Tag Archives: Valdis Dombrovskis

Cheap euro transfers everywhere in the Union and fairer currency conversions

“With today’s proposal we are granting citizens and businesses in non-euro area countries the same conditions as euro area residents when making cross-border payments in euro. All Europeans will be able to transfer money cross-border, in euro, at the same cost as they would pay for a domestic transaction. Today’s proposal will also require full transparency in currency conversion when consumers are paying by card in a country which does not have the same currency as their own.” Said Valdis Dombrovskis, Vice-President responsible for Financial Stability, Financial Services and Capital Markets Union.

The European Commission is today proposing to make cross-border payments in euro cheaper across the entire EU. Under current rules, there is no difference for euro area residents or businesses if they carry out euro transactions in their own country or with another euro area Member State.

Today’s proposal aims to extend this benefit to people and businesses in non-euro countries. This will allow all consumers and businesses to fully reap the benefits of the Single Market when they send money, withdraw cash or pay abroad. All intra-EU cross-border payments in euro outside the euro area will now be priced the same – with small or zero fees – as domestic payments in the local official currency. Moreover, the Commission is today proposing to bring more transparency and competition to currency conversion services when consumers are buying goods or services in a different currency than their own.

Consumers and businesses in the euro area already benefit from very low fees for cross-border payments in euro, thanks to the introduction of the cross-border payments regulation in 2001. Under current rules, there is no difference for euro area residents or businesses if they carry out euro transactions in their own country or with another euro area Member State. Today’s proposal aims to extend this benefit to people and businesses in non-euro countries whenever they travel or pay abroad, putting an end to the high cost of intra-EU cross-border transactions in euro.

In particular, this proposal provides that fees charged for cross-border payments in euro are the same that would be charged for equivalent domestic payments in the local currency. This will bring down fees to a few euro or even cents. For example, a cross-border credit transfer in euro (EUR) from Bulgaria will be priced the same as a domestic Bulgarian lev (BGN) credit transfer. This is a major change, as fees for a simple credit transfer can be exorbitant in some non-euro area Member States (up to EUR 24 for a transfer of EUR 10!). Today’s hefty fees are an obstacle to the Single Market as they create barriers to cross-border activities of households (buying goods or services in another currency zone) and businesses, in particular SMEs. This creates a major gap between euro area residents who benefit from the single currency, and non-euro area residents who can only make cheap transactions within their own country.

Today’s proposal will also bring about transparency on payments that involve different Union currencies. At the moment, consumers are usually not informed or aware of the cost of a transaction that involves a currency conversion. The proposal will therefore require that consumers are fully informed of the cost of a currency conversion before they make such payment (e.g. with their card abroad, be it a cash withdrawal at an ATM or a card payment at a point of sale, or online). This means they will be able to compare the costs of different conversion options to make a fair choice. Recent findings show that consumers have been complaining about dynamic currency conversion practices – i.e. paying abroad in their home currency – and asking for their ban after having found that they were losing out in the majority of the cases studied. The lack of necessary information to make the best choice often results in consumers being unfairly led towards the more expensive currency conversion option. The European Banking Authority will be tasked with drafting the necessary Regulatory Technical Standard to implement this enhanced transparency.

The legislative proposal will now be submitted to the European Parliament and Council for adoption.

EU new measures to tackle non-performing loans

 “As Europe and its economy regain strength, Europe must seize the momentum and accelerate the reduction of NPLs. This is essential to further reduce risks in the European banking sector and strengthen its resilience. With fewer NPLs on their balance sheets, banks will be able to lend more to households and businesses. Our proposals build on the significant risk reduction already achieved in recent years, and must be an integral part of completing the Banking Union through risk reduction and risk sharing.” Said Valdis Dombrovskis, Vice-President for Financial Stability, Financial Services and Capital Markets Union.

The Commission is today proposing an ambitious and comprehensive package of measures to tackle non-performing loans (NPLs) in Europe, capitalising on the significant progress already made in reducing risks in the banking sector. With today’s far-reaching measures, the Commission is delivering on the Council’s Action Plan to address the high stock of NPLs and prevent their possible future accumulation. It builds on ongoing efforts by Member States, supervisors, credit institutions and the EU: this has led to stocks of NPLs declining in recent years across banks and EU countries.The Commission is also presenting its second progress report on the reduction of NPLs in Europe, showing that the decline of NPL stocks is continuing.

EU to modernise Europe’s payment services

“This legislation is another step towards a digital single market in the EU. It will promote the development of innovative online and mobile payments, which will benefit the economy and growth. With PSD2 becoming applicable, we are banning surcharges for consumer debit and credit card payments. This could save more than €550 million per year for EU consumers. Consumers will also be better protected when they make payments.” Said Valdis Dombrovskis, Vice-President responsible for Financial Stability, Financial Services and Capital Markets Union. 

The new rules will be applicable as of 13 January 2018 through provisions that Member States have introduced in their national laws in compliance with the EU legislation. The Commission calls on Member States who have not yet transposed the Directive, to do so as a matter of urgency.

The revised Payment Services Directive (PSD2), which will apply as of 13 January 2018, aims to modernise Europe’s payment services to the benefit of both consumers and businesses, so as to keep pace with this rapidly evolving market.

