Income

Christine Lagarde: Hearing of the Committee on Economic and Monetary Affairs of the European Parliament

Retrieved on: 
Wednesday, November 30, 2022

I will also address the two topics selected by this Committee for todays hearing, namely the global monetary policy cycle and inflation differentials.

Key Points: 
  • I will also address the two topics selected by this Committee for todays hearing, namely the global monetary policy cycle and inflation differentials.
  • The shock hit just as we were coming out of the pandemic and has continued to cause economic disruptions.
  • [1]
    Given our proximity to the conflict and our dependence on energy imports, Europe has been hit particularly hard.
  • Higher energy costs have been a key driver of euro area inflation, which in October reached double digits for the first time since the start of the monetary union.
  • [2] *
    This rise in inflation affects everyone, but some are feeling it more than others.
  • We are monitoring these divergences carefully and expect them to normalise as the impact of these shocks fades over time.
  • The different shocks over the past year have also had an impact on real economic activity.
  • [4]
    The European response to the war has garnered broad support among citizens and optimism about the future of the EU has increased.
  • While monetary policy is geared towards bringing inflation back to our medium-term target, the economic outlook will also depend on the actions taken by other stakeholders.
  • I encourage EU policymakers, including this Parliament, to soon reach a viable and broadly shared agreement to help strengthen the foundations of our Economic and Monetary Union.
  • E. and Koester, G. (2022), The role of demand and supply in underlying inflation decomposing HICPX inflation into components,
    Economic Bulletin, Issue 7, European Central Bank.
  • See European Parliament Spring 2022 Survey: Rallying around the European flag - Democracy as anchor point in times of crisis.

Press release - MEPs clear way for new sources of EU revenue

Retrieved on: 
Tuesday, November 29, 2022

With 440 votes in favour, 117 against and 77 abstentions, MEPs have taken an important step towards implementing an amendment to the law governing the EUs revenue, the so-called Own Resources Decision (ORD).

Key Points: 
  • With 440 votes in favour, 117 against and 77 abstentions, MEPs have taken an important step towards implementing an amendment to the law governing the EUs revenue, the so-called Own Resources Decision (ORD).
  • They add that the Commission needs to take further timely actions if the proposed new own resources are not adopted or do not generate the anticipated level of revenue.
  • Hence the increasing importance of new revenues to pay off the debt and to face new challenges through common projects.
  • Background
    The ORD is the legal basis that provides for the revenue sources of the EU budget, and it is also the legal basis authorising funds to be borrowed on the financial markets to finance the Next Generation EU Recovery Instrument (NGEU).

Article - Cost of living crisis: targeted support and reforms needed (interview)

Retrieved on: 
Tuesday, November 29, 2022

EU governments should support those most affected by rising prices and carry on with reforms, MEPs Ludk Niedermayer and Drago Pslaru said in an interview.

Key Points: 
  • EU governments should support those most affected by rising prices and carry on with reforms, MEPs Ludk Niedermayer and Drago Pslaru said in an interview.
  • While he is in favour of targeted support for businesses and households, Niedermayer warned against very broad supportive measures that are expensive, and have potential to create inflation.
  • Pslaru noted that the EU post-pandemic recovery plan focuses on providing support for national reforms and investments.
  • These longer-term solutions, the reforms and investments that we are putting forward, are going to take us out of the inflation crisis, he concluded.

Luis de Guindos: Outlook for the euro area economy and financial stability

Retrieved on: 
Saturday, November 26, 2022

I will start by providing an overview of the euro area economic outlook that underpinned Octobers Governing Council deliberations.

Key Points: 
  • I will start by providing an overview of the euro area economic outlook that underpinned Octobers Governing Council deliberations.
  • I will then discuss how we see the risks to financial stability.I will start by providing an overview of the euro area economic outlook that underpinned Octobers Governing Council deliberations.
  • I will then discuss how we see the risks to financial stability.
  • But as we know, the euro area growth outlook has deteriorated significantly since then.
  • In fact, the euro area economy grew by 0.2% in the third quarter of this year, significantly slower than in the second quarter.
  • By reducing peoples real incomes and pushing up costs for firms, high inflation continues to dampen consumption and investment.
  • Moreover, global economic activity is growing more slowly, reflecting the impact of continued high inflation, tightening financial conditions and elevated geopolitical uncertainty.
  • As the prices paid for imports rise faster than those received for exports, worsening terms of trade are weighing on incomes in the euro area.
  • In our Financial Stability Review of November 2021, we underlined the impact of improved economic conditions in reducing risks to financial stability.
  • Since then, the outlook for financial stability has been downgraded twice: in our Financial Stability Review of May 2022, and the one to be published this week, which sets out how deteriorating economic and financial conditions have further increased risks to the stability of the euro area financial system.
  • Repricing risks and liquidity difficulties render financial markets and non-bank financial institutions vulnerable to disorderly risk adjustments.
  • Furthermore, longer-term fragilities persist associated with low cost-efficiency, limited revenue diversification and remaining overcapacity in parts of the euro area banking sector.
  • We will proceed with prudence, continuing to normalise our monetary policy in line with our medium-term price stability objective.

