12 detained in Poland in gun smuggling crackdown
12 detained in Poland in gun smuggling crackdown

With the active support of Europol, the Polish Border Guard (Straż Graniczna), together with the Internal Security Agency (Agencja Bezpieczeństwa Wewnętrznego) and the National Police (Policja) has seized close to a hundred firearms in raids tackling a gun-smuggling gang.

The Polish authorities found the weapons in a series of house searches in the regions of Świetokrzyskie and Łódzkie Voivodeship and charged 12 suspects – all Polish nationals between 32 and 60 – for their involvement in this illegal gun-running operation.

The organised crime gang under investigation smuggled weapons illegally from Slovakia to Poland, Russia and Ukraine.

The 96 seized firearms include revolvers, pistols, automatic rifles and hand machine guns. Several thousand rounds of ammunition of different calibre and one hand grenade were also confiscated as a result of this action day.

Additionally, over EUR 50 000 worth of cash was found during the house searches, alongside 14 marijuana plants and some amphetamine.

The case was conducted in close cooperation with Europol, which provided continuous intelligence development and analysis to support the field investigators.

This action day falls in the framework of a much larger two-year long investigation led by the Polish Border Guard which, besides this action day, has resulted so far in the seizure of close to 200 firearms, including so-called ‘Flobert’ guns and some 2 700 pieces of ammunition. Fifteen other individuals – 9 Ukrainian nationals, 1 Russian national and 5 Polish nationals had already been arrested.

The evidence seized during the course of this particular action is now being analysed to identify further investigative leads across Europe.

This action day was carried out in the framework of the European Multidisciplinary Platform Against Criminal Threats (EMPACT).

In 2010 the European Union set up a four-year Policy Cycle to ensure greater continuity in the fight against serious international and organised crime. In 2017 the Council of the EU decided to continue the EU Policy Cycle for the 2018 – 2021 period. It aims to tackle the most significant threats posed by organised and serious international crime to the EU. This is achieved by improving and strengthening cooperation between the relevant services of EU Member States, institutions and agencies, as well as non-EU countries and organisations, including the private sector where relevant. Illicit firearms trafficking is one of the priorities for the Policy Cycle.

What was once private has gone public – now the book industry faces a crisis
What was once private has gone public – now the book industry faces a crisis

It’s a tricky, disturbing debate, with few insiders prepared to go on the record. And as Grady points out, it raises fundamental questions. “Is the industry’s purpose to make the widest array of viewpoints available to the largest audience possible? Is it to curate only the most truthful, accurate, and high-quality books to the public?

“Or is it to sell as many books as possible, and to try to stay out of the spotlight while doing so? Should a publisher ever care about any part of an author’s life besides their ability to write a book?”

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Here in Australia we haven’t yet felt the full impact of this movement. Pressure not to publish does exist, but it tends to come from outside, as in the case of Clive Hamilton’s Silent Invasion, a critique of China’s operations in Australia that was abandoned by three publishers for fear of legal action from Beijing, until Hardie Grant published it in 2018. And good on the company for doing so.

Of course publishers turn down prospective books all the time, and are not expected to make their reasons public. But don’t expect this escalating debate to go away soon. I believe in airing all kinds of views in print, whether or not I agree with them or find them offensive. Yet somewhere, lines are drawn. The trouble is that at present, nobody can agree on where those lines should be.

Kerry Parnell: which cares if Meghan Markle writes a publication? Time to stop the sniping
Kerry Parnell: which cares if Meghan Markle writes a publication? Time to stop the sniping

What’s the top cope with Meghan composing a children’s guide? Of all the what to get frustrated about, “celebrity pens a kids’ book”, is not one of these.

You could consider it cheesy; you may move your eyes and think, “there goes another window of opportunity for typical authors to ever before get a novel deal”, as editors continue steadily to default to printing the great, bad and downright rubbish attempts of anyone with a family group title, once you understand they might shift a gazillion copies regardless of if every web page had been blank.

Meghan Markle and Piers Morgan.
Camera IconMeghan Markle and Piers Morgan. Credit: Supplied

She’s certainly not 1st royal, or celebrity, to turn kids’ author. Fergie was pumping aside children’s publications for decades including the woman Budgie the small Helicopter and Little Red show.

She’s written self-help and diet publications and now a Mills and Boon love. No person is screaming about this. Also Prince Charles had written The Ladybird Book on Climate Change.

In terms of a-listers, it’s a lot more of a concern of that hasn’t written one. Alongside the tsar associated with style David Walliams, is everyone from Tori Spelling, Natalie Portman, Barack Obama, Whoopi Goldberg, Jamie Lee Curtis, Madonna, Russell Brand, Bruce Springsteen, Ricky Gervais, Paul McCartney, Pharrell Williams, Simon Cowell, Zoe Foster Blake, Peter Helliar, Isla Fisher and Kate Ritchie to name just a few.

kids book The Bench by Meghan Markle, Duchess of Sussex.
Camera IconChildren’s guide The Bench by Meghan Markle, Duchess of Sussex. Credit: Random House/supplied

We appreciate Harry and Meghan stop the Royal Family mentioning they wished privacy, then broadcast so much dirty washing on Oprah that even the talk-show queen had been lost for words, but my real question is, do we really need to be outraged by each and every thing Meghan does?

We usually do not.

If she would like to compose a novel, whoopee-do on her. In the event that you don’t enjoy it, fine.

It may be heartfelt, it could be cynical, it might be disingenuous, or a work of wizard — i must say i don’t care.

The thing I do value could be the relentless sniping over each thing she does, for the reason that it’s getting exceedingly boring. It’s possible to not be an admirer of somebody and never having to bang on about this all the time.

The greater the anti-Meghan brigade shout and shout, the greater publicity each endeavor gets anyway — her book is currently a premier 10 bestseller on Amazon also it’s not even out until next month.

Eventually, even when it’s twaddle, if it gets numerous of parents reading for their young ones, we are able to all agree totally that is an excellent thing.

In terms of Roald Dahl, who all of these famous people so desperately wish to be: “Matilda’s powerful younger brain carried on to grow, nurtured by the voices of most those writers who had delivered their particular books out to the globe like ships on the sea.”

Therefore reverse your gunships, keyboard warriors, and hold fire. You’ll never ever sink the girl anyhow.

A bear book with both personal and historical perspective
A bear book with both personal and historical perspective

A Shape in the Dark: Living and Dying with Brown Bears

’A Shape in the Dark: Living and Dying with Brown Bears, ’ By Bjorn Dihle

By Bjorn Dihle. Mountaineers Books, 2021. $17.95. 208 pages.

Our Alaska shelves are filled with books about bears, those iconic animals that fascinate us with their beauty, power and resemblance in so many ways to ourselves. Do we need yet another book devoted to them?

In the case of Bjorn Dihle’s “A Shape in the Dark,” the answer may be yes. Despite a subtitle that suggests dramatic accounts of bear encounters and maulings in the overworked tradition, Dihle has delivered something else. Brown bears, in this case, are the means to present an inquiry into his own life of adventure, American environmental history, Alaska’s bear people and places, bear mythology and facts, and more. While the book generally addresses the relationship between humans and brown bears, it comes at the topic from a variety of angles chiefly informed by the author’s own experience and knowledge.

Dihle grew up in Juneau, still lives in Southeast Alaska and has spent a great deal of time exploring, often by himself, the wilder parts of the state. He has also worked as a guide for bear viewing and filmmaking. From childhood he’s had numerous bear encounters of his own and writes of his respect for the animals and his strategy of talking softly to them as a way of avoiding harm to either himself or the bears.

After a prologue and introduction that establish his own place in the world — his reactions to a close bear encounter in the Brooks Range and then to news of a fatal bear mauling on Admiralty Island in 2018 — Dihle goes on in part one to weave his life into the larger story of North American brown bears. He tells of the Lewis and Clark expedition across the continent, quoting from Lewis’ diary about the ferocity of the bears they met and killed. After he describes stumbling into a hole made by the passage of many bears on Admiralty Island, he reflects how Lewis and his stories set the foundation for America’s relationship with brown bears (in which eradication was the goal) and “how everything leaves a trail, whether it’s imprinted in the land, in the narratives we tell, or even in our blood.”

The author follows with more about the history of the American West and its “mountain men,” then the elimination of brown bears from California, then the stories of Theodore Roosevelt, John Muir, Aldo Leopold, Bob Marshall and others, and the evolution of knowledge and attitudes about brown bears. Each chapter shares this history in a context of his own experiences, his own interpretations of the past and present, making for a lively narrative. He ends this section with an Alaska-specific focus, including the “bear wars” early in the last century and, finally, the conservation efforts that resulted in protections for bears and their habitat.

In part two of the book, Dihle tells more stories about his personal fascination with bears and his wilderness adventures. Always, he seemed to be in the company of bears. On one Arctic trek, “It was a rare day I did not see a bear, and sometimes I saw as many as five. The bears became my world — everything else, the caribou and other wildlife, the river crossings and the pulsations (he was hearing a throbbing, like a heartbeat but coming from the land itself), thoughts of loved ones, became secondary.”

He tells of the fears he felt for a woman he found camping alone among bears and then of the Tlingit story of “The Woman Who Married a Bear” and the meaning he takes from it — that there’s a line between human and bear worlds and it’s best not to cross it. “I know that bears do not want me in their world. Sometimes when I forget my fear and common sense, though, I question the line that separates me from the bear world.”

