martedì 20 ottobre 2020

Segnalazione da CEPS: Rule of law and the Next Generation EU recovery and more

Rule of law and the Next Generation EU recovery: collegamento 
The Next Generation EU (NGEU) recovery response to the Covid-19 crisis, one of the most ambitious EU integration projects so far, risks foundering over differences of procedure that ought to guarantee the link between observing the rule of law and disbursing EU funds. There is widespread dissatisfaction in the European Parliament, across the political spectrum, with the lack of an effective mechanism to enforce the rule of law in member states. At the same time, there is a palpable reluctance among net budget contributors to send more EU funding to member states that are captured by corrupt governments. Hence the repeated call to the German rotating presidency of the Council that ‘something must be done’.

Protecting the financial interests of the Union

What can be done? Several options are worth considering. One that looks promising, but isn’t, rests on the argument that large transfers from the EU would be cut for countries whose governments interfere with the rule of law at home. This argument has strong political appeal. But the EU itself is also subject to the rule of law. It cannot just cut the funding to all of a member state’s beneficiaries without having the power to do so in the Treaty. The only legal base that could justify such an action would be the need to protect the financial interests of the Union itself. This is why the existing proposals, in practice, always refer to the need to protect the financial interests of the Union, not to the value of the rule of law itself. (...) 
Sovereign debt management in the euro area as a common action problem
This Policy Insight discusses sovereign debt management in the euro area, where the Covid-19 crisis has caused a huge increase in such debts. Our two main conclusions are that sovereign debt externalities remain important in the euro area, even in the new environment of permanently lowered interest rates, and that these externalities justify common euro area policies to deal with excessive sovereign debt accumulation and the attendant risks to the euro area’s financial stability. Our proposal is that a substantial part of the sovereigns purchased by the European System of Central Banks (ESBC) – in the order of 20% of euro area GDP – could gradually be transferred to the European Stability Mechanism (ESM), without any transfer of default risks, which would continue to fall on national central banks. Read more
Measuring price stability in Covid times
The recent fall in both headline and core inflation in the euro area has increased pressure on the European Central Bank (ECB) to adopt further measures to stimulate the economy. With headline inflation turning negative for two months, additional measures seem to be warranted. However, inflation data based on consumer prices should not be the only guide for policy in the kind of turbulent times we are currently experiencing. A broader price index such as the GDP deflator provides important additional information for policy decision.[1] This broad indicator is increasing at a rate of around 2%. There seems to be no danger of broad-based deflation. Read more
Who will really benefit from the Next Generation EU funds?
Southern and central-eastern European countries will be the biggest beneficiaries of financial support under the new EU Recovery and Resilience Facility and React-EU, as well as of the new Multiannual Financial Framework. Two main risks might reduce the economic impact of these instruments, however: i) the traditionally slow absorption rate of European structural investment funds and ii) limits to the capacity of national governments to channel very large amounts of public investment. Read more

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