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11. EU MONITOR: Czechs and the Post-2020 Multiannual Financial Framework

Author:
Vít Havelka
Publication Date:
04-2020
Content Type:
Special Report
Institution:
Europeum Institute for European Policy
Abstract:
In his latest EU monitor, Vít Havelka examines the attitude of the general Czech public towards the new EU Multiannual Financial Framework. At the beginning of May 2018, the European Commission introduced its proposal of the new Multiannual Financial Framework 2021-27. Since then, the EU member states as well as the European Parliament have been intensively negotiating about each aspect of the Commission´s draft without being able to reach an agreement. Consequently, the talks will slip into 2020, probably being finalized no earlier than summer 2020 during the German presidency of the European Council. The following article is therefore meant to provide the reader with an understanding of what ordinary Czechs think of the MFF negotiations and what should the EU budget finance. The text is predominantly based on standard public opinion poll conducted by STEM Agency in cooperation with EUROPEUM Institute for European Policy in October 2019. The sample consisted of 1002 respondents, combining PAPI and CAPI questioning. The quantitative research was supplemented with qualitative questioning in form of focus groups conducted at the beginning of November 2019.
Topic:
Public Opinion, European Union, and Finance
Political Geography:
Europe and Czech Republic

12. Brief on COVID-19: Eurozone in Agreement over the first COVID19-Response

Author:
Vít Havelka
Publication Date:
04-2020
Content Type:
Policy Brief
Institution:
Europeum Institute for European Policy
Abstract:
In his brief, Vít Havelka writes about the Eurozone ministers first agreement on the response against the crisis caused by the COVID-19 pandemic. After several Eurogroup meetings, the finance ministers of the EU19 finally managed to agree on their first COVID-19-crisis response. They sign up to a package worth of 540 billion €, consisting of 200 billion € loans from the European Investment Bank, 240 billion € from the European Stability Mechanism, and 100 billion € kurzarbeit package proposed by the European Commission. The coronabonds fiercely wanted by Italy, Spain and Portugal have not been approved, leaving the discussion to EU leaders who are due to convene on the 24th April.
Topic:
European Union, Finance, Coronavirus, and COVID-19
Political Geography:
Europe

13. Lessons Learned and Evolving Practices of the TIBER Framework for Resilience Testing in the Netherlands

Author:
Petra Hielkema and Raymond Kleijmeer
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Financial institutions face an evolving threat landscape with a wide range of hostile actors targeting them. Regulators and consumers reasonably expect the institutions to make themselves more secure. The question then emerges as to whether financial institutions are complying with the different standards, rules, and regulations regarding their security. International standard-setting bodies have recognized the need to raise the bar higher for the resilience of financial institutions. The publication of the Committee on Payments and Market Infrastructures-International Organization of Securities Commissions (CPMI-IOSCO) guidance on cyber resilience in June 2016 has been pivotal in emphasizing the need to have an integrated approach for financial market infrastructures, with the institution’s board being ultimately responsible and accountable for cyber resilience.1 Increasingly, authorities and financial institutions alike recognize that, in addition to assessing the overall resilience posture of a financial institution against sophisticated attacks, it will be important to actually test this posture. The CPMI-IOSCO guidance includes a chapter dedicated to testing, containing several examples of activities to that end. Recently, frameworks for testing the resilience posture of institutions in practice have been developed internationally.
Topic:
Markets, Science and Technology, Finance, and Resilience
Political Geography:
Europe, Netherlands, and Global Focus

14. Global E-Commerce Talks Stumble on Data Issues, Privacy, and More

Author:
Gary Clyde Hufbauer and Zhiyaou (Lucy) Lu
Publication Date:
10-2019
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
In early 2019, several important members of the World Trade Organization (WTO) submitted noteworthy proposals in a realm of international commerce that has evolved faster than rules to govern it: e-commerce or digital trade. While countries agree on less controversial subjects like banning unsolicited commercial electronic messages, the three leading WTO members—China, the European Union, and the United States—have big differences in their approaches to more challenging issues: data flows, data localization, privacy invasions by data collectors, transfer of source code, imposition of customs duties and internet taxes, and internet censorship. Their differing viewpoints lead Hufbauer and Lu to conclude that the prospect of reaching a high-level WTO e-commerce agreement is not promising. To reach an agreement, either most of the contentious issues must be dropped or the number of participating countries must be sharply reduced. A WTO accord, even of low ambition, would have value if only to establish basic digital norms on matters such as banning unsolicited commercial messages and protecting online consumers from fraudulent practices. A more ambitious accord covering the controversial issues should be negotiated in bilateral and/or plurilateral/regional pacts rather than in the WTO.
Topic:
Economics, World Trade Organization, Finance, Privacy, and Data
Political Geography:
China, Europe, Asia, North America, United States of America, and European Union