The last several chapters, largely rooted in his experience as a guide for bear viewers, focus much of their attention on the stories of individuals who’ve been mauled or killed by brown bears. This include interviews by the author; in each case he takes care to note what might have been done differently to avoid a dangerous situation. He also profiles with admiration Ken Leghorn, “considered the father of ecotourism in Southeast Alaska,” and a particular bear Dihle watched for years, with what seems equal admiration.

Near the end Dihle gives voice to his doubts about guiding. “Each season it seemed clients became increasingly obsessed with wanting to be close to a bear, often even expressing their disappointment if they didn’t have an encounter close enough to fill the screen of their smart phone.” He wonders, if the superficial goals seem to be to get a photo or bragging rights, if there’s not something more. “I wonder if it’s an attempt to remember something vital about ourselves we don’t even know we forgot.”

He wonders, too, about the effects of Alaska’s planned and proposed developments on bears and their homes, and he wonders what kind of world his young son will live in. His son, when he made his first cries, “sounded the same as a bear cub bawling.” His son is named Shiras, after a dark color-phase of bear found on Admiralty Island and once thought to be a separate species.

RAK Ceramics’ Bathroom and Tiles Books get a 2021 update
RAK Ceramics’ Bathroom and Tiles Books get a 2021 update
RAK Ceramics




  • 30 Mar 2021



With new product launches coming on board in 2021, RAK Ceramics is publishing new editions of its Bathroom and Tiles Books.

They will provide retailers with up-to-date marketing material, at what is a busy and exciting time for the bathroom brand. 

RAK Ceramics

RAK Ceramics’ customers can pass this sales and reference tool on for free to their clients. The new brochures feature the latest ranges of sanitaryware, brassware, furniture and mirrors. This includes the design-led RAK-Petit range launched with compact bathrooms in mind.

The Tile Book for 2021 features stunning new large format slabs and ceramic wall tiles, among the latest additions to the range. 

RAK Ceramics

A4 and full colour in format, both brochures feature inspiring room set photography to help bring the products to life. This is as well as full specification details to help make ordering simple.

Available to download in PDF versions, print copies of both brochures are available from regional sales teams.

EUR 809 million EIB Group support for COVID-19 resilience, education, water, energy efficiency and private investment in Romania
EUR 809 million EIB Group support for COVID-19 resilience, education, water, energy efficiency and private investment in Romania
>@EIB
©EIB
  • EIB and EIF working with leading Romanian banks to strengthen COVID-19 economic resilience
  • EIB streamlined university investment scheme already backing investment at Cluj Technical University and Bucharest Medical University
  • Record disbursement for Romanian projects and strong pipeline of future hospital, education, road safety and water financing

Higher education, water distribution, energy efficiency and private sector investment across Romania will benefit from more than EUR 809 million of new financing from the European Investment Bank and European Investment Fund agreed with Romanian public and private partners last year.

The European Investment Bank Group’s engagement also included targeted financing to ensure that Romanian companies can continue to invest and better face business challenges caused by the COVID-19 pandemic.

“The coronavirus pandemic made 2020 a uniquely challenging year for Romania, Europe and the whole world. The European Investment Bank Group has made a crucial contribution to helping businesses across Romania better withstand the economic challenges of COVID-19 and enabling priority higher education, health, water and energy investment to accelerate. The close cooperation between the EIB Group and Romania has transformed economic opportunities, priority infrastructure and key services in our country. The strong pipeline of future EIB and EIF engagement in Romania will build on this impressive track record.” said Alexandru Nazare, Romanian Finance Minister and Governor of the European Investment Bank.

“Ensuring that companies continue to invest and priority projects can proceed is crucial to reduce the impact of COVID-19 and build a better future. The excellent collaboration between Romanian public and private partners and colleagues from the European Investment Bank Group, including our technical and financial experts in Bucharest, have once again delivered transformational support for economic, social and climate investment in Romania. The EUR 809 million new EIB and EIF financing agreed in 2020 will benefit thousands of companies, students and households across the country in the years ahead.” said Christian Kettel Thomsen, EIB Vice President responsible for Romania.

“In 2020 the EIF provided more than EUR 387 million of new financing for small businesses across Romania. This included new guarantee and equity transactions, support for ten local microfinance schemes and backing for a first-of-its-kind synthetic securitisation transaction in Romania, to scale up leasing finance. The EIF teams in Bucharest and Luxembourg remain committed to working with our Romanian partners to continue mobilising high-impact private investment in Romania.” said Alain Godard, Chief Executive of the European Investment Fund.

Details of the EIB Group’s highly important financial and technical support for long-term and priority investment were outlined earlier today by Christian Kettel Thomsen, EIB Vice President responsible for Romania, Alain Godard, Chief Executive of the European Investment Fund and Debora Revoltella, EIB Chief Economist.

EIB and EIF backing for priority investment discussed with Ministers

Confirmation of the reinforced EIB Group engagement in Romania follows meetings over recent weeks with Alexandru Nazare, Romanian Finance Minister and Governor of the European Investment Bank, and Ministers responsible for Investments and European Projects, Energy and Transport.

Strengthening private sector investment and COVID-19 economic resilience

Business investment, leasing by agriculture, manufacturing and service companies and ensuring more inclusive access to finance across Romania will be enhanced by EUR 633 million of new private sector support agreed between the EIB, EIF and leading Romanian financial partners.

This includes more flexible and increased financing for business investment, provided through local banks and financial institutions, to ensure that Romanian companies can better withstand business pressures and economic challenges resulting from the COVID-19 pandemic.

New EIB support for private sector investment in Romania also included EUR 100 million backing to expand warehouse and supply chain capacity across the country and new lending programmes to ensure that entrepreneurs and socially disadvantages communities can access finance.

The EIB and EIF also backed the first ever synthetic securitisation deal in Romania that will strengthen specialist leasing finance and enable Romanian companies to upgrade manufacturing equipment and transport fleets.

New report shows mixed impact of COVID-19 on business investment in Romania

New EIB economic research suggests that business in Romania has became more pessimistic about the short-term outlook, very similar to peers across the EU. Pessimism is greatest about the economic climate.

The European Investment Bank Investment Survey highlights that uncertainty about the future remains the most cited long-term barrier to investment (82%), followed by the limited availability of skilled staff (72%). Firms in Romania are more likely than EU peers to cite adequate transport infrastructure as a long-term barrier to investment (63% versus 40%).

The new investment survey indicated that business investment is focused on replacement of existing buildings and production equipment and tilted towards tangibles. Around a quarter (27%) of firms in Romania report abandoning or delaying investment plans as a result of COVID-19, fewer than the EU average (35%).

The same proportion of firms in Romania (27%) also report continuing with investment plans albeit on a reduced scale or scope, i.e. well above the EU average (18%). Around one in ten firms face finance constraints, and reliance on internal financing sources remains high. Access to finance is more of an issue in Romania than in other EU countries and firms lagging with investments in digitalisation and energy efficiency face greater difficulties in successfully tapping external financing. 

About Romania’s green transition potential, three-quarters of Romanian businesses (75%) say that climate change currently has an impact on their business, well above the EU average (58%) while, two-thirds of firms (66%) report already investing or planning to invest in climate related projects, in line with the EU average (67%). However, only 37% of firms managed to invest in measures to improve energy efficiency, well below the EU average (47%).

Accelerating investment to transform higher education in Romania

Last summer the EIB launched its first streamlined higher education financing scheme in Romania. This will help to improve teaching, research and innovation at institutions across the country for the period 2021-2025.

The first two loans have been agreed with the Technical University of Cluj-Napoca and the University of Medicine and Pharmacy “Carol Davila” Bucharest. These will help to accelerate strategic development, enhance research facilities and strengthen education to benefit students and researchers in the years ahead.

The EIB is in discussions with other higher education institutions across Romania to support further investment and allow university investment to benefit from long-term financing and the EIB’s unique technical experience supporting education investment across Europe.

Cutting heating costs in homes and schools

Last year the EIB continued its track record of supporting energy efficiency in Romania and agreed EUR 42 million of new financing toward the Energy Efficiency Investment Programmes of three districts in Bucharest.

In their entirety, the programmes aim to reduce energy use and cut heating bills for 900 residential buildings and 19 schools, and EIB’s fresh funding supports the implementation progress. This new support will assist implementation of Romania’s National Energy Efficiency Action Plan and the EU Resource Efficiency Initiative.​

Strong pipeline for future EIB and EIF engagement in Romania

In the coming months new EIB expects to finalise support for construction of three new hospitals, a Regional Emergency Hospital in Iasi and new regional hospitals in Craiova and Cluj.

New schemes to improve road safety across the country, long-term financing to expand and update regional water infrastructure, following support last year for water schemes in Cluj-Salaj, and new initiatives to support business financing and municipal investment are also foreseen.

Building on track record of EIB Group engagement in Romania

Since 1991 the EIB and EIF have provided more than EUR 17 billion for transformational private and public investment across Romania.

