🏗️ Building the best safe asset 🗣️ Agnès Bénassy-Quéré in conversation with host @rebeccawire.bsky.social, @smerler.bsky.social and @jzettelmeyer.bsky.social on The Sound of Economics 🎙️ Listen to the podcast now: buff.ly/xxzZNK4

We look at the recently proposed overhaul of the EU Emission Trading System. The reform paints a softer ETS for what is expected to be a harder decade, but does not rid the system of policy uncertainty. As such, the signal may get lost in yet more political noise. www.algebris.com/policy-resea...

👂️Want to learn more? Check out our latest podcast, "Building the best safe asset", where host @rebeccawire.bsky.social sits down with @jzettelmeyer.bsky.social, Agnès Bénassy-Quéré & @smerler.bsky.social to talk about common European debt & the idea of a 'safe asset'. 🔗 buff.ly/TwfZMOO

Does hiking off reputational concerns now expose Lagarde to the risk of a “Trichet moment”? For sure, ECB communication around the rationale for hikes has been confused (and confusing). www.bloomberg.com/news/article...

Lagarde Sees No Need for More Forceful ECB Response to Iran War

The European Central Bank doesn’t need to react more forcefully to the fallout from the Middle East conflict because inflation is set to return to target over the medium term, President Christine Laga...

bloomberg.com

Kevin Warsh takes over the Federal Reserve today. He inherits an energy shock and Jerome Powell, who stays on the board. Warsh’s view of Al as "structurally disinflationary" may turn out to be right as concept but wrong on timing. It will be interesting to watch. www.instagram.com/p/DY0JubCkd9...

🇺🇸 🇨🇳 The world’s two largest economies meet. On the agenda: investment, Taiwan, tech, Iran and - obviously - tariffs and trade. www.instagram.com/p/DYSHkNCjOV...

The European Commission published its energy crisis plan (AccelerateEU) which is being discussed at the summit of EU leaders taking place on April 23/24. Read more ⬇️ www.instagram.com/p/DXhCOdJjLm...

As the Strait remains closed, jet fuel prices are the first line of disruption. Read more at ➡️ www.instagram.com/p/DXWtCE9DNY...

Three recent prominent books in economic policy, which I liked reading and recommend. Full discussion at: www.instagram.com/p/DXRhDGxDLB...

Two striking findings from the IMF World Economic Outlook just published - looking at who pays the cost of war and how big the macroeconomic impact of conflicts is. Full explainer on my IG ➡️ www.instagram.com/p/DXMUoKqDLh...

NEW: The theory that the dollar's status as the world's dominant reserve currency is a main driver of America's large & persistent current account deficits is wrong, Maurice Obstfeld writes.

Don't blame America's current account deficit on the dollar

The Trump administration and China's leaders generally differ on economic policy, but on one proposition some prominent members of their economic teams seem to agree: The dollar's status as the world'...

piie.com

US March CPI recorded the largest monthly jump since June 2022 - entirely driven by energy. At the same time, consumer confidence hit a historic low and nominal wages grew at the slowest pace since May 2021. The Iran shock is squeezing real incomes, and putting the Fed in a difficult position.

Is this the same Commission who argued it was imperative to scale back the EU sustainability regulatory framework via the Omnibus, because green tape was supposedly killing European competitiveness?

POLITICO Europe@politico.eu · 5mo ago

🚨 BREAKING: The European Commission has urged people to work from home, drive and fly less, and for EU countries to urgently roll out renewables, as it warned of a prolonged energy crisis as a result of the conflict in the Gulf. Full story: www.politico.eu/article/euro...

A wild day in energy markets, with Brent breaking through $119 before dropping below $90 on Trump’s comments hinting at a potential offramp. The conflict has pushed oil prices almost 30% above baseline - to be seen whether this reversal proves stable.

Want to know why Europe lags in innovation? Exhibit 1: less than 5% the EU Innovation Fund established in 2021 has been paid out, because companies spend up to 3’000 hours and an average 85’000€ in administrative costs to apply. Economic death by paperwork. www.ft.com/content/0797...

Companies swamped by 3,000 hours of paperwork to tap EU climate funds

Of the €7.1bn awarded from the bloc’s flagship innovation programme for clean tech, only 5% has been paid out

ft.com

The fifth #CERditchley panel, chaired by Yasmine Moezinia was on ‘Will Europe risk its (capital) markets taking off?’ with Agnès Bénassy-Quéré, @smerler.bsky.social, @erikfossingnielsen.bsky.social and Alexander Plekhanov

The 10 year BTP-Bund spread is at its lowest since 2010 and Italy in 2024 went back to a primary surplus, as it consistently did for almost two decades before COVID (unlike France, who’s been overshooting its deficit forecasts for 30 years). Don’t cry wolf where there isn’t one, it’s irresponsible.

Robin Brooks@robin-j-brooks.bsky.social · 12mo ago

There's first signs of contagion from France to Italy and flight to safety into German Bunds. Italy is the Euro zone Achilles heel. Without it, ECB could let French yields rise, helping France get its budget under control. But that's not possible with Italy always teetering on the brink of crisis...

