2
Longer-term inflation expectations from professional forecaster surveys
(annual percentage changes)
Sources: Survey of Professional Forecasters, ECB Survey of Monetary Analysis, Consensus Economics, Eurozone Barometer and ECB staff calculations.
Notes: The weighted average is calculated using the average number of respondents from each survey as weights. The latest observations is for the first quarter of 2022 for the SPF, January 2022 for Consensus Economics and the Eurozone Barometer and February 2022 for the Survey of Monetary Analysts.

Chart 3
Survey of Professional Forecasters: cross-sectional distribution of longer-term inflation point forecasts
(percentages of respondents; inflation point forecasts)
Sources: Survey of Professional Forecasters and ECB staff calculations.
Note: The latest observations are for the first quarter of 2022.

Chart 4
Survey of Monetary Analysts: distribution of longer-term inflation expectations
(percentages of respondents)
Sources: ECB Survey of Monetary Analysts (SMA) surveys between January 2020 and January 2022.
Notes: Values were rounded to one decimal prior to aggregation. The latest observations are for January 2022.

Chart 5
Consumer inflation expectations
(annual percentage changes)
Sources: ECB Consumer Expectations Survey and Eurostat.
Notes: Average denotes the winsorised (±2%) mean. The latest observations are for January 2022.

Chart 6
Inflation-linked interest rate swap rate in the euro area: 5-year rate 5 years ahead
(percentage per annum)
Sources: Reuters and ECB staff calculations.
Note: The latest observation is for 14 February 2022.

Chart 7
Headline inflation in the euro area
(annual percentage changes)
Sources: Eurostat and ECB staff calculations.
Notes: The latest observations are for the fourth quarter of 2021. The end-of-horizon projected values show the projected HICP inflation rate for the final year within the projection horizon.

The re-anchoring of inflation expectations has also been reinforced by improving labour market prospects. Since labour costs constitute the dominant share of domestic costs, it is difficult to sustain inflation at the target two per cent level if the labour market is too weak. Chart 8 shows the evolution of the unemployment rate since 2014, while Chart 9 shows the evolution of projected unemployment during the pandemic. Chart 8 and 9 show that the labour market has turned out to be stronger than was expected during the pandemic and that the latest staff projections postulate a significant further decline of the unemployment rate over 2022-2024, to a level of 6.6 per cent toward the end of this horizon. We would have to look back more than forty years to see such a low level of unemployment in the euro area. Of course, while these charts focus on the unemployment rate, it is always essential to take into account a wider set of indicators of labour market slack, especially in view of the role of pandemic-related labour market policies that might distort for longer the relation between the measured unemployment rate and the overall degree of labour market tightness.[3]

Chart 8
Unemployment rate in the euro area
(percentages of the labour force)
Sources: Eurostat and December 2021 ECB/Eurosystem staff projections.
Note: The latest observations are for December 2021.

Chart 9
Unemployment rate in ECB/Eurosystem staff projections
(percentages of the labour force)
Sources: ECB/Eurosystem staff projections and ECB staff calculations.

The projected tightening of the labour market in part reflects the success of macroeconomic policies during the pandemic, with fiscal policy focused on protecting household incomes, mitigating corporate vulnerabilities and maintaining the link between firms and workers through a focus on wage subsidy schemes and short-time working schemes rather than solely focusing on improving unemployment support programmes. It also is predicated on favourable aggregate demand conditions, including supportive financing conditions and fiscal policies. However, the projected tightening of the labour market also reflects the ageing of the euro area population and the possibility that the scale of the labour supply contribution from foreign workers may be weaker compared to the pre-pandemic trend. While such labour supply trends might tighten the labour market, these also have adverse implications for the trend path for potential output.
In summary, monetary policy must take into account both the near-term and medium-term forces shaping inflation dynamics. In line with its new monetary policy strategy, it should be clear that the ECB will set its monetary policy to deliver its symmetric two per cent target over the medium term, tolerating neither over-reactions nor under-reactions to emerging inflation risks. In particular, if the medium-term inflation dynamic is anticipated to stabilise around the two per cent target, this will permit a gradual normalisation of monetary policy. Whereas if inflation threatens to persist significantly above the two per cent target over the medium term, a tightening of monetary policy will be required. And finally, if inflation is anticipated to fall significantly below the two percent target over the medium term, setting an accommodative monetary policy will be necessary.
Compliments of the European Central Bank.