More details about EIB engagement in Romania

Full EIB Investment Survey 2020 results for Romania

Chaos Walking: 7 Big Differences Between The Book And The Movie
Chaos Walking: 7 Big Differences Between The Book And The Movie

The End Of Chaos Walking

Going hand in hand with the hurried third act of Chaos Walking as a movie is a few notable changes to the movie not found in the book. One major plot point of both is Viola needing to contact her ship and in the movie she successfully does so by the end of Chaos Walking. But, in the novels, this doesn’t happen until the second book. Then, there’s a lot that happens on the abandoned ship they use for communication in the film, such as Viola killing him so she can contact said ship, but in the book she does it so Todd doesn’t have more blood on his hands. Plus, in the movie Mads Mikkelsen’s Mayor villain seems to have died in a final face off between him and Todd, perhaps with the possibility of surviving his plummet? But in the books, the Mayor takes over all of the New World, leading into a bigger plotline for him in the rest of the trilogy.

Interview with Le Journal du Dimanche
Interview with Le Journal du Dimanche

Interview with Christine Lagarde, President of the ECB, conducted by Marie-Pierre Gröndahl and Hervé Gattegno

7 February 2021

There’s been a glut of bad news throughout Europe recently. How can we hold to the economic projections?
Uncertainties are indeed multiplying. As far as the economists at the ECB can remember, there have never been as many. Our projections are published every three months. One way of preserving a degree of optimism despite the current circumstances is simply to think back to the ECB’s projections released in September 2020 and the multiple uncertainties they took into account. What were the salient facts back then? The terms of the final Brexit deal were not yet known. The risks of a no-deal exit were still present, as much for the European Union as for the United Kingdom. On the pandemic front, no vaccines had been found and it was impossible to predict when they might become available. The US elections, of crucial importance for the whole world, had not yet been held. All of these major uncertainties have now been resolved, notably the most important one of all – the availability of reliable vaccines – because several have since been authorised by the competent international health authorities. That’s a new situation and it’s certainly a reason to be optimistic.
But is it enough to hope that 2021 will be a better year than the one before?
At the ECB we remain convinced that 2021 will be a recovery year. The economic recovery has been delayed, but not derailed. People are obviously waiting impatiently for it. We expect the upswing to gather pace around the middle of the year, even if the uncertainties persist. We are not immune to unknown risks surfacing. Let’s be clear: we will not see a return to pre-pandemic levels of economic activity before mid-2022.
What rate of growth do you expect for the euro area this year?
Around 4%. Maybe a little lower. This would already be a sharp increase relative to the contraction of 6.8% registered in the euro area in 2020. Everything will depend on the vaccination policies and the rollout of the campaigns. And on the economic measures taken by governments in response to health requirements.
On 21 July 2020, the European Heads of State and Government agreed on an exceptional recovery plan worth €750 billion. Are you concerned about the plan’s implementation?
There is no doubt that the current crisis has strengthened the European Union. The decision taken by the Member States to borrow jointly for the first time marks a moment of exceptional cohesion in the history of the European project. But the momentum must absolutely be kept up. The pandemic has an accelerating impact on everything: so we, too, need to speed up. You fight fire with fire. It’s better to act quickly, even if you might then have to backtrack to correct things that may have gone wrong.
The plan needs to be ratified in time for the European Commission to borrow as planned next June, and to then distribute the funds among the Member States of the European Union. In order for it to do so, all of the national recovery plans, comprising measures to promote green and digital transitions, will have to be submitted to the Commission very soon.
How will the ECB continue to act?
For its part, the ECB has been supporting households, firms and the Member States’ economies since the outset of the crisis. It acted extremely quickly, unveiling an initial €750 billion programme on 18 March 2020, followed by two other expansions amounting today to a total envelope of €1.85 trillion. Faced with the spread of the virus, it was important to prevent a fragmentation of financing conditions across euro area countries. We committed ourselves to remaining active in the markets until at least March 2022 in order to support and preserve financing conditions in Europe. Our preferred tool is the pandemic emergency purchase programme (PEPP), which differs from the ECB’s other asset purchase programmes, for two reasons: it is an emergency programme targeted to this crisis, and it gives us the option of deviating from the usual limits if they stand in the way of the support we need to provide to euro area economies. It’s an exceptional and temporary tool. As I have been saying since March 2020, our commitment to the euro has no limits. We will act for as long as the pandemic is causing a crisis situation in the euro area. We think that the time horizon of March 2022 is reasonable and that the PEPP envelope is appropriate. But if the ECB’s Governing Council thinks there is a need to do more, over a longer period, we will do more. However, if the whole envelope does not need to be used, we will not use it in full. That’s the principle of flexibility.
Doesn’t this accommodative monetary policy stance create risks?
We don’t see anything that gives us cause for concern. We do not yet see property bubbles at the euro area level, but we see signs of overvaluations in some of the euro area’s major cities in France, Germany, Luxembourg and Belgium, for example.
That said, it is vital that we continue to support lending across the entire economic system. Banks provide assets as collateral to the ECB and in return they receive funds at very low rates. They then use these funds to lend to firms. The priority is to ensure businesses have access to the funding they need. There is no alternative: when the economy is protected in this way, the ECB’s role is not to give one business priority over another. Collectively, we must give priority to growth, competition and innovation. At that point, the natural selection of companies will set in.
How should we react once the crisis is over?
Once the pandemic is over and the immediate economic crisis is behind us, we will have a tricky situation on our hands. We will have to be well organised. And not repeat past mistakes, like closing all the taps at once, cutting off both fiscal and monetary stimulus. Instead, we need to offer flexible support to our economies, and then reduce this support gradually as and when the pandemic subsides, and the recovery takes hold. Economies will then have to learn how to function again without the help of any of the exceptional measures that had to be introduced as a result of the crisis. I am not worried about this, because the capacity for recovery is strong. Our economies are resilient. To convince ourselves of this, we only have to look at the remarkable improvement recorded by the French economy in the third quarter of 2020, when quarterly growth rebounded by 18.5%.
Don’t the gaps between euro area Member States make it difficult to come up with a common monetary policy?
Above all else, the coronavirus (COVID-19) crisis has exacerbated any pre-existing gaps. That is why the Next Generation EU recovery plan is even more crucial, particularly the support it will provide through the grants given to each Member State, tailored precisely to their specific national situations. For example, Italy will receive around €200 billion in grants and loans. It is therefore vital that this exceptional solution is not wasted and that it is rolled out as soon as possible.
Concerns are surfacing about the very high debt levels of Member States. Is there any basis for these concerns?
There is no denying that our monetary policy would be more effective if there was a greater convergence of Member States’ economic policies. All euro area countries will emerge from this crisis with high levels of debt. There is no doubt that they will manage to repay this debt. Debt is managed over the long term. Investments made in sectors that are vital for the future will bring stronger growth. The recovery will create jobs and will therefore have a unifying effect. We are transitioning to a different economy, one that is more digital, greener, more committed to combatting climate change and to protecting biodiversity. It will also be driven by new values – which young people are already expressing through their job and career demands – which will meet a new set of parameters. Healthcare in particular is one of their main areas of focus.
A letter signed by 100 economists is calling for cancellation of the public debt owned by the ECB. How would you respond to them?
Cancelling this debt is inconceivable. It would be in violation of the EU Treaty which strictly prohibits monetary financing. This rule is a fundamental pillar of the common framework underpinning the euro. The EU Treaty has been agreed and ratified freely and voluntarily by EU Member States. Rather than expending so much energy asking for debt to be cancelled, it would be much more worthwhile to focus instead on how this debt should be used, on how public funds will be allocated, on which sectors we should invest in for the future. Those are the things we should currently be talking about.
Your predecessor Mario Draghi has been asked to form a new government in Italy. What is your view of his nomination?
Italy and Europe are fortunate that Mario Draghi has accepted the challenge of helping to end Italy’s economic and social crisis at a time when it is the euro area country hardest hit by the pandemic.
I have full confidence in Mario Draghi’s ability to rise to this challenge. He has all the requisite qualities: he has the knowledge, courage and humility needed to complete his new task, i.e. to restart the Italian economy with help from Europe.
Janet Yellen, the former chair of the US Federal Reserve, has become US treasury secretary. Is it good news?
Having a woman hold this position for the first time is wonderful news! What’s more, Janet Yellen has the ideal profile given the circumstances: she is an economist and a labour market specialist. Employment will play a crucial role in restarting the economy. She is also very warm and pleasant. She is as humble as she is brilliant. Her appointment will also help promote smooth economic relations between Europe and the United States. We will once again see a cooperative approach being taken in key areas, such as international trade and how to deal with the challenges of climate change.
You have called for the “greening” of monetary policy. Is this really part of a central bank’s mandate?
Absolutely. We all have a role to play in combatting climate change. The ECB is acting in accordance with its price stability mandate; climate change poses a risk to price stability, since it has an impact on growth, price levels and the economy in general. There is a legitimate legal basis for our stance. Public opinion is in favour of taking environmental, social and good governance criteria into account.