15. Finland’s 2019 presidency of the Council of the European Union: European and domestic determinants

Author:
Tuomas Iso-Markku and Juha Jokela
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs
Abstract:
The Finnish presidency of the Council of the EU faces a sensitive political climate, marked by divisions between the member states. However, some of the EU’s recent crises have also given the Union a renewed sense of purpose: striking the right balance between ambition and realism will therefore be a key challenge for Finland. During its presidency, Finland will have little legislative work, but can help in setting the EU’s priorities for the next five years, advancing the negotiations on the Multiannual Financial Framework and managing the Brexit process. The rise of the Eurosceptic Finns Party in the late 2000s had a crucial impact on Finland’s EU policy. This was reflected in harder and, at times, obstructive positions on EU issues. However, recently a new consensus on EU affairs seems to have emerged among the other parties. Antti Rinne’s new government is striving for a stronger EU with a presidency programme that resonates with the strategic agenda of the European Council, but also corresponds with the more limited role of post-Lisbon Treaty presidencies.
Topic:
Regional Cooperation, European Union, Finance, and Brexit
Political Geography:
Europe and Finland

16. The Privatisation of the Polish Banking Sector

Author:
Hubert A. Janiszewski
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
Warsaw East European Review (WEER)
Institution:
Centre for East European Studies, University of Warsaw
Abstract:
The Polish banking sector, at the outset of the Balcerowicz reform plan, was com- posed of the central bank (NBP), 9 regional commercial banks (which had spun out from NBP back in 1988): the state savings bank – PKO BP; the state bank handling foreign com- merce – Bank Handlowy SA; the state bank handling retail foreign exchange transfers – PeKaO SA; the state bank for financing the agriculture sector – BGZ; and a number of small cooperative banks – BRE SA a bank financing export industries established in 1986; and a single private bank, albeit with equity provided by state enterprises – BIG SA. The Ministry of Finance faced a formidable task, firstly to restructure the banking sec- tor – primarily commercial banks and at a later stage privatize the whole sector in order to i.a make it market oriented, flexible and serve large chunks of the rapidly privatizing economy as well as to cater to the needs of the population. It should be stressed – to give the full description of the sector, that the percentage of bad loans in all the above-mentioned banks (except BIG, BRE and probably PKO BP) was between 30 to 50% of their portfolios! It was therefore decided by Finance Minister Leszek Balcerowicz and his key staff, that prior to their privatization, restructuring of the banks was the key for their success. The major problem with restructuring was a lack of funding, which was not available as the Polish state was bankrupt and private resources were by far too small, and politi- cally inaccessible; moreover the parliament would not allow creation of additional debt by way of equity injections to the ailing banking sector. Under those difficult conditions Balcerowicz managed to pass through parliament a set of legislation on restructuring the economy including banks, which allowed for the provision of banks with so-called restructuring bonds (a special law had been enacted called the “Law on financial restructuring of banks and enterprises”) to strengthen their balance sheets and force them to individually, over time, repay such new debts. In order to guide and help the banks with the restructuring, with the assistance of the British Government, the so-called British Know How Fund was created, whose purpose was to provide professional advice and assistance to all commercial banks. This advice was strengthened by a so-called “twinning arrangement”, under which each of the nine commercial banks was provided with a “twin partner” in the form of an established western bank. Among the banks that participated in this scheme were the Allied Irish Bank (twinned to WBK based in Poznan), ING (Bank Śląski in Katowice) and the Midland Bank (Bank Za- chodni in Wroclaw). The whole operation was launched in early 1990 and was completed by early 1993, thus most of the commercial banks were potentially ”ready” for privatization with substan- tially improved balance sheets. Parallel to the above, all the other banks embarked on the restructuring of their balance sheets, if only in order to stay competitive in the market.
Topic:
Privatization, Finance, State Capitalism, and Banking
Political Geography:
Europe, Eastern Europe, and Poland

17. Introduction to the Round Table on Building a Modern and Robust Banking System: Poland’s Experience after 1989

Author:
Stefan Kawalec
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
Warsaw East European Review (WEER)
Institution:
Centre for East European Studies, University of Warsaw
Abstract:
Poland was the first country of the Soviet bloc in which a non-communist government was created following the period of the cold war. This was the government of Tadeusz Mazowiecki called into being on September 12, 1989. The government announced imme- diately that the economic system would be changed. The government did not propose a third way. It said that a market economy would be introduced, based on private ownership with a freely exchangeable currency. After this transformation of the socialist economy into a capitalist economy was announced, the government acted very quickly to realize this goal. The change of the economic system entailed a great undertaking, consisting of the creation of a banking system adapted to the needs of a market economy. In the socialist economy, there was no money in the true sense of the word. Money served only a certain limited purpose related to the distribution of consumer goods, but not for all such goods. A significant portion of consumer goods were distributed through the use of ration cards, special coupons or through informal channels such as sales made under the counter. En- terprises had their inputs and outputs rationed. The simple fact that an enterprise had złotys on its account did not give the enterprise the right to buy the necessary goods, if the rights to obtain such goods were not included in the appropriate distribution list. Having złotys was also insufficient for purchasing goods from abroad. For that one needed foreign currency -- which also was rationed in accordance with the distribution lists.
Topic:
Communism, Democracy, Finance, and Banking
Political Geography:
Europe, Eastern Europe, and Poland