See Lane, P.R. (2022), “Bottlenecks and monetary policy”, The ECB Blog, 10 February.

At the same time, the visible decline in market-based measures of inflation compensation to below-target levels in recent weeks that is shown in Chart 6 will warrant monitoring. Since market-based measures of inflation compensation combine compensation for expected inflation and compensation for inflation risk premia, such indicators do not allow for straightforward interpretation but the variation over time in these measures is informative.

For inflation dynamics, it is also essential to monitor the extent of slack in capital utilisation and the mix of domestic and export demand (see also Lenza, M. and Jarocinski, M. ”An Inflation-Predicting Measure of the Output Gap in the Euro Area”, Journal of Money, Credit, and Banking, Vol. 50(6), pp. 1189-1224). In particular, the relation between output levels and price-determining expenditure levels will be different between current account surplus regions and current account deficit regions (see also See Galstyan, V. (2019), “Inflation and the Current Account in the Euro Area,” Economic Letter No 4, Central Bank of Ireland and Eser, F., Karadi, P., Lane, P.R., Moretti, L. and Osbat, C. (2020), “The Phillips Curve at the ECB,” The Manchester School, Vol. 88(S1), pp. 50-85..

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Today, the Commission is announcing an investment of over €110 million into LIFE programme integrated projects for environmental and climate protection, selected after a call for proposals covering the year 2020. The funding will support new major environmental and climate projects in 11 EU countries – Cyprus, Czechia, Denmark, Estonia, Finland, France, Latvia, Lithuania, the Netherlands, Poland and Slovenia. The projects contribute to a green recovery from the COVID-19 pandemic and support the European Green Deal’s objectives of making the EU climate neutral and zero-pollution by 2050. They are examples of actions to deliver key European Green Deal objectives under the EU Biodiversity Strategy for 2030 and the EU Circular Economy Action Plan.
Executive Vice-President responsible for the European Green Deal Frans Timmermans said: “We have no time to waste when it comes to the climate, biodiversity and pollution crises. The LIFE programme provides direct support to projects across the EU and enables entire countries and regions to protect and restore nature. Nature is our biggest ally and we need to take care of it so it can take care of us. My congratulations to each of the projects selected today.”
Commissioner for the Environment, Oceans and Fisheries Virginijus Sinkevičius added: “LIFE Programme integrated projects is one of the main tools to make the green transition a reality by delivering targeted changes on the ground. Through these projects, Member States can green their economies, bring back nature and biodiversity, and improve their resilience. I am looking forward to seeing the benefits that this investment will bring in the 11 countries and beyond their borders.”
Integrated projects allow Member States to pool additional EU funding sources, including agricultural, structural, regional and research funds, as well as national funding and private sector investment. Altogether, the 11 projects are expected to attract more than €10 billion of complementary funds, significantly multiplying the resources allocated today to make a real difference on the ground.
Delivering Green Deal objectives on the ground
Nature conservation: A project in France will introduce measures to halt and reverse biodiversity decline in the Grand Est region by, for instance, setting up three pilot forest areas. Another project will mitigate the adverse effects of human activities that threaten Finland’s marine and coastal biodiversity, by monitoring and improving the management of the national network of Marine Protected Areas. These projects will help deliver the EU Biodiversity Strategy for 2030.
Clean air: A project in Poland will implement measures to improve overall air quality in the region of Silesia where air pollution is among the most severe in Europe, by replacing small-scale solid-fuel domestic heating devices with less polluting alternatives. This project contributes to the EU’s 2030 greenhouse gas emission targets and the Zero Pollution Action Plan.
Waste management: In Cyprus, a project will aim to improve the infrastructure and collection systems for recyclable and biodegradable waste. In Latvia, the focus will be on improving separate waste collection and reuse of municipal waste. In Denmark, a project will work on waste prevention and on setting up a better waste regulatory framework. The project in Slovenia will aim to achieve a better recycling rate of non-hazardous construction and demolition waste, among other actions. In total, four projects will focus on waste prevention and recovering resources, contributing to the goals of the EU’s Circular Economy Action Plan and the Waste Framework Directive.
Climate change mitigation: LIFE funding will help Lithuania reach the objectives set out in its national energy and climate plan (NECP) including more efficient buildings, climate-friendly mobility, an energy-saving industry, and enhanced green public procurement. In Estonia, various tools and solutions will be created for the deep renovations on a range of buildings in three cities, which can then be replicated across Estonia and other Member States and support the EU’s Renovation Wave Strategy.
Climate change adaptation: In the Netherlands, LIFE funding will help stimulate climate change adaptation across several sectors: water management, infrastructure, agriculture, nature, health and spatial/urban planning. A project in the Moravian-Silesian Region in Czechia will increase the region’s climate resilience, improve the quality of the environment for inhabitants and support sustainable development. Both projects will be following the goals of the EU’s Adaptation Strategy.
Find out more about the 11 integrated projects in the short descriptions. 
Background
The LIFE programme is the EU’s funding instrument for the environment and climate action. It has been running since 1992 and has co-financed more than 5 500 projects across the EU and beyond. The Commission has increased LIFE programme funding by almost 60% for the 2021–2027 period. It now stands at €5.4 billion. LIFE has currently four sub-programmes: nature and biodiversity, circular economy and quality of life, climate change mitigation and adaptation, and clean energy transition.
The LIFE programme provides funding for integrated projects. These projects support the implementation of EU environmental and climate legislation and policies, on regional, multi-regional, national or trans-national level. Integrated projects help Member States comply with key EU legislation in six areas: nature conservation, water, air, waste management, climate change mitigation and climate change adaptation.
Compliments of the European Commission.
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On February 15, 2022, the EU is acting on its space ambitions by tabling two initiatives – a proposal for a Regulation on a space-based secure connectivity and a Joint Communication on an EU approach on Space Traffic Management (STM). Space technology is essential for facilitating our daily lives, contributing to a more digital, green and resilient future for our planet. As a major space power, the EU’s Space Programme already provides valuable data and services for a wide array of daily applications from transport, agriculture, and crisis response to the fight against climate change, to name a few.
However, due to new challenges and increased international competition, the EU’s space policy needs to constantly evolve and adapt if we want to continue enjoying freely the benefits that space brings. Today’s initiatives will help safeguard the efficiency and security of our current assets while developing European cutting-edge space technology to the benefit of our citizens and economy.
Space-based secure connectivity
In today’s digital world, space-based connectivity is a strategic asset for EU’s resilience. It enables our economic power, digital leadership and technological sovereignty, competitiveness and societal progress. Secure connectivity has become a public good for European governments and citizens. The Commission is thus putting forward an ambitious plan for an EU space-based secure communication system that will:

Ensure the long-term availability of worldwide uninterrupted access to secure and cost-effective satellite communication services. It will support the protection of critical infrastructures, surveillance, external actions, crisis management and applications that are critical for Member States’ economy, security and defence;

Allow for the provision of commercial services by the private sector that can enable access to advanced, reliable and fast connections to citizens and businesses across Europe, including in communication dead zones ensuring cohesion across Member States. This is one of the targets of the proposed 2030 Digital Decade. The system will also provide connectivity over geographical areas of strategic interest, for instance Africa and the Arctic, as part of the EU Global Gateway strategy.

Both governmental user needs and satellite communication solutions are changing rapidly. The EU space-based secure communication system seeks to meet these increased and evolving needs, and will also include the latest quantum communication technologies for secure encryption. It will be based on the development of innovative and disruptive technologies, and on the leveraging of the New Space ecosystem.
The total cost is estimated at €6 billion. The Union’s contribution to the Programme from 2022 until 2027 is €2.4 billion at current prices. The funding will come from different sources of the public sector (EU budget, Member States, European Space Agency’s (ESA) contributions) and private sector investments.
This initiative will further boost the competitiveness of the EU space ecosystem, as the development of a new infrastructure would provide a gross value added (GVA) of €17-24 billion and additional jobs in the EU space industry, with further positive spill-over effects on the economy through the downstream sectors using the innovative connectivity services. Citizens would also benefit from the technological advantages, reliability and operational performance of such satellite communication services ensuring high-speed internet connections across the EU.
Space Traffic Management
With an exponential increase in the number of satellites in orbit due to new developments in reusable launchers, small satellites and private initiatives in space, the resilience and safety of EU and Member States’ space assets are at serious risk. It is critical to protect the long-term viability of space activities by ensuring that space remains a safe, secure and sustainable environment. This makes Space Traffic Management a priority public policy issue, which requires the EU to act now, collectively and at a multilateral level, if we are to ensure a safe, secure and sustainable use of space for the generations to come.
Against this background, the Joint Communication establishes an EU approach on Space Traffic Management. The goal is to develop concrete initiatives, including operations and legislation, to promote the safe, secure and sustainable use of space while preserving the EU’s strategic autonomy and industry‘s competitiveness.
The EU approach focuses on four elements:

Assessing the STM civilian and military requirements and impacts for the EU;
Strengthening our technological capability to identify and track  spacecraft and space debris;
Setting out the appropriate normative and legislative framework;
Establishing international partnerships on STM and engaging at a multilateral level.

Members of College said:
Executive Vice-President Margrethe Vestager said: “Space technology is essential for our everyday life and security. Today’s initiatives will ensure secure, efficient connectivity at all times. It is benefitting both citizens and governments. It will play a key role in Europe’s digital transformation. And make us more competitive. I hope that an EU approach to space traffic management and space technology will guarantee a safe and sustainable use of space in the long run.”
The High Representative of the Union for Foreign Affairs and Security Policy, Josep Borrell, stated: “Space has become more crowded than ever, increasing the complexity and the risks related to space operations. To address this global challenge, we propose today an EU approach to Space Traffic Management. We will develop concrete capabilities, set norms and engage with key partners and in multilateral fora to ensure a safe, secure and sustainable use of space. While STM is a civilian endeavour, European security and defence depend on a safe, secure and autonomous access to space.”
Thierry Breton, Commissioner for the Internal Market, said: “Space plays a growing role in our daily lives, our economic growth, our security, and our geopolitical weight. Our new connectivity infrastructure will deliver high-speed internet access, serve as a back-up to our current internet infrastructure, increase our resilience and cyber security, and provide connectivity to the whole of Europe and Africa. It will be a truly pan-European project allowing our many start-ups and Europe as a whole to be at the forefront of technological innovation.”
Background
The two initiatives adopted today are concrete deliverables of the Action Plan on Synergies between civil, defence and space industries, where these two flagship projects are mentioned.
Secure Connectivity 
To implement this new space-based initiative ensuring secure connectivity across Europe, the Commission launched in December 2020 an initial system study to explore technical aspects and the potential service provision models.
Meanwhile, the Commission published an additional call to also involve the European New Space ecosystem to integrate technologically cutting-edge, innovative ideas by SMEs and start-ups. Two contracts were awarded in December 2021 and the technical work is now ongoing with results expected by June 2022.
Space Traffic Management
Since 2016, the Union already has a Space Surveillance & Tracking capability (SST), implemented by the EU SST Consortium. More than 130 European organisations from 23 Member States have registered so far to the EU SST services (collision avoidance, fragmentation analysis, re-entry analysis). Today, more than 260 EU satellites, including the Galileo and Copernicus fleets, benefit from the collision avoidance service.
In 2021, partners of EU SST shared 100 million measurements through their data-sharing platform. Most recently, the EU SST fragmentation service confirmed the detection of and monitored space debris from destruction of a satellite in low orbit (COSMOS 1408) following an anti-satellite test conducted by Russia on 15 November 2021.
Compliments of the European Commission.
The post Space: EU initiates a satellite-based connectivity system and boosts action on management of space traffic for a more digital and resilient Europe first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