Interview with Deutschlandfunk
Interview with Deutschlandfunk

Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Klemens Kindermann on 29 January 2021 and published on 31 January 2021

31 January 2021

Perhaps a question of general interest to start off with: how is the ECB operating during the coronavirus pandemic? Is everyone working from home?
The ECB put some comprehensive measures in place very early on. And this means that the vast majority of our people have been working from home for many months now. To be honest, I find it really remarkable how well it has worked because the ECB is a very complex institution that now is almost completely in teleworking mode.
Talking of coronavirus: the pandemic has caused the euro area economy to collapse – by 5% in Germany alone last year. The prospect of a vaccine has made many more optimistic about the year 2021. Now there are problems with vaccine distribution. There are coronavirus mutations. There are numerous lockdowns all over Europe. Is there a threat of another setback for the economy?
The pandemic has led to the biggest economic collapse since the Second World War. There was a dramatic decline in the wake of the first lockdown. And then there was an unexpectedly strong recovery over the course of the year. Unfortunately, this has now been interrupted by the second wave of the virus. It is becoming apparent that the euro area suffered negative growth in the fourth quarter of last year. In the light of the worsening health situation in many countries, a very weak first quarter is to be expected this year. The speed of the vaccination rollout will now be decisive because ultimately that will be the only way to contain the pandemic in the longer term. And then when the lockdown measures are lifted again, we could see another strong recovery similar to what we saw last year.
Where do you see the euro area economy at the end of the year then? Will we have seen significant growth over the course of the whole year?
There will, of course, be positive growth this year. We see growth for the euro area at close to 4% for the current year. Nonetheless we will not have reached pre-crisis GDP levels even by the end of this year.
The European Union came together to agree on a €750 billion plan to combat the coronavirus crisis. Is that enough money to alleviate the economic problems caused by the pandemic?
First, I would like to emphasise what a great achievement it is to have succeeded in finding a European response to this crisis. And now the first thing to do is to actually implement it and put this really quite large programme into practice. Above all, it needs to be ensured that these funds are used sensibly. It is paramount to succeed in returning the euro area economy to a path of higher sustainable growth after the crisis. To achieve this, it is essential that the money is used to invest to support structural change, namely in the direction of a more digital and greener economy.
When you say it depends on implementing this quickly – the money is only supposed to start flowing in the middle of this year at the earliest. Is that good enough? Don’t things have to move faster than that?
The countries themselves have already done quite a lot and they will continue to do that. These measures on the national level are also very important. But certainly one has to speed up a little bit so that these European tools become available soon and so they can be used.
You mention activities on the national level. Much depends on how the national governments in the euro area combat the economic consequences of the pandemic. Some national governments – like Germany – can provide more economic support than others. Is that a problem for the recovery of the euro area as a whole?
The crisis indeed affects different euro area countries in different ways. And this is primarily because certain sectors are being hit harder by the crisis than others. We are seeing a slump in the services sector, while areas like manufacturing have been less severely affected and are now profiting, for example, from the fact that China has recovered quickly. This has led to a certain divergence in the euro area. In addition, countries that were particularly severely affected – because they have very large tourism sectors, for instance – were also those that were already in a weaker initial situation and had less fiscal space. This is why it is so important that there is a European response to this crisis.
Many euro area states, especially those that you were just talking about, are significantly increasing their levels of indebtedness. Is that not dangerous?
In view of the difficulties of the pandemic, massive government measures are required. This has to be financed through increased debt. If it hadn’t been for these measures, these countries would have fallen into a much deeper crisis. Just think about the short-time work schemes that are so important in ensuring that people can keep their jobs. Without the measures, many viable firms would have gone under. If these measures had not been taken, the crisis would have been much deeper. And that could even have led to higher levels of debt in the medium term. It is crucial that the countries succeed in returning to a sustainable growth path in order to manage the increased debt levels. If the countries return to strong growth after the pandemic, then the higher levels of debt aren’t a problem.
So, to ask one more time, you don’t see a new sovereign debt crisis coming?
No, I don’t see that coming.
There is a discussion in Germany at the moment about suspending what is known as the debt brake [the constitutional limit to the ability of federal and state governments to take on new debt] for a number of years. How do things stand at the European level? Because the rule that limits deficits to 3% of economic output for EU Member States is currently suspended in the light of pandemic-related deficit spending. Would it not also make sense to consider suspending the rule over a number of years so as to afford the countries more space for the future?
It was certainly important for the European rules to be temporarily suspended. It is equally important to return to a framework of fiscal rules after the pandemic. But there is broad consensus about the need to reform these rules – above all, because the rules are not binding enough in good times and are too restrictive in bad times. This limits their effectiveness. And that is why I think it makes sense to consider modifying the regulatory framework.
Ms Schnabel, last year the ECB initiated a massive emergency bond purchase programme to counter the economic consequences of the pandemic, which was increased again in December. How can you explain these huge sums to our listeners? Why does it have to be a truly incredible 1.85 trillion euro?
Let me reiterate that we are in the middle of the worst economic crisis since the Second World War. And extraordinary situations call for extraordinary measures. 2020 saw dramatic upheavals on the financial markets, which were reminiscent of the upheavals at the time of the global financial crisis from 2007 to 2009. The markets collapsed. Liquidity dried up. And at the same time, many companies desperately needed liquidity as their revenues had crumbled. And that was the situation in which the ECB – fortunately, you might say – responded very quickly and adopted a wide-ranging package of measures that had two main components. One was to provide liquidity on a large scale to banks at very low terms. And then there was the new bond purchasing programme that you mentioned, characterised by a large degree of flexibility. With this package of measures, we succeeded in calming the financial markets relatively quickly. But I would like to emphasise that the real turning point in the crisis did not arrive until agreement emerged on the European rescue package. And this is where you can see very well how in this crisis, unlike in earlier crises, monetary and fiscal measures reinforced each other, by which I mean they multiplied each other’s impact. And that was very important.
Does this mean that the bond purchases under this emergency programme known as PEPP do not have be increased again?
That depends on how the pandemic evolves. The economic performance will largely be determined by how quickly we manage to reach what is known as herd immunity. And this is where vaccination will play a key role. In December, we already extended our programmes as it was becoming evident that the pandemic would also last a lot longer. We have extended them up until March and June of next year. We do of course hope that that will be enough.
Particularly highly indebted euro area states have to pay a premium on their sovereign bond yields, if they want to take on more debt. The question is this: Does the ECB targeted purchases of sovereign bonds from these countries in order to keep down these premia?
Our purchase programmes are set up in such a way that we make purchases in line with what is known as the ECB capital key. Roughly, the shares correspond to each country’s share of gross domestic product in the euro area as a whole. However, the new bond purchase programme has been set up with a special form of flexibility that would make it possible in a crisis to buy more bonds in those countries suffering particular dislocations. This is because we wanted to ensure that common monetary policy reaches the euro area as a whole. We had precisely a situation like this in March of last year, when a clear fragmentation occurred in the euro area. At that point, bonds of certain euro area countries were bought in larger amounts. The situation calmed down quickly and it was no longer necessary to buy more bonds from certain countries. This then also led to a decline in the deviations from the capital key.
Well, in its spectacular ECB judgement last year, the German Constitutional Court had ruled that the ECB needed to comply with precisely this capital key. Does that mean the parameters set by the Constitutional Court, to which the ECB is not actually fully obliged, are met as far as you’re concerned?
Absolutely. What the Constitutional Court specifically highlighted was that our measures need to be proportionate. And that has always been a major concern of ours. In other words, when we make decisions on measures, we need to consider whether these measures are effective, whether they are appropriate and whether other measures would possibly be more effective. And, of course, whether the measures cause side effects that are possibly greater than their positive effects. And this review is something we do continuously, and it plays an important role when we decide which measures are taken.
You’ve explained quite clearly that, with these bond purchases, you’re keeping the financing conditions favourable for enterprises and for states, thus supporting the economy. But is that your mandate in the first place? Isn’t your mandate actually to safeguard price stability in the euro area?
Yes, you are of course completely right. The goal is to safeguard price stability. But this is done by stimulating the economy. This requires the financing conditions in the euro area to be favourable for households and for enterprises.
Not only are you buying bonds, you’re also keeping interest rates low. The benchmark rate has been at a record low of 0.0% since March 2016. How long will we need to wait until interest rates start rising in the euro area?
First of all, I would like to point out that the low interest rate environment is not attributable solely to the ECB’s monetary policy. This is being driven by long-term macroeconomic trends. Due to the global demographic situation, more is being saved. And at the same time, less is being invested because productivity growth has declined. That is a global phenomenon over which central banks have little influence. This excess saving has led to interest rates falling. This is not first and foremost the result of central bank policy; instead, it has to do with the underlying macroeconomic factors. Monetary policy has to deal with these circumstances. In order to stimulate the economy, interest rates need to be set even lower. I can of course not predict when interest rates might be raised. What I can tell you, though, is that raising interest rates in the current situation would have disastrous effects. Seen in that light, that is not something anyone should wish for.
Excess savings is, however, the right keyword. What would you say to savers who have seen no interest accumulating in their accounts but who actually want to put something aside for their old age?
For savers, the current interest rate environment is difficult. But people are, of course, not just savers. They are also borrowers. Borrowers benefit from low interest rates. And, in addition, low interest rates stimulate the economy, as I described earlier. Among other things, this means that this low interest rate policy has had a positive impact on the labour market. Many people have kept their jobs or found a new job because, thanks to the expansionary monetary policy, the economy has performed better. Seen in that light, it’s not helpful to view interest rates in isolation. Most euro area citizens have benefited from our policy.
We’re currently observing a sharp rise in yields on long-dated US government bonds. This is usually the precursor of higher inflation expectations. Should the ECB already be starting to change direction, getting ready for higher inflation?
What we’re seeing is an interesting short-term movement. The first estimates of the January inflation rate in Germany have just been published. And they were surprisingly high.
True, but this is down to the VAT cut and the price of CO2, isn’t it?
Indeed. In the first instance, it is these one-off effects that are responsible. Moreover, it’s not easy to measure inflation right now because our basket of goods has changed significantly. We have almost stopped consuming certain things altogether – we’re no longer eating out, going to the hairdresser’s or travelling. All of this is reflected in the basket of goods considered for inflation measurement. The weights of individual goods in the basket have shifted significantly. As a result, it is very difficult to compare the figures over time. Besides, this year we are also going to see base effects in the price of energy. Last year, energy prices plummeted. This means that one year later, we will see that inflation will be particularly high. We are expecting the inflation rate to pick up in the course of this year. We must be careful, however, not to mistake these short-term developments for a sustained increase in inflation. We are faced with very weak demand. And it does not look like this is going to fundamentally change. This is why we continue to be more worried about inflation being too low rather than too high.
The ECB intends not only to scrutinise its monetary policy but also to communicate better. This interview is certainly part of that approach. What else, Ms Schnabel?
We are facing a very challenging economic situation and we need to see how we can bring inflation closer to levels that are consistent with our inflation target. We are currently conducting a thorough review of our strategy. The review will look at several topics, including communication, as you mentioned. It is a topic that is particularly close to my heart. Climate change is another topic that we’re looking at.
Indeed, this week the ECB set up, or announced the setting up of, a climate change centre. Why does a central bank look after environmental protection? Aren’t others better equipped to do that?
The main responsibility for climate action lies with the governments. Central banks can contribute to a more limited extent. But no one can ignore the fact that climate change is the greatest challenge to society, much greater even than the pandemic. The ECB cannot ignore it. This is why we ask ourselves which role we can play, within our mandate, in combating climate change.
Does this mean buying green bonds?
It means many different things. We must ask ourselves how we take climate change into account in our economic models. Traditionally, climate change does not feature, and this is something we certainly have to change. We must ask ourselves what impact climate change has on risk assessment. This is important for banking supervision, but also for monetary policy. Then we must ask ourselves what climate change means for our monetary policy operations. And as an institution, we need to think about how we can get greener, how much business travel is necessary, how we invest our pension funds.
I have to ask again – should the ECB also buy green bonds?
This is a topic that’s being discussed as part of our strategy review. But, in fact, the ECB is buying green bonds in not insignificant amounts already. The question, therefore, really is whether the ECB should buy more green bonds than its share in the current market. And this is a question that’s provoking a lot of controversy, but it will be a significant part of our strategy review.
What will happen when the ECB reduces its bond purchases because, for example, of a threat of higher inflation? We already spoke about this. Will the extent of climate action depend on inflation then?
It must be equally possible to increase and to decrease bond purchases. And when we do, we must not be guided by any considerations other than that of our primary mandate, which is price stability.
To finish off with, let’s talk about the digital euro, which is something that you’re also planning to embark on, or at least are considering. What would it look like? Do you want to compete with Bitcoin?
Digitalisation affects all aspects of our lives, a trend that the pandemic strengthened further. This is also clear when you look at how people pay for things. Digital payments now play a bigger role. A digital euro would give citizens access to secure central bank money. You can think about it as banknotes in digital form. It is not about replacing cash, which is still very popular in the euro area. A digital euro would just be an alternative form of money. We are seeing a lot of different developments in this field. Private digital currencies are being developed, other currency areas are considering creating digital money. The ECB needs to be prepared and able to potentially issue its own digital currency to secure monetary sovereignty. But let me stress that no decision has been made yet. A lot of preliminary work needs to be done first. Nevertheless, it is of course a topic that the ECB needs to tackle in this digital age.
When you say “other currency areas” I’m guessing you mean China. Work on this has been going on there for more than five years now. The digital yuan is being trialled already, people are being randomly selected to test it. Can you even catch up with China?
Some countries were quicker than others to launch such projects. But it’s not like that boat has sailed. What’s important is to properly prepare for a digital euro so that if we do introduce it, it is a well thought-out and robust system. I don’t think it would make sense to rush into this and launch a half-finished concept. Money is simply too important.
Facebook now wants to launch its own currency, called Diem. It was referred to as Libra before. Would it compete with the euro?
First we need to ask whether these so-called private currencies can be considered as real currencies, or whether they’re simply investment products. A currency needs to have very specific features. Trust is a very important one. I doubt that a private provider can ever manage to inspire trust like the ECB does.
We’re almost finished, but I’d still like to ask you one last question, if I may, Ms Schnabel.
Of course.
How do you invest your own money?
You can look it up on our website – not the amounts, but the names of assets. Of course, we have certain restrictions. For example, we are not allowed to invest in financial institutions because we supervise them. But I always try to invest in future-oriented areas, like digital, green and of course ETFs.