#Bruegel is republishing the classics and I’m super proud that this paper by @pisaniferry.bsky.social and myself made the cut. It took a lot of work on then-obscure central bank liquidity data, but it changed the way we look at capital flows within monetary union. www.bruegel.org/policy-brief...

Sudden stops in the euro area

Internal balance-of-payment crises should be taken as a strong signal of weakness and a wake-up call to reform euro area structures

bruegel.org

Thank you to Jon Hay for featuring my comments in this extensive article on the UK’s decision to scrap plans for a Green Taxonomy. Great insights also from the other people quoted in the piece! www.globalcapital.com/article/2f2q...

UK scraps Taxonomy, stakes green reputation on credible transition

Transition plans and disclosure rules will be central to UK’s bid for sustainable finance leadership

globalcapital.com

My latest, on the recent notice by the European Commission on defence investment in the sustainable finance framework.

Bruegel@bruegel.org · last yr.

🪖 Can #defence #investment be sustainable? The European Commission thinks so 🔎 @smerler.bsky.social digs into the Commission's recent efforts to justify its efforts to incentivise greater defence investment. ♻️ Can there be such a thing as 'sustainable defence'? 🔗 buff.ly/GBeMML9 #EconSky

The international monetary system is changing before our eyes. Germany and Italy pressed to bring gold home from US; a survey of more than 70 global central banks showed more were thinking of storing their gold domestically amid concerns about ability to access it. www.ft.com/content/e393...

Germany and Italy pressed to bring $245bn of gold home from US

Trump’s attacks on the Fed and growing geopolitical risks reignite public debate about repatriating bullion

ft.com

Great piece by @martinsandbu.ft.com in today’s FT. As I wrote back in April, the EU’s best response to Trump’s tariffs would be to issue more EU debt. My preference however is for ramping up genuine EU debt issuance, not settling for synthetic asset solutions. www.bruegel.org/first-glance...

More EU debt issuance would be the best response to Trump’s tariffs

The European Union should think strategically and seize the opportunity to fill the void created by Trump

bruegel.org

The return of volatility: the S&P 500 has gained or lost at least 1% in seven of the past 10 sessions, and April is poised to be the most-volatile calendar month since the Covid crash in 2020. www.wsj.com/finance/stoc...

Huge Stock Swings Are the New Normal for Frazzled Investors

April is poised to be the most-volatile calendar month since the Covid crash in 2020.

wsj.com

ECB’s Guindos Says Euro May Become Alternative Reserve Currency ‘in Some Years’ - but that will require “additional integration” he says (and a step up in EU issuance, says I) www.bloomberg.com/news/article...

ECB’s Guindos Says Euro May Become Alternative Reserve Currency ‘in Some Years’

European Central Bank Vice President Luis de Guindos said the euro could become an alternative to the dollar as a reserve currency if Europe increases its integration efforts.

bloomberg.com

Latest US inflation numbers surprised to the downside, but the University of Michigan survey points to 12-month inflation expectations at 6.7%, and above 4% for the next 5 years. Powell previously dismissed it as an outlier, but important to watch for role of the $. www.reuters.com/markets/us/u...

US consumer sentiment, inflation expectations deteriorate sharply in April

U.S. consumer sentiment deteriorated sharply in April and 12-month inflation expectations surged to the highest level since 1981 amid unease over escalating trade tensions.

reuters.com

It may seem counterintuitive to issue more debt during a crisis. But in a world where US economic policy is unpredictable, safe asset diversification suddenly has value. And the EU’s best response to US tariffs is to issue more debt. My OpED at @bruegel.bsky.social www.bruegel.org/first-glance...

More EU debt issuance would be the best response to Trump’s tariffs

The European Union should think strategically and seize the opportunity to fill the void created by Trump

bruegel.org

"The EU should thus move to fund the entire cost of its planned rearmament with EU debt, similarly to NGEU." @smerler.bsky.social on the global role of the euro in light of American chaos. www.bruegel.org/first-glance...

More EU debt issuance would be the best response to Trump’s tariffs

The European Union should think strategically and seize the opportunity to fill the void created by Trump

bruegel.org

All eyes in the market are on China. So far, China is going for a strategy of being the adult in the room: *US TARIFFS A HEGEMONIC MOVE, SELFISH: LIN *US TARIFFS DEPRIVE GLOBAL SOUTH OF RIGHT TO DEVELOP, LIN SAYS *NATIONS SHOULD OPPOSE PROTECTIONISM, LIN SAYS

Dollar down on a massive trade protectionist shock is something that will go in the macroeconomics handbooks for the next generations: *EURO RISES MORE THAN 1% TO $1.0980, HIGHEST LEVEL IN SIX MONTHS

Ma tribune dans L’Opinion, sur les implications du paquet Omnibus pour la finance durable ⬇️ www.lopinion.fr/internationa...

« Simplification ou dilution ? Les implications du paquet Omnibus pour la finance durable »

La simplification du reporting dans l’Union européenne entraînera une réduction de l’information disponible et introduira des distorsions sur le marché de la finance durable.

lopinion.fr