Frank Elderson: Maintaining prudence when navigating unexpected tides and firming currents

Retrieved on: 
Saturday, November 26, 2022

Indeed, these were some of the main considerations when assessing the macroeconomic outlook in the euro area exactly one year ago.

Key Points: 
  • Indeed, these were some of the main considerations when assessing the macroeconomic outlook in the euro area exactly one year ago.
  • Today, a mild recession in the euro area around the turn of the year is quite plausible, as ECB President Christine Lagarde recently highlighted.
  • [1] Today, we face euro area inflation that continues to be far too high, having reached double digits in October.
  • Today, long-term interest rates in the euro area are around 2.5 percentage points higher than when I was first due to speak to you last year.
  • Today, as Bundesbank President Joachim Nagel said just last week, - muss die Geldpolitik auf der Hut sein.
  • The increase in interest rates reflects several steps in the monetary policy normalisation which the ECB started in December 2021.
  • As both an ECB Executive Board member and the Vice-Chair of the ECBs Supervisory Board, I am particularly interested in how banks adjust to the shifting macroeconomic tides.
  • More importantly, banks and we as supervisors need to be mindful that the increase in interest rates does not occur in isolation.
  • [3] Moreover while the macroeconomic tides may have changed, many of the structural challenges facing banks have not.
  • Indeed, the underlying currents which banks were already affected by last year, are still very much present.
  • In fact, important currents have even firmed with the change in tides.
  • While the prevailing macroeconomic tides and the inescapable currents of the climate and environment crises may have different causes, they nevertheless have something important in common.
  • This is especially true when assessing the configuration of tides and currents in conjunction, in other words, when assessing how the macroeconomic environment and the climate and environmental crises interact.

ECB Financial Stability Review shows risks increasing as economic and financial conditions worsen

Retrieved on: 
Saturday, November 26, 2022

- PRESS RELEASE

Key Points: 
  • - PRESS RELEASE
    ECB Financial Stability Review shows risks increasing as economic and financial conditions worsen
    16 November 2022
    - Households and firms face multiple challenges, including weakening economic outlook, higher inflation and tighter financial conditions
    - Diminished market liquidity raises risk of disorderly asset price adjustments, which could test investment fund resilience
    - Governments should ensure support to vulnerable sectors is targeted and does not interfere with monetary policy normalisation
    Risks to financial stability in the euro area have increased amid soaring energy prices, elevated inflation and low economic growth, the November 2022 Financial Stability Review published today by the European Central Bank (ECB) shows.
  • At the same time, financial conditions have tightened as central banks act to rein in inflation.
  • People and firms are already feeling the impact of rising inflation and the slowdown in economic activity, said ECB Vice-President Luis de Guindos.
  • Our assessment is that risks to financial stability have increased, while a technical recession in the euro area has become more likely.

Household inequality and financial stability risks: exploring the impact of changes in consumer prices and interest rates

Retrieved on: 
Saturday, November 26, 2022

= Household inequality and financial stability risks: exploring the impact of changes in consumer prices and interest rates =

Key Points: 
  • = Household inequality and financial stability risks: exploring the impact of changes in consumer prices and interest rates =
    Published as part of the Financial Stability Review, November 2022.
  • Since the start of 2022, euro area households have seen the largest increase in consumer prices in decades and the first increase in interest rates in over ten years.
  • Simulations of the impact of rising consumer prices and interest rates on the near-term financial health of households reveal a more pronounced risk of default in lower income quintiles.
  • During 2022, euro area households have seen the largest increase in consumer prices in decades and the first increase in interest rates in over ten years.
  • Despite the scale of the pandemics impact on overall GDP, households have generally experienced relatively benign financial conditions in recent years, supported by declining unemployment, stable incomes and low interest rates.
  • On aggregate, debt service-to-income ratios and household non-performing loan (NPL) ratios have steadily declined since 2015 ( Chart B.1, panel a).
  • However, the recent combination of higher core inflation, surging energy prices, high economic uncertainty and increasing mortgage rates could test households financial capacity ( Chart B.1, panel b).
  • Additionally, significant declines in consumption resulting from the financial squeeze could have a negative feedback effect on economic performance.
  • Recent stability in euro area households financial situation could be tested by sharp increases in energy and consumer prices

    Sources: Panel a: Bank for International Settlements, Eurostat, ECB and ECB staff calculations.