‘The Bhagavat Gita’ book review: Twin view of a sacred scripture
‘The Bhagavat Gita’ book review: Twin view of a sacred scripture

Express News Service
Let us begin with The Bhagavad Gita translation first. It is a verse-by-verse translation, with the Sanskrit shlokas on one page and the English translation on the facing page. There is no interpretation, no commentary; just a literal translation. With over 2,700 translations of the Gita between 1785 and 1979 in 50 identified languages, why do we need another translation? For several reasons. There is an inevitable loss when translating from Sanskrit to English—a loss of context, exact meanings, and of course, the beauty of the Sanskrit poetry which cannot be reproduced in English, no matter how hard one tries. Some words cannot be translated to English with complete fidelity. For example, ‘duty’ is at best a partial translation of the Sanskrit word ‘dharma’. Given these limitations, it becomes all the more important to not compound this loss by translating words without understanding their context.

Debroy tells us that some less than adequate understanding of Sanskrit leads to ‘Gudakesha’ (another of Arjuna’s names which means one who has conquered sleep, derived from ‘gudaka’—sleep, and ‘isha’—lord) being translated as someone ‘whose hair is in a bun’, which is etymologically possible, but contextually implausible. Then there are problems that arise from an incomplete reading of the Mahabharata itself.

Consider also what is lost in translations that substitute words for convenience or otherwise. For instance, in 1.36, Arjuna laments to Krishna, ‘O Janardana! What pleasure will we derive from killing the sons of Dhritarashtra? Although they are criminals, sin alone will be our lot if we kill them.’ To understand why the Kauravas are criminals, you have to read the footnote that tells us that according to the shastras, ‘there are six types of criminals—arsonists, poisoners, those who bear arms to kill you, those who steal wealth, those who steal and those who steal other people’s wives.’ If you substitute the word criminal with evil, you lose something in the translation.

This translation seeks to avoid all such pitfalls. If you want to appreciate Sanskrit, the shlokas are reproduced in Devanagri. In cases where the Sanskrit sentence flows to the next one, rather than combining the translations across all these shlokas, the translation sticks to a verse-by-verse cadence. That makes the job of a reader trying to match the shloka to the English translation easier. Given all this, this book should become a go-to reference for people wanting a faithful, accurate, and copiously footnoted English translation of the Bhagavad Gita. More than 800 footnotes, spread across 60 pages, provide additional notes and context without interrupting the flow of the translation.

The first book is a faithful, verse-by-verse translation. But a more fundamental question may arise in the mind of the reader: how should I read the Gita? Why should I read it? For that, we should turn to the second book—The Bhagavad Gita for Millennials. It seeks to, and succeeds in, introducing the reader to the world of the Gita in its various dimensions. The book also answers several questions as a typical reader may have about the Mahabharata and the Gita. Like, who composed the Mahabharata, why was Krishna Dvaipayana called Vedvyasa, what is the BORI (Bhandarkar Oriental Research Institute) Critical Edition, was the Gita written by one or multiple authors, is the Gita a later interpolation into the Mahabharata, and so on.

Which leads to another natural question—the historicity of the Mahabharata. Or the historicity of the most famous character in the epic—Krishna. Archaeologist BB Lal answered the question on the historicity of the Mahabharata more than half a century ago when he led the excavation and found evidence of several Painted Grey Ware sites dating back to the second millennium BCE. We can rely on the evidence presented by the Chandogya Upanishad that references Krishna, the son of Devaki, the account of the Greek traveler Megasthenes, the Sanskrit grammarian Panini’s 5th or 6th century BCE work, Ashtadhyayi, and so on. The circumstantial evidence points to Krishna as a historical person. It is important to point out that it is the historicity of Krishna that is covered, not his divinity—an important distinction that should not be conflated.

But what makes this book unique is probably the second chapter. The author takes the reader on a whirlwind tour of why there is no substitute to reading the Gita in its original Sanskrit. Because translations cannot be completely recreated, they are often trans-creations, and no translation can capture the beauty of the Sanskrit poetry in the Gita. Having said that, we are told how to break up a Sanskrit shloka to rearrange it in a linear fashion. Several verses are thus subjected to the process of dissection, revealing the order in which the words are to be read, opening a pathway to understanding even seemingly difficult shlokas.

Having introduced the reader to the mechanisms of reading, rearranging, and understanding the shlokas in the Gita, the book then elucidates several shlokas and their concepts by taking the reader on a journey in the form of stories from the texts. Most are from the Mahabharata, for obvious reasons, but several from other texts also such as Upanishads and the Puranas.

What then is the suggested order of reading these books? For me, the answer is obvious—read the Millennials book first, keeping the translation as a handy reference. Start on it, but do not treat it as a weekend read. The translation is for a slower, more careful, more contemplative reading.

Interview with Helsingin Sanomat
Interview with Helsingin Sanomat

INTERVIEW

Interview with Luis de Guindos, Vice-President of the ECB, conducted by Petri Sajari on 24 November 2020

28 November 2020

What are the key risks for the euro area recovery at the moment?