18. The EU’s Financial Architecture for External Investment: Progress, Challenges, and Options

Author:
Hannah Timmis and Mikaela Gavas
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
In 2017, the EU launched an ambitious programme of investment mobilisation in Africa and the Neighbourhood: the External Investment Plan (EIP). The EIP aims to increase the scale, impact, and coherence of EU-supported external investment by introducing various innovations to the European financial architecture, including a new guarantee mechanism and a unique “three-pillar” approach to investment support. The European Commission is proposing a significant expansion of the EIP under the EU’s new long-term budget, the Multiannual Financial Framework 2021–27, replacing the current plethora of investment tools and modalities with a single framework. This paper provides a comprehensive overview of the evolution of the EU’s complex external investment architecture. Based on interviews with stakeholders, it documents lessons learned during the EIP’s first year of implementation and proposes a series of options for the design and operationalisation of the new investment framework. To increase the additionality, development effectiveness, and efficiency of EU-supported external investment, it recommends that the European Commission improve the current architecture by providing greater policy steer to investors; increasing competition among institutions for investment support; clarifying linkages between the three pillars; setting clear guidance, fee structures, and standardised contractual terms; and strengthening management of investment tools.
Topic:
Regional Cooperation, European Union, Finance, and Investment
Political Geography:
Europe

19. The EU’s Financial Architecture for External Investment: Progress, Challenges, and Options

Author:
Hannah Timmis and Mikaela Gavas
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
In 2017, the EU launched an ambitious programme of investment mobilisation in Africa and the Neighbourhood: the External Investment Plan (EIP). The EIP aims to increase the scale, impact, and coherence of EU-supported external investment by introducing various innovations to the European financial architecture, including a new guarantee mechanism and a unique “three-pillar” approach to investment support. The European Commission is proposing a significant expansion of the EIP under the EU’s new long-term budget, the Multiannual Financial Framework 2021–27, replacing the current plethora of investment tools and modalities with a single framework. This paper provides a comprehensive overview of the evolution of the EU’s complex external investment architecture. Based on interviews with stakeholders, it documents lessons learned during the EIP’s first year of implementation and proposes a series of options for the design and operationalisation of the new investment framework. To increase the additionality, development effectiveness, and efficiency of EU-supported external investment, it recommends that the European Commission improve the current architecture by providing greater policy steer to investors; increasing competition among institutions for investment support; clarifying linkages between the three pillars; setting clear guidance, fee structures, and standardised contractual terms; and strengthening management of investment tools.
Topic:
Regional Cooperation, European Union, Finance, and Investment
Political Geography:
Europe

20. Financing social investment for an economy of well-being: Moving from good practices to a paradigm shift

Author:
Claire Dhéret and Marta Pilati
Publication Date:
07-2019
Content Type:
Policy Brief
Institution:
European Policy Centre
Abstract:
Growing socio-economic disparities in the EU, both within and between member states, pose a serious threat to the Union’s social model, political viability, and its economic strength. In the absence of adequate levels of public investment, and with the added pressures of an ageing population and societal changes, Claire Dhéret and Marta Pilati make the case for a paradigm shift in the financing of social investment. The latter is based on the idea that investing in human and social capital enhances individuals’ capabilities and enables them to successfully participate in society and the economy, resulting in a more skilled, resilient and healthy workforce. But where will the money come from? In this Policy Brief, Dhéret and Pilati investigate the unlocked potential of EU financial instruments in fostering social investment, and the unique opportunity provided by the next Multiannual Financial Framework (2021-2027) and the InvestEU programme. Although the Commission’s efforts have been commendable so far, they argue for additional EU measures to ensure the creation of a genuine market for the social economy, which will not only help re-invigorate Europe’s social model but also make it a global champion for an ‘economy of well-being’. The EU can do this by: (1) ensuring that financial regulation is not an obstacle to social investment; (2) supporting social innovation throughout the entire social policy production chain; and (3) integrating national social investment strategies into the larger European policy framework.
Topic:
European Union, Finance, Economy, Investment, and Innovation
Political Geography:
Europe