Economic and Financial Affairs

In preparation for the upcoming spring meetings of the World Bank Group and the IMF, ministers also reviewed global economic developments, risks and policy challenges. Based on input from the ECB and the Commission, ministers discussed privacy considerations related to a digital euro. They also held a thematic discussion on housing market developments, focused on housing affordability. Lastly, the Eurogroup was informed about European banking supervision priorities and the broader financial regulation agenda in the context of the invasion of Ukraine by Russia, as well as recent activities of the Single Resolution Board. During an Economic and Financial Affairs Council configuration (ECOFIN) meeting on 5 April, EU economy and finance ministers discussed the implementation of the sanctions imposed by the EU on Russia, and welcomed Serhii Marchenko, Minister for Finance of Ukraine, to part of the meeting by videoconference. They also discussed the impact of the war in Ukraine on European economies, based on a new assessment by the European Commission. The ECOFIN adopted conclusions on the strategic autonomy of the European economy, discussed implementation of the 2021 Council conclusions on strengthening the European financial architecture, and reviewed work on the transposition into EU law of the global agreement that multinationals pay not less than 15% tax anywhere in the world. The ECOFIN also prepared for the IMF and G20 spring meetings, reviewed the status of financial services legislation, adopted updated Value Added Tax rules and a reinforced mandate for the EU’s Fundamental Rights Agency, and authorised Member States to sign the second additional protocol to the convention on cybercrime (Budapest convention).

This financing will support the implementation of the crucial investment and reform measures outlined in Bulgaria's recovery and resilience plan. It will play a crucial role in enabling Bulgaria to emerge stronger from the COVID-19 pandemic. The RRF is the key instrument at the heart of NextGenerationEU. It will provide up to €800 billion (in current prices) to support investments and reforms across the EU. The Bulgarian plan forms part of an unprecedented and coordinated EU response to the COVID-19 crisis. It addresses common European challenges by embracing the green and digital transitions and by strengthening economic and social resilience and the cohesion of the single market.

Payments to Italy under the RRF are performance-based and depend on Italy implementing the investments and reforms outlined in its recovery and resilience plan. On 30 December 2021, Italy submitted to the Commission a first payment request of €21 billion under the RRF covering 51 targets and milestones covering several reforms and investments. This request covers reforms and investments in the areas of public administration, public procurement, justice, spending review framework, higher education, active labor market policies and law- framework to empower people with disabilities as well as Italy's audit and control system for the implementation of the RRF. They also concern major investments in the field of business digitization (“4.0 transition”), energy efficiency and the renovation of residential buildings. On 28 February 2022, the Commission adopted a positive preliminary assessment of Italy's payment request. The favorable opinion of the Economic and Financial Committee of the Council on the request for payment enabled the Commission to adopt a decision to disburse the funds. The amounts of payments made to Member States are published on the Recovery and Resilience Scoreboard, which shows the progress made in the implementation of the RRF as a whole and of the individual recovery and resilience plans.

During an online press briefing with the Prime Minister of Greece Kyriakos Mitsotakis, the Executive Vice President announced the disbursement of the first payment to Greece of €3.6 billion (excluding pre-financing), of which €1.7 billion is in non-reimbursable financial support and nearly €1.9 billion in loans, under the Recovery and Resilience Facility (FRR). Payments to Greece under the RRF are performance-based and depend on Greece implementing the investments and reforms outlined in its recovery and resilience plan. On 29 December 2021, Greece submitted to the Commission a first payment request for €3.6 billion under the RRF including 15 targets covering several reforms and investments. This request covers reforms and investments in the areas of energy efficiency, electric mobility, waste management, labour market, taxation, business environment, healthcare, public transport, as well as the Greek audit and control system for the implementation of the RRF.

The proposal adopted on 1 April complements the humanitarian assistance provided by the EU to those fleeing from Ukraine, particularly as they travel across the Union, and is fully consistent with the EU asylum acquis and with the Union's external action. Since the start of Russia's military invasion of Ukraine, over 3.8 million people fleeing the war against Ukraine have arrived in the EU. The EU and its Member States have made considerable efforts to provide humanitarian assistance and temporary protection for these people, including access to the labour market, housing, medical assistance and education for children. One of the immediate needs of refugees is to convert their hryvnia banknotes into the currency of their host country. This proposal aims to promote a coordinated approach for all Member States to offer those fleeing from Ukraine the same conditions for converting their hryvnia banknotes into local currency independent of the Member State that hosts them. This approach was necessary because the National Bank of Ukraine had to suspend the exchange of hryvnia banknotes into foreign cash to protect Ukraine's limited foreign exchange reserves. As a result, credit institutions in EU Member States have been unwilling to carry out the exchanges due to the limited convertibility of hryvnia banknotes and exposure to exchange rate risk.

The digital euro could foster the emergence of cross-border solutions for payments and the deployment of instant payments. It could support innovation and competition in payments and strengthen the EU's open strategic autonomy. In addition, a digital euro could meet the new payment needs of Industry 4.0. The European Central Bank (ECB) and the Commission are jointly examining, a wide range of political, legal and technical issues in relation to the possible introduction of a digital euro. The Commission wants to gather stakeholders’ views on users’ needs and expectations for the digital euro and how to make it available for retail while preserving the legal tender status of euro cash. This consultation also seeks views on the role of a digital euro for retail payments and the EU digital economy, its impact on the financial sector and financial stability, as well as aspects related to anti-money laundering rules and data protection.

The latest episode of Real Economy on Euronews asks “what does this mean for the future of government spending in the EU, especially when it comes to investment to combat climate change?” The current fiscal rules go back to the Maastricht treaty and the beginning of the euro area in 1992. At their core they mandate that annual fiscal deficits be capped at 3% of GDP and that overall government debt does not exceed 60% of GDP. During the pandemic, the rules were temporarily put on hold so that governments could spend more, but they are due to return in 2023. The Dutch finance minister Sigrid Kaag and Spanish finance minister Nadia Calviño are calling for a reform that would enable the public investments needed to implement the green and digital transitions. The Commission has published a review of its economic governance framework, along with a stakeholder consultation. It is due to make recommendations later in 2022. Paolo Gentiloni, Commissioner for Economy, recognises the need for change: “We all know that these thresholds were decided 25 years ago. We have now an average debt level near to 100% in the euro area. I think we have to adapt our rules to have a gradual path of debt reduction, allowing us to make the needed investment.”