The fourth quarter of 2020 will be marked by the measures taken by euro area governments to deal with the new wave of coronavirus (COVID-19) infections that started after the summer. While these containment measures are generally not on the same scale as those taken in March or April, they will have an impact on the economy. We had a welcome surprise in the third quarter, but our quarter-on-quarter growth projection for the fourth, which was slightly above 3%, will not be met. Looking at leading indicators such as the purchasing managers’ index, negative quarter-on-quarter growth is now the most realistic scenario for the end of the year.

The main issue in the near future will be the availability of the vaccine and the precise details of how and when it is to be rolled out. The news is having a positive impact on market sentiment, but the implementation of the vaccine warrants our attention. Hopefully, a very high percentage of the population will soon be vaccinated and the nightmare of this pandemic will begin to draw to a close.

According to the International Monetary Fund, the pandemic will have the largest impact on the eurozone economy. What do you think the long-term damage of this crisis will be?

There are indeed factors that cause concern. The first long-term consequence of the pandemic is that public debt-to-GDP ratios will increase by between 15 and 20 percentage points. Similarly, leverage in the private, mainly corporate, sector will also increase. And there is a risk, which we need to avoid, of long-term scars in the labour market. Currently we see a decoupling between the drop in economic activity and the evolution of the labour market, i.e. unemployment levels have not risen by as much as you would expect with such a deep decline in activity. This is because the temporary work schemes implemented by governments across Europe are avoiding a sharp increase in unemployment.

We believe the economy will start to recover in 2021 and continue its revival in 2022. It will be essential that those who are currently on furlough schemes continue to belong to the labour force, and that those who have lost their jobs can rejoin the labour market. We can then not only recover the level of economic activity we had before the pandemic, but also the level of employment.

If the crisis gets worse, which now seems inevitable, what more will the ECB be able to do?

As I’ve mentioned, the fourth quarter will be worse than forecast, but the medium-term outlook – mainly because of the ray of hope brought by news of the vaccine – looks brighter. However, when we assess our instruments we do not only look at economic output. We also look at the evolution of inflation, which is our primary mandate. Inflation will be negative until the end of the year and we expect that it will turn positive next year because some drivers of this negative inflation will be reverted, for instance the reductions in value added tax or the sharp decline in oil prices caused by the lack of economic activity. All in all, we expect inflation to be close to 1% in 2021 and to see it moving up towards 1.2% or 1.3% in 2022.

As President Lagarde indicated after the last Governing Council meeting, we will recalibrate our instruments in December and this recalibration mainly involves our targeted longer-term refinancing operations (TLTRO), which is an instrument to inject liquidity into the banking sector, and the pandemic emergency purchase programme (PEPP), which right now comprises an envelope of €1.35 trillion to be implemented until mid-2021.These are the two main tools if the situation gets darker, although the arrival of the vaccines brings hope regarding the medium-term outlook.

Is there a risk that low interest rates, combined with the asset purchase program and the PEPP, are creating zombie companies that would not have survived under normal financial conditions and are therefore an obstacle to creative destruction?

The interest rate environment is not only a consequence of monetary policy decisions. It is also the consequence of a combination of other factors, such as globalisation, digitalisation and demographics. These have made the natural interest rate, which is a real variable rather than a monetary variable, decline over time. This, combined with very low inflation expectations, has created a situation where nominal interest rates, which are the ones we observe in the markets, are very low. But this is not only a result of monetary policy – it also reflects a decline in the natural interest rate.

Furthermore, low rates have been very useful in sustaining economic activity. Without them, the process would most likely not just have been one of creative destruction but one of simple destruction of companies and a decline in GDP.

Some might also say that the high debt levels in the economy will lead to zombie banks and zombie companies that constrain growth because of extraordinary debt burdens. What is your assessment of this?

As I mentioned earlier, there will be a legacy of debt after this crisis, in both the public and the private sector, and we will have to take this into consideration. But there is no alternative in the short term. The first line of defence against the consequences of the pandemic has been, and had to be, fiscal policy. The alternative – doing nothing – would have had much worse consequences in the short term and also in the medium and long term.

Regarding private debt, when you experience a decline in revenues as substantial as that experienced by many European companies, you need to try to bridge the gap and survive until the pandemic is over. And to do that you need to take on debt. There’s no alternative. Once the pandemic is over, issues such as fiscal sustainability and private lending will come to the fore, but in the short term there is no alternative.

Let’s move to the banking system. What are the main vulnerabilities in the eurozone banking system?

European banks have more capital and are more liquid and resilient than before the global financial crisis. But their weak point is very low profitability, which is reflected in very low valuations. This is not trivial, as it has an impact on their capacity to raise capital in the markets or generate it organically. It also makes it challenging to achieve an adequate level of provisioning that is in line with developments in the economy. Profitability was already the key weak point before the pandemic, and the crisis has aggravated it. Banks will also suffer a decline in revenues and the level of non-performing loans (NPLs) will go up. We expect the bulk of the NPL wave to come in the first half of next year.

Do you believe there will be consolidation via mergers and acquisitions in the eurozone banking sector?

We have started to see some consolidation, for instance in Italy and Spain. So far it’s domestic consolidation. It would be good if we also saw some cross-border consolidation. Consolidation is not a target in itself, but it could be a way to reduce excess capacity and costs.

The ECB started its asset purchase programme in early 2015 and abandoned it in late 2018. In autumn 2019, it was started again, but inflation remains very low. What are the key factors behind this extraordinarily low inflation?

Both headline and core inflation have been low over the last ten years and, as I mentioned, there are some structural factors, such as digitalisation, globalisation and demographics, that help explain why. In 2015 and 2016, there was a clear risk of deflation and the ECB acted to avoid it and to anchor inflation expectations. It remains to be seen what will happen with some of these factors. For instance, globalisation will likely not be as intense as it has been in recent decades, as the pandemic could make value chains more regional, which might have an impact on inflation. However, according to our projections inflation will remain low, and we will therefore keep monetary policy accommodative so that inflation can converge to our medium term aim.

In July 2020 the European Union introduced a recovery plan worth €750 billion. What is your take on that? Is there a risk that States may use it in a manner that does not promote structural changes?

The Next Generation EU fund is a very positive response, not only because of its size but also because it sends a very clear signal of the common willingness to defend Europe and the euro area. And regarding the funds, indeed, it’s not about spending but about spending properly, through programmes that can transform the European economy and accompany the structural reforms needed to improve productivity and enhance competitiveness. The European Commission will monitor this spending. If this money is not spent properly, we will be missing a great opportunity to make the European economy greener, more digital and more competitive.

Since introducing the PEPP in March, the ECB has definitely been able to calm the markets, but many people might still wonder how the programme has supported the real economy and households. What is your answer?

Calming the situation in the sovereign debt markets also brought reassurance to other markets, which has had a positive impact on the financing conditions that banks offer to their clients, households and companies. By avoiding fragmentation in the sovereign debt markets, we also avoided a credit crunch. Furthermore, PEPP also includes corporate sector purchases such as bonds or commercial paper.

Do you believe the attitude towards public debt has changed for good? Or is this change temporary, based on the fact that extraordinary times require extraordinary actions to support the economy?

Fiscal policy has to be the first line of defence, and fiscal deficits will be the consequence of the measures that governments have taken and will continue to take to address the impact of the pandemic. Public expenditure has to focus on the pandemic, for instance on furlough or public guarantee schemes, healthcare, etc. As a result, we will see larger public debt ratios. But in the medium term, once the pandemic is over, the situation will need to be addressed to ensure the sustainability of public finances.

So, basically, your answer is that you don’t believe that there has been a major shift in attitude towards public debt?

The big change is that the pandemic has caused a public health crisis which demanded a fiscal response. There was no alternative and, in the medium term, we will see higher public debt ratios. We will have to deal with that once the pandemic is over.

The response to this crisis has been quite different from what it was ten years ago, when the eurozone crisis began, because then the constant narrative was that we cannot allow public debt to increase.

This time is different. This crisis hasn’t been triggered by banks or financial stability troubles, as was the case in 2008. This is an exogenous shock of a magnitude we have not seen since the end of the Second World War. The policy response was the only one available: fiscal measures as the first line of defence, accompanied by monetary policy. Not acting rapidly on the fiscal side would have provoked an even deeper decline in GDP, and fiscal policy would also have had to react to that.

Interview with Le Monde
Interview with Le Monde

INTERVIEW

Interview with Yves Mersch, Member of the Executive Board of the ECB, conducted by Marie Charrel and Eric Albert

28 November 2020

How do you feel about the euro today compared with your hopes and expectations at the time of negotiating the Maastricht Treaty?

At the time, it was a leap into the unknown. The international financial markets were sceptical. And we didn’t know whether citizens would embrace the new currency. Today, I am very satisfied with the outcome. First of all, the euro has won the wholehearted approval of more than 75% of Europe’s citizens. And even the most eurosceptic of political parties have changed their opinion on this given that Europe’s citizens do not want to “undo” what has already been accomplished.

What’s more, it’s a currency valued by the corporate sector and sought after by the financial markets. Only a few years ago, there were still concerns that the euro area might fall apart. The political response to the crisis and the steps taken by the European Central Bank quelled those concerns. Today, the differences in interest rates across countries, across firms in those countries, have been reduced. And there is heightened demand on the part of international investors for euro-denominated assets, even though we do not have the same financial market depth as other countries, such as the United States.

