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51. China's Belt and Road Initiative in Italy: An Analysis of Financial Cooperation

Author:
Nicola Bilotta
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Financial cooperation is essential to boosting bilateral economic ties, providing firms with more effective instruments to operate in foreign markets. It should come as no surprise, then, that financial cooperation was a pillar of the 2019 Memorandum of Understanding (MoU) reached between Italy and China in support of the latter’s Belt and Road Initiative (BRI). However, a preliminary analysis of BRI-related commercial agreements between Italian financial institutions and their Chinese counterparts shows that they have not resulted in any ground-breaking development. These Memoranda have apparently just added a “BRI” badge to pre-existing trends of collaboration. The BRI-related MoUs in the field of financial cooperation do not, for the time being at least, justify concerns that China may gain an economic foothold in Italy large enough to win it much political influence. A more realistic risk is that these MoUs may undermine a common European approach to China, weakening the negotiating stance of the European Union’s. Paper prepared in the framework of the IAI project “When Italy embraces the BRI”.
Topic:
Foreign Policy, Political Economy, Governance, Finance, and Belt and Road Initiative (BRI)
Political Geography:
China, Europe, Asia, and Italy

52. CBDCs for Dummies: Everything You Need to Know about Central Bank Digital Currency (And Why You Shouldn’t Be Afraid of It)

Author:
Nicola Bilotta
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
“No cash accepted in this store”. What might seem to some like science fiction is on its way to becoming reality. The rise of non-cash payments is a global phenomenon, although moving at different speeds around the world. To keep up with the digitalisation of payments (and of the economy), many central banks are exploring the development of Central Bank Digital Currencies (CBDCs), a digital form of cash. Despite being confined to a technical discussion among experts, when (rather than if) launched, CBDCs concerns us all. Thus, raising awareness of what CBDCs are, and of their key economic and political dimensions, is crucial to ensure that citizens are not only passive spectators. This paper has the ambition to provide (non-expert) readers with straightforward and simple answers to some of the many questions they may have around CBDCs. It sets the ground to better understand what CBDCs are (and are not), their drivers and their possible design. It will explore the impact of CBDC systems on privacy, the geo-strategic drivers of CBDCs and the possible rivalry between public and private money. Paper prepared in the framework of a research effort on the risks and the opportunities related to Central Bank Digital Currencies (CBDCs) with the support of Intesa Sanpaolo and the Bank of Italy.
Topic:
Political Economy, Governance, European Union, Finance, Currency, and Digital Policy
Political Geography:
China, Europe, and United States of America

53. Greenwashing under growing regulatory scrutiny

Author:
Busisipho Siyobi
Publication Date:
05-2021
Content Type:
Special Report
Institution:
Good Governance Africa (GGA)
Abstract:
On 10 March 2021, a set of ‘green finance’ rules designed by the EU to prevent greenwashing – the act of claiming that a fund is sustainable when in reality it is working against sustainability objectives – was applied to certain financial services sector firms in the EU. These rules – known as the EU Sustainable Finance Disclosure Regulation (SFDR) – effectively categorise products as sustainable and non-sustainable. Asset management firms will be subject to rigorous disclosure requirements should they want to credibly market their funds as promoting sustainability. These rules are an attempt to regulate what is currently a disordered market, where firms are quick to employ the ESG concept for marketing purposes, but investors have no way of ascertaining whether the claimed credentials are legitimate or verifiable. In our view, this regulatory trend towards preventing concept abuse is a welcome development and will help to separate the wheat from the chaff in a world that is under immense pressure to achieve low-carbon growth. Early adopters of ESG principles – those who mainstream social and environmental responsibility into how the firm is governed – will see optimal long-run returns. Those who engage in greenwashing or are too slow to adapt will suffer long-run decline.
Topic:
European Union, Finance, Business, Sustainability, and Greenwashing
Political Geography:
Africa and Europe

54. COVID-19 credit support programs in Europe’s five largest economies

Author:
Julia Anderson, Francesco Papadia, and Nicolas Véron
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
n 2020, European governments mitigated the economic impact of COVID-19 lockdowns and other pandemic-fighting programs through a host of initiatives, including efforts to support credit, such as guarantees for bank loans, particularly to small and medium-sized enterprises. This paper presents detailed information about these national credit support programs in the largest national economies of the European Union (France, Germany, Italy, and Spain) and the United Kingdom. The information was collected through thorough examination of published material and extended exchanges with national authorities and financial sector participants. The analysis focuses on (1) how countries positioned themselves on the many tradeoffs that emerged in designing and implementing the programs; and (2) what explains differences in usage across countries and its leveling off everywhere in the second half of 2020.
Topic:
Government, European Union, Finance, Fiscal Policy, and COVID-19
Political Geography:
United Kingdom and Europe

55. Banking Bailout Law: A Comparative Study of the United States, United Kingdom and the European Union

Publication Date:
10-2021
Content Type:
Video
Institution:
Mile End Institute, Queen Mary University of London
Abstract:
Our expert panellists discussed Virág Blazsek’s book, Banking Bailout Law: A Comparative Study of the United States, United Kingdom and the European Union, which examines the different bank bailout and resolution techniques and tools through carefully selected case studies. The panel explored the pros and cons of the different legal and regulatory options identified by the book to reconstruct a regulatory framework that might better serve countries in future financial crises.
Topic:
Economics, European Union, Finance, Banking, and Bailout
Political Geography:
United Kingdom, Europe, North America, and United States of America

