Aurelia Butler

BRUSSELS (Reuters) – The European Union’s idea of jointly borrowing for joint goals, such as for the post-pandemic recovery, could be used again by the EU if the implementation of the recovery scheme is a success, European Economic Commissioner Paolo Gentiloni said on Monday.In an unprecedented move to prevent economic fragmentation due to the COVID-19 pandemic, European Union countries agreed last year to jointly borrow 800 billion euros ($903 billion) and spend them on rebuilding their economies greener and more digitised.The joint borrowing was seen by many as breaking a taboo and financial markets greeted the decision with enthusiasm, prompting speculation if the recovery fund, called Next Generation EU, could be transformed into a more permanent arrangement — something many northern European countries are strongly against.”Indeed it was an extraordinary decision,” Gentiloni told the European Parliament’s budget committee in Strasbourg during a hearing in response to a question from a lawmaker. “But we should recognise the fact that it was conceived as a one-off — it is in the legal acts. Does this mean that this kind of methodology to raise common resources for a common goal could never be used again in the EU? I don’t think so. I think this could happen, this has nothing to do with making (it)permanent,” Gentiloni said.”But for this we need success with implementation of the Next Generation EU and in the challenge of raising stronger own resources,” Gentiloni said, referring to dedicated revenue streams to the EU budget from which the 800 billion euro borrowing is to be repaid.Under the scheme each of the EU’s 27 countries will get grants and cheap loans to invest in reducing carbon dioxide emissions and in making economies more fit for the digital age. The money for the projects will come from the Commission, which will pay it out to governments in tranches until 2026, on the completion of jointly agreed milestones and targets.The Commission has already disbursed 54 billion euros in pre-payments to 18 countries to get projects going. Further pre-payments are in the pipeline as 22 countries have already had their spending plans approved by the Commission in line with the EU’s joint goals. Of the remaining five countries, approval for the Netherlands and Bulgaria’s plans has been delayed due to changes in government in those countries, and the Commission said good progress has been made in approving Sweden’s programme.Approval for Poland and Hungary’s spending plans, however, faces bigger challenges because the EU executive says Poland does not meet the requirement of having an independent judiciary while Hungary has problems with corruption — both issues that endanger the proper spending of EU funds.($1 = 0.8864 euro) More

Canada dramatically hardened its tone with Washington on Friday, threatening to slap tariffs on a range of American goods unless the matter was resolved. Ottawa says the credits would badly damage its auto industry.Trudeau said his government was working hard to ensure the United States understood the credit was bad for both nations, given the integrated nature of the continental auto industry.”There are a number of solutions we’ve put forward. One of them would be to align our incentives in Canada and in the United States to make sure that there was no slippage or no unfair advantages on one side or the other,” Trudeau said.”We are happy to do that. Those are conversations that are ongoing right now,” he continued.Months of lobbying have done little to dissuade U.S. legislators, who are considering a new $12,500 tax credit that would include $4,500 for union-made U.S. electric vehicles.Canada says this is equivalent to a 34% tariff on Canadian-assembled electric vehicles. More

LONDON (Reuters) -Bank of England Governor Andrew Bailey warned banks and other regulated financial firms on Monday that they should be “especially cautious” about holding volatile cryptoassets until regulators put new rules in place.Bailey, speaking at a news conference, said future rules for cryptoassets – the BoE’s preferred term for financial instruments such as bitcoin – would balance risk management with the need to support innovation and competition. “The FPC considers that financial institutions should take an especially cautious and prudent approach to any adoption of these assets until such a regime is in place,” he said after a meeting of the BoE’s Financial Policy Committee (FPC).Although no major British banks have reported direct exposure to cryptoassets as yet, some are starting to offer a variety of services, such as cryptoasset derivatives trading or custody services, the FPC said.The crypto market continues to grow rapidly, increasing tenfold since early 2020 to about $2.6 trillion last month, equivalent to 1% of global financial assets, the FPC said.”It probably isn’t a financial stability risk today but it has all the makings of something that could become one,” Bailey said.The Basel Committee of global banking regulators has set out proposals for punitive capital charges on cryptoassets held by banks.But Bailey said there was a need to look beyond banks to the wider “non-bank” financial world when considering rules.”Enhanced regulatory and law enforcement frameworks, both domestically and at a global level, are needed to influence developments in these fast-growing markets,” the FPC said.The BoE does not view bitcoin or other cryptocurrencies as meeting the general definition of a currency, and reiterated a warning that cryptoassets had no intrinsic value and that investors could lose all their money.British regulators estimate that 2.3 million adults in Britain own cryptoassets such as bitcoin, but they still only account for 0.1% of households’ net financial wealth.The Financial Conduct Authority said last week that investments in cryptoassets should not be protected by Britain’s Financial Services Compensation Scheme. More