  • This special feature explores financial stability risks from a perspective of household inequality.
  • It takes a granular look at households consumer price and interest rate sensitivities, exploiting distributional survey data from the ECBs Household Finance and Consumption Survey (HFCS).
  • The average lower-income household in the euro area spends a large portion of its income on basic goods and housing.
  • By contrast, the average household in the lowest income quintile spends about 70% on basic needs ( Chart B.2, panel a).
  • [6] The lower the income, the higher the probability of any illiquidity stemming from changes in prices and interest rates translating into debt default.
  • Shock refers to the impact of changes in consumer prices and interest rates on household finances between the first quarter of 2022 and the end of 2022.
  • Shock refers to the impact of changes in consumer prices and interest rates on household finances between the first quarter of 2022 and the end of 2022.

Brussels Privacy Convening Focuses on Empowering Vulnerable and Marginalized People, Launches New Project

Retrieved on: 
Saturday, November 26, 2022

Brussels Privacy Convening Focuses on Empowering Vulnerable and Marginalized People, Launches New Project

Key Points: 
  • Brussels Privacy Convening Focuses on Empowering Vulnerable and Marginalized People, Launches New Project
    The Future of Privacy Forum (FPF), a global non-profit focused on data protection and privacy, and the Brussels Privacy Hub of Vrije Universiteit Brussel (VUB) will jointly present the sixth edition of the Brussels Privacy Symposium on November 15, 2022.
  • The in-person event will convene in Brussels, bringing together policymakers, academic researchers, civil society, and industry representatives to discuss privacy research and scholarship.
  • In line with this years topic, Vulnerable People, Marginalization, and Data Protection, participants will explore the extent to which data protection and privacy law including GDPR and other modern data protection laws like Brazils LGPD safeguard and empower vulnerable and marginalized people.
  • The event marks the launch of VULNERA, the International Observatory on Vulnerable People in Data Protection, led by the Brussels Privacy Hub and supported by the Future of Privacy Forum.

Buyers burned by BurnLounge

Retrieved on: 
Friday, November 25, 2022

If you or your clients work in the multi-level marketing (MLM) arena, a decision by a federal judge in the FTC's lawsuit against BurnLounge, Inc., merits your attention.

Key Points: 
  • If you or your clients work in the multi-level marketing (MLM) arena, a decision by a federal judge in the FTC's lawsuit against BurnLounge, Inc., merits your attention.
  • After a nine-day trial, the court ordered a total of $17 million in refunds for consumers who were burned by the scam.
  • BurnLounge promoted itself online, through phone calls, and via in-person meetings with claims of big money to be made.
  • BurnLounge claimed to be a cutting edge way to sell digital music through multi-level marketing, but music sales accounted for only a small percentage of the money.

New Report: Americans' Trust in Messengers Varies Widely by Age, Political Views, Geography

Retrieved on: 
Thursday, November 17, 2022

NEW YORK, Nov. 17, 2022 /PRNewswire/ -- A new report released by the Ad Council Research Institute (ACRI) finds notable differences across generational, political and geographic lines in who Americans trust for information about important social issues and what motivates them to take action. The 2022 Trusted Messenger Survey, an ongoing, annual exploration that began in 2021, offers important insights for brands, causes and civic groups working to educate and inspire the American public at all levels on these and other topics.

Key Points: 
  • Younger Americans, particularly Gen Z, are much more likely than older generations to trust broader influencers (social media influencers, celebrities, podcast hosts, athletes, etc.)
  • The 2022 study saw significant differences in the messengers Americans trust by political affiliation.
  • In contrast, Republicans have significantly more trust in religious leaders (53%, compared to 37% of Democrats and 36% of the general public.)
  • Other than spouses and other immediate family members, the only messengers with similar levels of trust between urban and rural Americans are pastors/religious leaders.