By Kristalina Georgieva, IMF Managing Director | Atlantic Council, Washington, DC |
Ladies and gentlemen, friends,
Let me start by thanking the Atlantic Council for providing a fitting venue to discuss central banks’ forays into Digital Currencies.
Since its founding in 1961, the Council has made important contributions to strategic, political, and economic policy debates. Those debates have served us well, helping us to test the boundaries of our thinking and be better prepared for what lies ahead.
So, today, we aim to test our thinking again. We have moved beyond conceptual discussions of CBDCs and we are now in the phase of experimentation. Central banks are rolling up their sleeves and familiarizing themselves with the bits and bytes of digital money.
These are still early days for CBDCs and we don’t quite know how far and how fast they will go.  What we know is that central banks are building capacity to harness new technologies—to be ready for what may lie ahead.
If CBDCs are designed prudently, they can potentially offer more resilience, more safety, greater availability, and lower costs than private forms of digital money. That is clearly the case when compared to unbacked crypto assets that are inherently volatile. And even the better managed and regulated stablecoins may not be quite a match against a stable and well‑designed central bank digital currency.
We know that the move towards CBDCs is gaining momentum, driven by the ingenuity of Central Banks.
All told, around 100 countries are exploring CBDCs at one level or another. Some researching, some testing, and a few already distributing CBDC to the public.
In the Bahamas, the Sand Dollar—the local CBDC—has been in circulation for more than a year.
Sweden’s Riksbank has developed a proof of concept and is exploring the technology and policy implications of CBDC.
In China, the digital renminbi [called e-CNY,] continues to progress with more than a hundred million individual users and billions of yuan in transactions.
And, just last month, the Federal Reserve issued a report that noted that “a CBDC could fundamentally change the structure of the U.S. financial system.”[i]
As you might expect, the IMF is deeply involved in this issue, including through providing technical assistance to many members. An important role for the Fund is to promote exchange of experience and support the interoperability of CBDCs.
As part of the service to our members, today we are publishing a paper that shines a spotlight on the experiences of six Central Banks at the frontier—including China and Sweden—to be covered in the panel discussion following my remarks.
We take away three common lessons from these Central Banks from which others may benefit.
Lesson number one: no one size fits all.
There is no universal case for CBDCs because each economy is different.
In some cases, a CBDC may be an important path to financial inclusion—for instance, where geography is an obstacle to physical banking.
In others, a CBDC could provide an essential backup in the event that other payment instruments fail. One such case was when the Eastern Caribbean Central Bank extended its CBDC pilot to areas struck by a volcanic eruption last year.
So, central banks should tailor plans to their specific circumstances and needs.
Lesson number 2, financial stability and privacy considerations are paramount to the design of CBDCs.
Central banks are committed to minimizing the impact of CBDCs on financial intermediation and credit provision. This is very important for the wheels of the economy to run smoothly. The countries we studied offer CBDCs that are not interest-bearing—which makes a CBDC useful, but not as attractive as a vehicle for savings as traditional bank deposits.
We also saw in all three active CBDC projects—in the Bahamas, China, and the Eastern Caribbean Currency Union—that they placed limits on holdings of CBDCs, again, to prevent sudden outflows of bank deposits into CBDC.
Limits on holdings of CBDCs also helps meet people’s desire for privacy while guarding against illicit financial flows. Smaller holdings are allowed without the need for full identification if the risks of money laundering and terrorist financing are low—this could be a boon for financial inclusion. At the same time, larger transactions and holdings require more stringent checks, as you would expect if you deposit a bag of cash at the bank.
In many countries, privacy concerns are a potential deal breaker when it comes to CBDC legislation and adoption. So, it’s vital that policymakers get the mix right.
And that brings me to lesson number three: balance.
Introducing a CBDC is about finding the delicate balance between developments on the design front and on the policy front.
Getting the design right calls for time and resources, and continuous learning from experience—including shared experiences across countries. In many cases, this will require close partnerships with private firms to successfully distribute CBDCs, build e-wallets, add features, and push the bounds of technology.
But the policy aspects are also paramount, including developing new legal frameworks, new regulations, and new case law.
On both fronts, a CBDC also requires prudent planning to satisfy policy targets like financial inclusion, and avoid undesirable spillovers such as sudden capital outflows that could undermine financial stability.
Taken together, careful design and policy considerations will underpin trust in CBDCs. But let us not forget that trust must be anchored in credible central banks with a history of delivering on their mandates.
Introducing a CBDC is no substitute for this underlying trust built over decades—a public good that allows money to grease the wheels of our economies.
The success of a CBDC, if and when issued, will depend on sufficient trust. And, in turn, any successful CBDC should continue to build trust in central banks.
So, let me conclude.
The history of money is entering a new chapter.