There is still scepticism surrounding the euro. Are you at all concerned by the mistrust of Monetary Union voiced in Italy at the start of the pandemic, or in Greece during the 2012-15 crisis?

It is always easier to blame Europe for what’s not working and attribute success to national policies, and that can fan the flames of this mistrust. In spite of all that, public support for the euro is strong. In some Member States, it is even close to 90%. We shouldn’t forget about the permanent transfers that flow within the EU from its more developed to its less developed members. If the latter were not in the euro area, their debt would undoubtedly not be financed at such low interest rates. Leaving the euro area would increase their debt servicing costs through interest rate levels and devaluations, which would mean less money for investment, research and education. And by the way, we can also ponder whether or not the younger Member States would remain intact if they left the single currency and the EU.

The euro nevertheless went through a major crisis between 2010 and 2015, which led to huge social upheaval…

The initial agreement was that we would have a single currency, but that fiscal, economic and structural policies would be kept at national level. We were aware that it was a source of tension, which still exists today. But we learned lessons from the last financial crisis. The response to the pandemic has led to much closer coordination, as it happens, between monetary policy and national fiscal policies. And the Stability and Growth Pact (which caps the budget deficit at 3% of GDP) has even been temporarily put on hold.

The EU has also reached an agreement on a €750 billion recovery package. Talks to finalise the package are ongoing. Is this a “Hamiltonian moment” for the EU in terms of taking a step closer towards federalism?

It is a very important step. Europe has shown that it is still capable of employing its political capital to respond with solidarity. This has had a considerable impact on non-European investor confidence. But the European recovery package is temporary in nature, for use only in response to the pandemic. To say that it marks the beginning of the “United States of Europe” is going a bit far. The situation is very different from when Alexander Hamilton advocated for US federalism in the 18th century in the wake of the civil war. At that time, there was a very clear financial benefit to consolidating the debt of the southern states funded by their northern counterparts.

From an economic perspective, has Europe fallen behind the United States since the 2008 crisis?

We can make up the ground that we have lost. The gap has come about due to structural factors. There are strong trends such as demographic change (moving at a faster pace in the United States) behind the difference in per capita GDP. There is also the proportion of funding to the economy provided by banks in Europe. When a banking crisis occurs in an already weakened sector, it has a knock-on effect on the entire economy, and the recovery takes even longer. We have learned from this, which is why we set up the banking union and insisted on the need for a capital markets union. Moreover, European fiscal policies have been excessively procyclical. As a result, countries that built up their reserves are currently in a much better financial position to deal with the pandemic crisis, whereas those with the highest levels of debt know that there are limits to the action they can take.

There is also the issue of private debt. At the beginning, it was higher in the United States, but it has been brought down much faster there than in Europe. Last of all, Europe needs to implement structural reform at national level. Recommendations have been made, but they haven’t resulted in action being taken. The same goes for the Stability and Growth Pact: the rules are not being complied with. To me, there is a significant lack of governance which needs to be fixed. To be master of its own destiny and compete with the United States, Europe needs to solve its structural weaknesses.

Since the euro area was created, it has remained an unfinished project, edging slowly towards completion, and only during times of crisis. Do you know why?

The differences across the economic, financial and political cycles, which are never aligned in the various Member States, are holding back progress. This poses a challenge to the task of building Europe, which, as Jean Monnet pointed out, only picks up speed in times of crisis. But once you’ve been working this way for 30 years, it becomes second nature! It is difficult to avoid these delays and complexities when you embark upon a project as colossal as building the European Union in peacetime. Similar projects in other countries have often been the result of civil wars.

In the long run, will the EU Treaties need to be amended?

We can already implement significant reforms without changing any Treaty, such as creating the capital markets union a must for us or completing banking union. Reform in other areas will be more challenging. Transferring some powers that have remained at the national level up until now, such as budgetary authority, or taxation – still subject to the unanimity rule – will thus be very difficult to do without transferring a degree of national democratic representation – sovereignty – to the European level. The issuance of common European debt is a sign of significant progress, but common budgetary capacity or a European budget worthy of the name are still a long way off. Currently, the European Parliament is above all else responsible for expenditure, but very little revenue: the system is therefore flawed. During the discussions held prior to the Maastricht Treaty, we were convinced that the single currency would act as a catalyst for European integration. We were hopeful that the markets would push in that direction. But in this respect, they have at the very least…been slow to respond.

Many people today are calling for a review of the Stability and Growth Pact at the very least – the target of 3% of GDP for the budget deficit and of 60% of GDP for debt – a target with which Member States are no longer able to comply. Should the Maastricht rules be reviewed? If so, in what way?

The less we have complied with these rules, the more complex and confusing they have become for the general public, which is not very democratic. However, it is true that they are a reflection of the situation in the 1990s when inflation and growth hovered around 2%. We can simplify and revise them to take into account the effects of globalisation, demographic change, and the fall in the equilibrium interest rate. But it is also worth noting that there is currently a debate in Germany to bring the budget deficit to below the 3% mark in 2022 or 2023. At the end of the day, compliance with the rules has nothing to do with the economy. It is more a matter of political science and law. Abolishing the Maastricht rules will not improve the functioning of our economies. For that to happen, we need to improve our capacity for growth, and therefore implement structural reforms.

By aiming to comply with these fiscal rules at all costs, isn’t there a risk that we may make the same mistake we made in 2010 by reintroducing austerity policies too early?

Making public spending more efficient is not the same as austerity. The temporary budgetary support measures are not sustainable if there is no recovery in activity levels. From the outset, the Stability and Growth Pact required a balanced budget. Is that a bad thing? We need to find a common response to this issue. If it is the norm to have a budget deficit of, let’s say, 5% of GDP, this means that national as well as international investors need to be found to finance it. International investors like policies that are predictable, robust and sustainable over the long term. We have the benefit of a stable currency that has the backing of our citizens. This should not be undermined by an unsustainable fiscal policy.

Over the next few years, what changes would you like to see within the EU?

Structurally, we need to continue with our efforts in education and research which are crucial for our future. But we also need to provide a more tangible response to the issues that are of major concern to our fellow citizens. How will Europe deal with matters of internal and external security? How will it deal with healthcare? Are we convinced that the response to the pandemic should be purely domestic, as should the response to terrorism? The problem is that as the Treaties currently stand, we cannot respond at the European level.

You have attended more than 500 Governing Council meetings. Do you have any regrets or are there any particular success stories that come to mind?

Before joining the ECB, I also attended several hundred ECOFIN meetings and around a hundred EU Council meetings. Europe is part of who I am, so please forgive me. The success stories are always collective, never individual. At the ECB, a young institution, we have always favoured a more federal-style and consensus-based decision-making process. It works very well. And it also makes it possible to overcome the all-too-often intergovernmental approach to European decision-making.

Interview with Börsen-Zeitung
Interview with Börsen-Zeitung

INTERVIEW

Interview with Yves Mersch, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, conducted by Kai Johannsen and published on 21 November 2020

21 November 2020

Mr Mersch, is it part of the European Central Bank’s mandate to engage with the capital market segment of green and sustainable finance?

The EU Treaties require the ECB to give primacy to the objective of price stability. If ECB’s engagement with the green and sustainable financial sector were necessary for maintaining price stability in the euro area, it would fall within the remit of our primary objective. I don’t think that applies at present.

In addition, the ECB has what are known as secondary objectives. Without prejudice to our primary objective of price stability, we support the general economic policies in the EU “with a view to contributing to the achievement of the objectives of the Union”. One of these objectives is to work towards “a high level of protection and improvement of the quality of the environment”. This justifies why the ECB is also looking into sustainability.

However, contrary to what some may argue, that does not mean that the ECB is free to take the initiative and decide itself how “a high level of protection and improvement of the quality of the environment” is to be achieved. For good reason, that remains the privilege of elected politicians.

What are the risks facing green and sustainable finance over the coming years?

I would see it as a risk if green finance degenerated into a pure marketing tool. If investors want to make the world a greener place, they need to know how their investments contribute to more sustainability. To put it in technical terms, I see the risk of informational market failures if information on the sustainability of businesses and financial products is inconsistent, largely not comparable and at times unreliable or even completely unavailable. Definitions of what constitutes a sustainable investment are often subjective and inconsistent. The EU taxonomy is a promising initiative, albeit incomplete. Its practical usability remains a challenge. Plans are also under way for widely applicable industry standards.

What else is needed?

Better and more standardised non-financial reporting will also be crucial. This is essential for correctly pricing the risks. Sound reporting is the cornerstone of appropriate risk management.

Finally, financial institutions, including banks, need to ensure they can identify at an early stage, and deal with, the risks emerging from the effects of climate change and a rapid transition to a carbon-neutral economy.

Only once these prerequisites are met can sustainable finance prosper and have a tangible impact on the real economy. Otherwise there remains a risk of “greenwashing” and of an unsustainable “green bubble” detached from fundamental data.

The EU taxonomy for green and sustainable finance is a complex system of classification intended to give investors and providers of financial products certainty as to what can be classified as green and sustainable. Is this a masterstroke by the EU that will advance this market segment and possibly also serve as an example for other countries and regions?

The EU Taxonomy Regulation is important. A sound classification system provides investors with valuable information for their investment decisions. The taxonomy was designed with green bonds in mind. Its application to other financial products may not be as straightforward and the overall design might need to be adjusted.

Moreover, the system is indeed very complex.

