Publications

Last October the ECB published a 55-page paper on the pros and cons of a central bank digital currency (CBDC). This paper concluded that research should continue at only a modest pace. It was therefore surprising that a brief statement, accelerating the project, was recently issued. We learn that the ECB (jointly with the European Commission) is actively ‘exploring the possibility of issuing a digital euro’ and that a project might commence within months. Why this acceleration? The statement mentions two factors, i) the emergence of crypto assets, and ii) ‘rapid changes in the payments landscape’. Let us consider each.

According to a recent survey across 34 countries, more people worry about income inequality than about the current COVID-19 pandemic. Pessimism with regard to inequality appears to be particularly widespread in France, followed by Spain, Greece, and Germany.

Global inequality increased until the 1970s/80s. Yet, more recent historical developments show a different picture. In fact, global income inequality decreased significantly during the past decades. Those who care about decreasing global inequalities should advocate better institutional contexts, to enhance growth in poorer countries and ease migration flows on a global scale.

When we see social interactions that seem unfair, people usually demand legislation that would prohibit the behavior they dislike. But this kind of intervention does not come without a price and has unintended consequences.
On October 28th, the European Commission initiated a legislative procedure to ensure “adequate minimum wages” across the EU member states in response to the coronavirus pandemic. The Commission thought that this would help the workers affected by the crisis. The proposed legislation would require that EU countries set their minimum wages by taking into account a number of national parameters, such as the cost of living, house prices, and GDP per capita.

Gallup conducted a panel survey in the very days the Pfizer and BioNTech COVID-19 vaccine was certified as effective. According to the survey, only 63% of Americans agree to be vaccinated against Covid-19. Things are similar in other Western countries. An article published by Nature Medicine last October (Jeffrey V. Lazarus et al, A global survey of potential acceptance of a COVID-19 vaccine) surveyed 13,426 people in 19 countries, and examined potential acceptance rates and factors influencing acceptance of a COVID-19 vaccine. Only 71.5% of participants reported that they would be likely to take a COVID-19 vaccine.

The UK’s 2019 current account deficit with the EU was GBP 118 billion. The Trade and Co-operation Agreement (TCA), commonly referred to as the Brexit agreement, is therefore of greater value to the EU by protecting this imbalance with tariff free trade, than to the UK. However, by excluding services from the Treaty – 42% of UK exports to the EU are services – key decisions about the terms of future trade in financial services such as capital markets and banking, have been deferred to this year. By carving services out of the TCA, the EU has skilfully taken the upper ground in this area. We analyse the present situation and identify possible headwinds that might limit the EU’s exploitation of this advantage.

WP 2021-02.

Young people’s attitudes towards retirement are contradictory: on the one hand, they don’t trust public pay-as-you-go pensions. According to recent surveys, around half of the respondents do not expect significant retirement income from this source. On the other hand, private efforts are insufficient to close the expected pensions gap.

The term meritocracy describes a social and political context in which merit is the key criterion to evaluate the distribution of rewards. If such distribution reflects individual merit, it is fair. It is unfair in the opposite case. The term was coined in 1958 by British sociologist Michael Young, according to whom meritocracy describes a dystopia, not something necessarily desirable. Young was affiliated to the labor party. In fact, the term maintained a negative connotation for a long time within the leftist culture. Since the 90s of the last century, however, the world of politics took at different view, possibly encouraged by egalitarian theories that sought to combine egalitarianism and personal responsibilities.

The concept of central bank issued digital currencies (CBDC) has been around for several years, arguably since bitcoin became established around 2015. The topic is now very hot even in Europe, with Sweden planning to launch a retail focussed e-krona in 2021. Switzerland is also working on this very topic.

Two distinct patterns have been characterizing the news media landscape lately, First, according to the World Press Trends data, for example, daily print newspaper circulation between 2012 and 2017 has declined by 20 percent in Europe, 12 percent in North America, and 31 percent in Oceania. Of course, Internet and social media have played a crucial role in explain this dynamic. But there is more to it.