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Action Policy Digest September 2020

Author:

Date: 14 September 2020

Type: Other

Topic: Credit

Organized as a monthly newsletter, it presents an overview of the current international policy debate. You find below a selection of the best ideas from the most influential think tanks, structured in four areas: (i) Finance, (ii) Innovation and Development, (iii) European Affairs and (iv) Social Policy.

 

FINANCE

Is the COVID-19 crisis an opportunity to boost the euro as a global currency? . The euro never challenged the US dollar, and its international status declined with the euro crisis. Faced with a US administration willing to use its hegemonic currency to extend its domestic policies beyond its borders, Europe is reflecting on how to promote it currency on the global stage to ensure its autonomy.

How to make EU bonds a safe(r) European asset“. If the European Commission’s proposal for a recovery fund is approved by member states, the EU would become the biggest supranational issuer in the world. To uphold the EU’s extremely high creditworthiness under a massively enhanced borrowing envelope, the Commission proposes that member states transfer up to 0.6% of gross national income to the EU budget per year until 2058, when the last bonds would be repaid.

Managing volatile capital flows in emerging and frontier markets. The COVID-19 pandemic caused an unprecedented sharp reversal of portfolio flows in emerging and frontier markets, triggering concerns about financial stability and consequently, strong policy responses. This column uses a novel analytical framework, the capital-flows-at-risk methodology, to show that changes in global financial conditions tend to influence portfolio flows more during surges and reversals than in normal times.

Emerging market central banks and quantitative easing: high-risk advice . Le banche centrali dei mercati emergenti con valute deboli non dovrebbero ricorrere a strumenti monetari non ortodossi come il quantitative easing come risposta alla crisi innescata dal COVID-19.
 

INNOVATION AND DEVELOPMENT

Design choices for central bank digital currency“. How severe is Europe’s dearth of AI talent and how does it compare to the United States, China and the United Kingdom – the world’s AI champions?

Europe has an artificial-intelligence skills shortage . Central bank digital currency (CBDC)—fiat currency issued by central banks in digital form—has progressed in the past few years from a bold speculative concept to a seeming inevitability.

 

EUROPEAN AFFAIRS

Ex-post economic evaluation of competition policy: The EU experience . With the increased globalisation and digitalisation of the economy and the challenge of recovery from the COVID-19 crisis, the future of EU competition policy is up for debate. In response, the European Commission is reviewing its enforcement practice and has brought forward new policy initiatives. This column summarises the main lessons learnt from this work and sets out areas for further research.

CERFive reasons why even a basic EU-UK trade deal is better than nothing. A deal would avoid tariffs, unlock supplementary benefits, allow for EU and UK customs co-operation, ensure the Northern Ireland protocol is implemented sustainably and provide a platform on which to build a deeper relationship in the future.

The financial fragility of European households in the time of COVID-19. The concept of household financial fragility emerged in the United States after the 2007-2008 financial crisis. It grew out of the need to understand whether households’ lack of capacity to face shocks could itself become a source of financial instability.

 

SOCIAL POLICY

Private and joint activities in the household: The evolving costs and benefits of togetherness . COVID-19 lockdowns and school closures have affected working hours and household income, with an unequal effect on women and men. The collective model of the household has hitherto ignored distinctions between private versus joint activities by parents in household time allocation.

Credit

Let me remind you that credit is the lifeblood of business, the lifeblood of prices and jobs.

Herbert Hoover

Health

Good health is essential to social and economical development and it empowers all of the public sectors.

World Health Organization

Innovation

Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.

Peter Drucker

Human Capital

Talent is a source from which water flows constantly renewed. But this source loses its value unless it is properly used.

Ludwig Wittgenstein