The New EU Climate and Energy Package: Passing the test? CEPS Commentary, 6 January 2014

On 22 January 2014, the European Commission is expected to publish the proposals for the 2030 Framework for Climate and Energy Policies, which will be discussed and possibly – or maybe, partly – agreed during the 20-21 March 2014 European Council. This is the first comprehensive review of the 2007-09 Climate and Energy Package, which resulted in the so-called ‘20-20-20’ targets by 2020. The principal intention is to define the EU’s climate change and energy policy framework for the next decade and beyond to give investors an adequate amount of predictability if not certainty. This Commentary argues, however, that the ‘2030 Framework’ is not just about predictability; it is also about making the proper adjustments based on the lessons learned and also in response to new issues that have emerged in the interim. The authors ask what the main lessons are and how they should influence the 2030 Framework. Or put differently, what are the conditions that the “2030 Framework” will need to meet in order to offer a viable package for discussion?

Was the ECB’s Comprehensive Assessment up to standard? CEPS Policy Brief No. 325, 10 November 2014

The Comprehensive Assessment conducted by the European Central Bank (ECB) represents a considerable step forward in enhancing transparency in euro-area banks’ balance sheets. The most notable progress since the previous European stress test has been the harmonisation of the definition of non-performing loans and other concepts as well as uncovering hidden losses, which resulted in a €34 billion aggregate capital-charge net of taxes. Despite this tightening, most banks were able to meet the 5.5% common equity tier 1 (CET1) threshold applied in the test, which suggests that the large majority of the euro-area banks have improved their financial position sufficiently that they should no longer be constrained in financing the economy. As shown in this CEPS Policy Brief by Willem Pieter de Groen, however, the detailed results provide a more nuanced picture: there remain a large number of the banks in the euro area that are still highly leveraged and in many cases unable to meet the regulatory capital requirements that will be introduced in the coming years under the adverse stress test scenario.