What does that mean for risk assessment in practice?

I see a certain gap between its envisaged objective and its practical usability.

However useful the taxonomy may be for green investment decisions, it will not help in the risk assessment of economic activities exposed to climate risk. Finally and more fundamentally, the taxonomy is only one piece of the puzzle: granular data at the corporate level are required in order for it to be usable.

If we address these shortcomings, the EU can set an example for the parallel processes now under way in other countries. We have one of the most advanced frameworks for sustainable finance. The EU taxonomy can be an important element in promoting the EU regulatory approach abroad, and in strengthening the EU’s role as a global hub for sustainable finance.

When do you expect financial markets and market participants to be fully green and sustainable?

I don’t think that the entire financial sector will one day be green. There are many industries that are neither clean nor dirty and they also raise funding on the market. Moreover, I don’t think we can stop climate change by choking off entire sectors of the economy. We should rather create the right incentives through, say, fiscal policy measures, including carbon pricing and other regulatory tools.

Finally, the financial sector can indeed help, but it can’t save the planet on its own.

We are now transitioning towards green and sustainable capital markets: what specific transition risks do you see in this phase?

The transition towards a greener and more sustainable capital market may lead to a repricing of assets. If this adjustment happens abruptly, i.e. if the redirection of capital proceeds in an unexpected or disorderly way, we talk about transition risks.

However, compared with the potential economic losses arising from climate risks, the transitory losses that may occur are paltry. But individual banks could certainly be hit hard: the bulk of exposures to the most energy-intensive borrowers are held by just a few banks. In other words, a few banks have very high exposures.

Are the banks already providing sufficient disclosure on specific risks that are neither green nor sustainable, i.e. largely brown assets, and do you already incorporate these in the ECB’s banking supervision? How far do the banks go in their disclosure and do they go far enough for the ECB?

I see a need for further action in that regard. It’s true that the disclosure of climate-related risks has improved, but mostly the information is just not detailed enough, and only seldom supported by quantitative data.

We will soon be publishing a “Guide on climate-related and environmental risks”. The Guide sets out how, in our view, institutions should take climate and environmental risks into consideration in their business strategies, governance and risk management frameworks and how these are to be disclosed. We looked at the disclosure for last year from a sample of the institutions that we supervise – more than half of them did not even meet the minimum requirements set out in the Guide. In relation to this we will soon be publishing a report on the disclosure of environmental risks of the banks under our supervision.

Does that provide any first lessons for the ECB?

Yes. That is why we will devote our 2022 stress test to the topic of climate change. This stress test should not only be analytical and top-down, but, in the hope of a better data situation, a better taxonomy and better standards, also enable a meaningful bottom-up approach.

Are you concerned that a major case of greenwashing could arise, which could trigger a chain reaction and result in a sharp downturn in the financial markets? Are the markets sufficiently forearmed against this, or in other words, are they stable enough?

There is no doubt that greenwashing is an issue, even if an improvement is in sight. The European Commission will soon present a legislative proposal for an EU green bond standard. However, a green bond does not necessarily tell us how green a company is as a whole. The classification relates instead to individual assets that these bonds are intended to finance. These assets are only part of the company’s balance sheet, which could indeed also include conventional assets with a bigger carbon footprint. Thus, on their own, green bonds are not sufficient for a greener real economy.

What would in your view be helpful?

A welcome Commission initiative concerns the introduction of an EU ecolabel for financial products and in particular for investment funds. This should allow retail investors who are concerned about the environmental impact of their investments to rely on a trustworthy and verified label and hence make informed investment decisions. At the same time incentives could be created for financial markets to develop more products with a reduced or positive environmental impact.

It remains a problem that markets may not yet be able to correctly assess the fundamentals of green financial products. This is for instance the case with green bonds, where there are large differences in the extent to which the bond proceeds are truly invested in green and sustainable projects.

How important are sustainability ratings? Do you already deploy these ratings in your supervision? Are the ratings robust enough for an appropriate estimation of risks and opportunities?

The current environmental, social and governance (ESG) ratings of banks do not reflect their lending to companies with high carbon emissions. Similarly, they are also not an appropriate measure of credit risk. These ratings are more concerned with social responsibility.

Carbon emission figures could provide a better proxy for the physical and transition risks to which companies are exposed.

An issue that comes up repeatedly is that each agency uses different metrics for their sustainability ratings: the same data are assessed or weighed in different ways. Should providers therefore report several sustainability ratings or just one?

The fact that ratings vary so much across providers is largely due to three factors: first, the underlying raw data and calculation methodologies; second, the methodologies used to compute the ratings; and, third, the qualitative elements underlying each assessment. Therefore, providers should present metrics and ratings in a transparent way so that investors can understand them.

What is even more important is that data gaps in the underlying data are closed. This brings us back to disclosure, for which the taxonomy framework and reliable labels for sustainable financial products – including an EU standard for green bonds – are crucial.

Does the ECB deploy green and sustainable investments in its fund management – of pension funds, say? If so, what are the investment criteria, what kinds of investment are excluded?

The pension funds are managed autonomously. The management has undertaken to adhere to the United Nations Principles for Responsible Investment and thus to include sustainability standards.

In addition, we have increased the share of green bonds in our own funds portfolio and will continue to do so in future. We follow the Sustainable and Responsible Investment Guide for Central Banks’ Portfolio Management from the Network for Greening the Financial System, of which we are a member.

Haunted house books for hunkering down in lockdown
Haunted house books for hunkering down in lockdown
E

ngland is in a second lockdown and with days getting shorter and colder we are spending more time than ever inside. A recent survey of how reading habits changed during the first lockdown found that people were reading more – and that trend is sure to continue this time round.

While you hunker down in the seeming safety of your home, how about picking up a book about houses that aren’t quite as safe? We’re talking about places where the floorboards creak, the staff are creepy and there’s something not quite right about the children.

The haunted house has been making a comeback on the screen, as we’ve seen with the recent successes of the BBC comedy series Ghosts and Netflix’s adaptations of The Haunting of Bly Manor and Rebecca. It seems our fascination with unsettling places continues to grow.

Many of these stories started in books so here are five classic examples to keep you company this lockdown:

House of Leaves (2000) by Mark Danielewski

Presented as a found document, this is a unique book featuring copious footnotes on some pages while others contain hardly anything at all. This story follows a family as they move into a new house on Ash Tree Lane. As they enter the property they discover that it is somehow bigger on the inside than it is on the outside.

The children, as they tend to in these stories, begin talking of a creature and soon they all hear a growl coming from deep within the house.

‘Burnt Offerings’… Stephen King is a fan

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Burnt Offerings (1973) by Robert Marasco

Desperate to get away from their apartment in Queens, the cash-strapped Rolfe family rents a summer home in upstate New York.

The place is a secluded haven, with a pool and private beach. This seemingly perfect summer home, however, comes with a curious stipulation in the rental agreement, which insists that the elderly mother of the homeowners stays with them.

Bizarre, catastrophic events ensue. Burnt Offerings is known to have been model for Stephen King’s 1977 bestselling novel The Shining as both narratives deal with abrupt personality changes.

The Haunting of Hill House (1959) by Shirley Jackson

If you’ve watched the Netflix series you should read the book that inspired it – they’re pretty different. The short novel is considered one of the finest examples of horror writing and Jackson a master of the haunted tale.

The story follows Dr Montague who wants to prove the existence of the supernatural. Renting Hill House one summer, he invites various people who have reported paranormal experiences. The house has been the site of many violent deaths and suicides so there’s hope one of those unhappy souls will make themselves known.

Unsurprisingly, when you go looking for ghosts in a novel, you will find them. There are bumps in the night, cryptic writings on the wall and a whole load of unexplained coincidence, what more could you want?

Rebecca (1938) by Daphne du Maurier

The unnamed young woman who narrates the novel falls in love with an older, wealthy man, Maxim de Winter, and moves into his isolated estate in south-west England, Manderley.

Daphne du Maurier’s classic is spookier than the recent Netflix adaptation

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The house is practically a shrine to the memory of his first wife, Rebecca, who died the year before in mysterious circumstances.

Malevolent forces are at work in this house as the young bride’s attempts to start a new life with her husband are foiled at every turn by the housekeeper and Rebecca’s confidante Mrs Danvers.

The book is far more spooky than recent Netflix adaptation, which presents viewers with a thoroughly modern and far more empowered protagonist.

The Yellow Wallpaper (1892) by Charlotte Perkins Gilman

This is an agonising first-person tale of creeping mental and physical decline.

Summering at a colonial mansion, the narrator is confined to an upstairs nursery with ominously barred windows and scratched-up floors. She becomed fixated on the sickly yellow wallpaper covered in ““an interminable string of toadstools, budding and sprouting in endless convolutions”.

The longer she stays in the room the more the walls seems to move and the more it seems like there might be someone moving it from within.

The Fall of the House of Usher (1839) by Edgar Allan Poe

This short story recounts the terrible events that befall the last remaining members of the once-illustrious Usher clan and the house’s last visitors.

Arriving at the home of his reclusive friend Roderick Usher, our narrator is intrigued by the decaying house, particularly a thin crack extending down the front of the building and into the adjacent lake.

Usher’s mind is disintegrating and he is falling deeper into a madness. Things are not as they seem in the suspenseful tale of horror.

Daniel Cook is a Senior Lecturer in English, University of Dundee. This article first appeared on The Conversation.