Countries are seeking to preserve key aspects of their traditional monetary and financial systems, while experimenting with new digital forms of money.
The paper we are releasing today shows that for those experiments to succeed policymakers need to deal with many open questions, technical obstacles, and policy tradeoffs.
It may not be easy or straightforward, but I am confident that the bright minds in Central Banks can succeed, thanks to their trademark resourcefulness and perseverance.
Fittingly, even the great inventor Thomas Edison acknowledged that: “There is no substitute for hard work.”
And this is what we embrace at the IMF: This hard work has already advanced. We are supporting countries in their CBDC experiments—to understand big picture trade-offs, to provide technical assistance, and to serve as a transmission line of learning and best practice across all 190 members. And we are stepping up collaboration with other institutions, such as the Bank for International Settlements, at par with the rapidly growing significance of digital money.
Today’s discussion is only the beginning of an exciting journey — and we have a great panel to take us further on it.
Thank you.
Compliments of the IMF.
The post IMF | The Future of Money: Gearing up for Central Bank Digital Currency first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Eswar S. Prasad explains how technology is transforming the nature of money and how that will affect our lives |
In his latest book, The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance, the Cornell University professor describes how digital currencies and other financial technologies are reshaping everything from consumer banking to monetary policy and international payments. In a conversation with F&D’s Chris Wellisz, Prasad lays out the advantages and perils of the new forms of money.
F&D: Is cash destined to wither away?
EP: The convenience of digital payments to both consumers and businesses makes it highly unlikely that cash will survive much longer. In China there are two private payment providers, Alipay and WeChat Pay, that have blanketed the entire Chinese economy with very low-cost digital payments. You can use those for something as simple as buying, say, a piece of fruit or a couple of dumplings from a street vendor. In advanced economies like Sweden, the private sector is doing an equally good job of providing very low-cost digital payments.
‘The convenience of digital payments makes it highly unlikely that cash will survive much longer.’
F&D: Is it likely that cryptocurrencies like Bitcoin will be used to buy a cup of coffee or pay the rent?
EP: Bitcoin has not worked very well as a medium of exchange that can be used for day-to-day transactions. One main reason is that Bitcoin has very unstable value. It’s as though you took a bitcoin in with you to a coffee shop, and one day you could buy a whole meal with it and on another day just get a small cup of coffee. In addition, Bitcoin is somewhat slow and cumbersome to use.
F&D: Is there a solution to the problem of volatility?
There are new cryptocurrencies called “stablecoins” that get their stable value essentially by being backed up by stores of fiat currency, such as US dollars or euros. They basically become linked to the value of those currencies, and they can then be used to make both domestic payments and payments across national borders more effectively and efficiently.
F&D: You explain in your book how stablecoins may not be as stable as they seem. What risks do they pose?
EP: A stablecoin issuer might say that they are going to hold stocks of liquid securities, but who is going to make sure that they do in fact hold the securities? Even if they did hold the securities, it’s possible that if a lot of people try to redeem those stablecoins and convert them back into fiat currencies at the same time, many of the securities that are supposed to back up the stablecoins might not be as liquid—that is, as easy to convert into fiat currencies—as one might expect.
‘We will soon have access to digital versions of the dollar or the Chinese renminbi and many of the other major currencies.’
F&D: Are there other risks?
EP: There are concerns that stablecoins, unless they are closely regulated, might become conduits for illicit financing of various sorts of activities, both within and across national borders. And the additional difficulty, of course, is that cryptocurrencies, including Bitcoin, know no borders. For a country by itself to effectively regulate these cryptocurrencies is going to be hard. We’ll have to undertake some sort of global coordination in terms of these regulatory policies.
F&D: Some countries are considering the adoption of a so-called central bank digital currency (CBDC). What is the rationale?  
EP: For some developing countries, the objective is that of broadening financial inclusion. There are many people in those countries who don’t have access to digital payments. They don’t have access to basic banking products and services. In countries like Sweden, where most people do have access to bank accounts, the imperative is a little different. The Swedish central bank, the Riksbank, envisions the e-krona, or the digital krona, as essentially a backstop to the private payment infrastructure.
F&D: How about China?
EP: The Chinese government is very concerned about two payment providers that have come to dominate the payment system and are blocking effectively the entry of new competitors who could provide innovations. The Chinese central bank views a digital yuan as essentially a complement to the existing payment systems, but one that could in principle increase the amount of competition.
F&D: How does a digital currency affect the ability of a central bank to control inflation and ensure full employment?