56. Financing the European Union: New Context, New Responses

Author:
Clemens Fuest and Jean Pisani-Ferry
Publication Date:
09-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Roughly two thirds of the European Union’s budget is financed out of member states’ national tax revenues. These resources, based on gross national incomes, are transparent, fair and in line with the principle of subsidiarity but they lead to political debates that emphasise the cost of EU spending rather than the benefits, and add to the perception of the EU budget in terms of net balances, rather than value added. The financing of the EU budget must be reassessed in the light of the July 2020 decision to launch the Next Generation EU programme. Budget resources could include a plastics charge, a carbon border adjustment mechanism, a digital tax, revenues from emissions trading and a financial transactions tax. We evaluate these options against four criteria: whether the origin of the revenue can be assigned to a particular member state; whether the revenue can be raised in isolation or requires pan-European tax coordination; whether the new resource can help reduce tax distortions in the EU; and whether the resource is related to EU policies. Revenues from emissions allowances fit these criteria best. Carbon emissions do not primarily cause damage only where they occur. Taking the EU cap on emissions as a given, additional emissions in a particular member state should be regarded as a negative externality on other member states. Emission reduction objectives are set at EU level. Whoever auctions off an allowance, wherever the corresponding emission occurs in the EU, and wherever the resulting good or service is consumed, the impact on common policy outcomes is the same. In this regard, proceeds from the sale of emissions trading system allowances are not that different from customs duties. Compared to the ETS, the other candidates for EU own resources are less convincing. Carbon border adjustments are intended to limit international competitive distortions rather than to generate revenue. Digital taxes and minimum corporate taxes are best left to the process underway in the Organisation for Economic Co-operation and Development. On a financial transactions tax there is no agreement within the EU. Total ETS revenues up to 2050 would approach €800 billion in a realistic scenario and possibly even €1.5 trillion assuming the scope of the ETS and the share of auctioned permits are increased. ETS revenues therefore would be largely sufficient to repay the Next Generation EU debt. However they would generate distributional effects, and so part of the revenues should finance grandfathered rights that would accrue to the member states. The EU can tackle the distributional issues involved in the reform of own resources.
Topic:
Budget, European Union, Finance, Tax Systems, COVID-19, Decarbonization, and Digitalization
Political Geography:
Europe

57. Emerging Europe and the capital markets union

Author:
Alexander Lehmann
Publication Date:
09-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The European Union’s capital markets union (CMU) plan is in urgent need of a revamp. Because of Brexit, EU capital markets and supervision need to become more integrated. The ongoing deep recession increases the need for equity finance mobilised by capital markets. The eleven EU countries in central and south-eastern Europe which joined the EU in 2004 and after (EU11) are particularly affected by the ongoing consolidation of exchanges, which has diminished liquidity in smaller markets and in the traded securities of mid-sized companies. Corporate funding remains even more bank-dependent in the EU11 than in the rest of the EU. Equity capital, whether in the form of listed shares or directly supplied by investment funds, is particularly underdeveloped. Even though the sustained and superior growth record in the region compared to the rest of the EU should be a magnet for investors, cross-border exposure to traded equity in the region remains very limited. To gain broader acceptance in all EU countries, CMU will need to support more forcefully funding for small and medium enterprises (SMEs), and foster market integration throughout the single market, including outside the euro area. The immediate priorities for the EU should be to revise market regulation and facilitate capital market access by smaller firms. Lighter standards in dedicated SME markets should be widened for newly-listed companies, but should not be available to more mature listed companies. In this way, high standards of transparency and integrity, which have been bolstered by post-financial crisis regulation, will be preserved. The EU11 countries need to embrace corporate governance rules and greater transparency of company financial data, which would facilitate equity finance. They must also attract investors who will seek disclosure of environmental, social and governance performance of issuers. Much could be done to foster liquidity on national exchanges, including by embracing the inevitable further consolidation of exchanges and other infrastructure.
Topic:
Markets, European Union, Regulation, Finance, Business, Capital, Corporate Governance, and Private Equity
Political Geography:
Europe

58. European Elections: A Year In Review

Author:
Katerina Davidova, Vít Havelka, Jana Juzová, Christian Kvorning Lassen, and Danielle Piatkiewicz
Publication Date:
05-2020
Content Type:
Special Report
Institution:
Europeum Institute for European Policy
Abstract:
On the occasion of the anniversary of the ninth European Parliament elections, which took place from 23 to 26 May 2019, experts of EUROPEUM Institute for European Policy prepared five analyses reflecting on the past year in the key areas: climate, multiannual financial framework, migration, geopolitics and European Union enlargement. The experts of EUROPEUM Institute for European Policy weigh in with analyses in their respective fields – climate, multi-annual financial framework, migration, geopolitics and EU enlargement – of the first year since the European elections. It is our hope that this review of the first year of unprecedented upheaval will be an opportunity to reflect both on the past year, but also the challenges of tomorrow.
Topic:
Climate Change, Migration, European Union, Geopolitics, and Finance
Political Geography:
Europe

59. Sustainable finance: the road to greater energy security in the Visegrad region

Author:
Linda Zeilina
Publication Date:
06-2020
Content Type:
Policy Brief
Institution:
Europeum Institute for European Policy
Abstract:
Linda Zeilina wrote a policy paper as a part of the Think Visegrad platform on the topic of sustainable finance and energy security of the Visegrád group countries. The coronavirus outbreak has made the unthinkable happen, with major economies grinding to a halt and international travel coming to a standstill. Now, it is time to think what is often seen as unthinkable: to reimagine economic models and energy systems, and to position the Visegrad countries well for the economic models of the future. By doing so, the region will also make itself much more secure and prosperous.
Topic:
Security, Energy Policy, Finance, Coronavirus, and Sustainability
Political Geography:
Europe

60. 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