EP: Let’s say all American citizens had, in effect, an account with the Federal Reserve, then it would be a lot easier for the Fed to undertake certain operations such as stimulus payments. When the pandemic hit, the initial coronavirus stimulus bill involved a large amount of money being transferred to American households. Many households that had direct deposit information on file with the Internal Revenue Service were able to get direct deposits to their bank accounts, but households that did not have that information on file with the IRS ended up getting prepaid debit cards or checks, many of which were lost in the mail and some of which were misappropriated or mutilated.
F&D: Could central bank digital currencies be used to fight tax evasion and other crimes?
EP: If you cannot use cash to pay your gardener or babysitter, it’s much more likely that those payments will get reported to the government. And especially for large-value transactions, that will certainly make a difference in terms of tax revenues. Having digital money also reduces the use of cash for illicit transactions, say for drug trafficking or money laundering.
F&D: Are there risks for private sector banks and payment providers?
EP: If the government is in effect providing a very low-cost digital payment system, that might make it very difficult for private payment providers to continue their services because after all, what private corporation can compete with the deep pockets of the government? There is another risk, which is that commercial banks, which are very important in modern economies in terms of providing credit that fuels economic activity, might find that their deposits are being swept away into central bank accounts. In troubled times depositors might feel that ultimately their deposits are going to be safer with the central bank or other government institution compared to a commercial bank, even if the commercial bank deposits are insured.
F&D: Is there a solution to that problem?
EP: The experiments with CBDCs that are underway in China and Sweden are suggesting that what might work more efficiently is a dual-tier system of CBDCs. The central bank would provide the underlying payment infrastructure and provide the CBDC essentially in the form of digital tokens, but the actual digital wallets in which those CBDCs are maintained would be held  by the commercial banks.
F&D: What are the challenges facing emerging market and developing economies, which depend heavily on cross-border trade and investment?
EP: Friction-free international payments could certainly benefit importers and exporters. It could make it easier for them to conduct international trade transactions. But there are some risks as well. The more conduits you have for the international flow of capital, the harder it will be to manage those capital flows.
And that could lead not just to more capital flow volatility, but also to more exchange rate volatility. For small economies and developing economies in particular, capital flow volatility and exchange rate volatility can make the management of domestic economic policies that much more challenging.
F&D: What are the challenges for central banks in emerging markets?
EP: We are soon going to be moving to a world where we will have global access to digital versions of the dollar or the Chinese renminbi and many of the other major currencies. It is also likely that many megacorporations with worldwide reach, such as Amazon, could start issuing their own stablecoins.
So if you think about small economies, or economies that have central banks or currencies that are not very credible, one can easily see those currencies being swept away by other currencies, either official or private, that citizens of these countries trust a lot more than their own currencies.
F&D: Do you see a digital yuan threatening the dollar’s dominant position as a global currency by virtue of China’s status as a fast-growing world economy?
EP: It’s not just the economic size or the size of the financial markets of a country issuing a particular currency, but also the institutional framework in that country that maintains the trust of foreign investors. And these elements of trust include the rule of law, an independent central bank, and an institutionalized system of checks and balances. In all these dimensions, I think the US still retains a dominance relative to much of the rest of the world.
F&D: The Federal Reserve has a cautious attitude toward CBDCs. Why?
EP: One needs to think about what the user case really is for the CBDC in each country, and in the US certainly we have certain issues with our payment systems. A lot of payments are intermediated through credit cards, which are actually quite expensive for merchants to use because of the very high interchange fees. And many of those costs are passed on to consumers. About 5 percent of households in the US are still unbanked or underbanked. So you and I can use Apple Pay, but to use Apple Pay, we need to have that linked to a bank account or a credit card, and many households simply don’t have access to that. So a CBDC might at the margin increase financial inclusion, but the Fed already has a major project underway called “FedNow” to increase the efficiency of both retail payments as well as wholesale payments; that is, payments among businesses and financial institutions.
F&D: Do official digital currencies pose broader dangers for society?
EP: You could see an authoritarian government using a digital version of its central bank money essentially to surveil its population. And even a benevolent government might decide that it wants to make sure that the money its central bank issues not only is not used for illicit purposes, but is also not used for purposes it might regard as not necessarily socially beneficial. You might well start seeing money being used as an instrument not just of economic policy, but potentially even social policy. That would be dangerous for the credibility of central bank money and for central banks themselves.
This interview has been edited for length and clarity.
Authors:

ESWAR PRASAD is a professor at Cornell University and a senior fellow at the Brookings Institution.

CHRIS WELLISZ is a freelance writer and editor.

Opinions expressed in articles and other materials are those of the authors; they do not necessarily represent the views of the IMF and its Executive Board, or IMF policy.
Compliments of the IMF.
The post IMF | The Currency Revolution first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The new European Health Emergency Preparedness and Response Authority (HERA) today presents its first annual work plan, which will have a budget of €1.3 billion in 2022 to prevent, prepare for and rapidly respond to cross-border health emergencies. Following the adoption of the 2022 work plan by the HERA Board, HERA can now start implementing actions to strengthen preparedness and response capabilities within the EU, address vulnerabilities and strategic dependencies and contribute to reinforcing the global health emergency architecture.
Announcing the adoption of the work plan at the informal EPSCO Council in Grenoble, Stella Kyriakides, Commissioner for Health and Food Safety, said: “Two years into the pandemic, we know that the capacity to respond decisively to cross-border health emergencies must be at the heart of a strong European Health Union. HERA is already operational and working to ensure that medical countermeasures are available for the present, but also ensuring that the right tools are available for any future health threats. The adoption of HERA’s first work plan will enable it to begin its critical mission, by becoming the EU’s health security watchtower for future health threats, as well as a key player for health crisis preparedness at global level.”
As a key pillar of a strong European Health Union, HERA has set out a number of ambitious deliverables for 2022, both in the context of the ongoing COVID-19 response, and for preparedness for potential future health threats.
Prevent and prepare for future cross border health emergencies: In the “preparedness phase”, HERA will work closely with other EU and national health agencies, industry, research community, civil society and international partners to improve the EU’s readiness for future health emergencies. Actions include:  

Procuring and stockpiling medical countermeasures for a series of public health threats with a budget of over €580 million;
Releasing over €300 million to research and development of medical countermeasures and innovative technologies against emerging threats;
Building a network of ever-warm manufacturing facilities that can be mobilised in case of emergency (EU FAB);
Establishing a long term and large scale EU platform for clinical trials and data platforms;
Identifying three high-impact health threats, in addition to COVID-19, by the end of spring in close collaboration with Member States in the HERA Board, EU agencies, international partners and experts.

Detect future health threats: HERA will in addition carry out threat assessments and intelligence gathering, develop models to forecast an outbreak, and map out a response plan at EU level. Actions for 2022 include:

Putting in place a state of the art real-time health threat detection and intelligence system;
Creating a dedicated IT platform for threat assessment and threat prioritisation.

Respond to health threats: In the context of the response to the COVID-19 pandemic, HERA’s emergency response functions have already been activated. In the event of further cross-border public health emergencies at EU level, additional action will be taken, notably by  activating emergency funding and launching mechanisms for monitoring, new targeted development, procurement and purchase of medical countermeasures and raw materials. Ongoing actions include:

Ensuring the timely provision of COVID-19 vaccines to EU Member States, including variant-adapted vaccines if needed;
Procurement of COVID-19 therapeutics for EU Member States;
Scaling up national capacities for the detection and scientific assessment of variants;
Ensuring delivery of vaccines across the world.

Background
The European Health Emergency Preparedness and Response Authority (HERA) is a key pillar of the European Health Union and a fundamental asset to strengthen the EU’s health emergency response and preparedness. HERA was established in September 2021 to replace ad hoc solutions to pandemic management and response with a permanent structure with adequate tools and resources to plan ahead the EU action in case of health emergencies. HERA will anticipate threats and potential health crises, through intelligence gathering and building the necessary response capacities. When an emergency hits, HERA should have response solutions ready ensuring the development, production and distribution of medicines, vaccines and other medical countermeasures.
The overall HERA budget is €6 billion for the period 2022-2027.
Compliments of the European Commission.
The post European Health Union: HERA launches first work plan with €1.3 billion for preparedness and response to health emergencies in 2022 first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.