New EU tools to combat VAT fraud

 Cross-border VAT fraud is a major cause of revenue loss for Member States and EU budgets. Today’s proposal will help to strengthen the cooperation between institutions working nationally and at EU level in order to effectively tackle this problem and improve tax collection.” Said Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue.

The European Commission has today unveiled new tools to make the EU’s Value Added Tax (VAT) system more fraud-proof and close loopholes which can lead to large-scale VAT fraud. The new rules aim to build trust between Member States so that they can exchange more information and boost cooperation between national tax authorities and law enforcement authorities. The most cautious estimates show that VAT fraud can lead to lost revenues of over €50 billion a year for EU Member States – money that should be going towards public investment in hospitals, schools and roads. Revelations in the ‘Paradise Papers’ have again shown how tax avoidance schemes can be used to help wealthy individuals and companies to circumvent the EU’s VAT rules to avoid paying their fair share of tax. Recent reports also suggest that VAT fraud schemes can be used to finance criminal organisations, including terrorists. Today’s proposals would enable Member States to exchange more relevant information and to cooperate more closely in the fight against these activities. Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “The Paradise Papers have again shown how some are taking advantage of lax application of EU VAT rules to get away with paying less VAT than others. And we know that VAT fraud can be a source of financing for criminal acts, including terrorism. Combating this requires far more effective information-sharing than currently exists between the competent national authorities – and today’s proposals will make that happen.

EU electronic payments safer and more innovative

 

The Commission has adopted rules that will make electronic payments in shops and online safer.

We have struck the delicate balance between security and convenience. Thanks to these new rules, there will be exciting new opportunities for all market players, old and new, to offer better consumer services. At the same time, the new rules will make electronic payments safer.” Said Valdis Dombrovskis, Vice-President in charge of Financial Stability, Financial Services and Capital Markets Union.

This will also allow consumers to access more convenient, cost-effective and innovative solutions offered by payment providers. These rules implement the EU’s recently-revised Payment Services Directive (PSD2) which aims to modernise Europe’s payment services so as to keep pace with this rapidly evolving market and allow the European e-commerce market to blossom. Today’s rules allow consumers to use innovative services offered by third party providers, also known as FinTech companies, while maintaining rigorous data protection and security for EU consumers and businesses. These include payment solutions and tools for managing one’s personal finances by aggregating information from various accounts. A key objective of PSD2 is to increase the level of security and confidence of electronic payment. In particular, PSD2 requires payment service providers to develop strong customer authentication (SCA). Today’s rules therefore have stringent, built-in security provisions to significantly reduce payment fraud levels and to protect the confidentiality of users’ financial data, especially relevant for online payments.

EU issues rules on derivatives

With these rules, EU financial market players will now have certainty on what derivatives will have to be traded on venues where greater safety, stability and transparency are assured.”  Said Valdis Dombrovskis, Vice-President in charge of Financial Stability, Financial Services and Capital Markets Union.

The Commission has today issued rules to make certain types of derivatives trades safer and more transparent. A derivative is a financial contract linked to the fluctuation in the price of the underlying asset or basket of assets to which it refers (e.g. the development of interest rates). The new rules specify which derivatives should be subject to the trading obligation under the Markets in Financial Instrument Regulation (MiFIR) and follows G-20 commitments to ensure that more trading in derivatives takes place on transparent trading venues, instead of being privately negotiated over the counter. Specifically, the new rules determine those derivatives that may only be traded on an EU trading venue or a non-EU trading venue covered by equivalence decisions of the Commission. EU trading venues include regulated markets, multilateral trading facilities, and organised trading facilities. The rules adopted today take the form of regulatory technical standards (RTS) and will now be sent for scrutiny to the European Parliament and the Council. Furthermore, the Commission is planning to soon adopt its equivalence decision recognising some US trading platforms, following last month’s agreement with the US Commodity Futures Trading Commission (CFTC) on a common approach regarding certain derivatives trading platforms.

Estonian European Semester to foster the Economic and Monetary Union

The strength of the EMU depends on the financial discipline. It is very important that the member states follow the rules we have already agreed upon for the EMU. It is also essential to use all of the opportunities afforded by coordination procedures,” said Minister Toomas Tõniste, Finance Minister of Estonia, in Tallinn.

Valdis Dombrovskis, European Commission Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, met with Minister Tõniste. Vice-President Dombrovskis and Minister Tõniste focused on the matters of deepening the Economic and Monetary Union (EMU), a topic that Estonia hopes to achieve good progress in during the Estonian Presidency of the Council of the European Union. They also discussed overall economic developments in the context of European Semester and Estonian performance.

“We should use this window of political and economic opportunity. This is a good moment to put in place the remaining elements of a well-functioning EMU,” said Valdis Dombrovskis at the meeting. “It is better than waiting for a new crisis to complete the work. The European Commission is taking the initiative in this discussion: certain options were outlined in a reflection paper in May; President Juncker elaborated on some of these ideas in his State of the Union speech last month; and we will come with specific proposals on the 6th of December”.

Minister Tõniste stressed that EMU plays an important part in strengthening the European finance sector and in harmonising member states’ economic development.

For economic developments in the context of European Semester and Estonian performance Finance Minister Toomas Tõniste said: “Estonia’s economic growth has gained speed due to the recovery in Europe. I also welcome increased business confidence and the pickup in investments that will allow rewards from the favourable developments in European markets. However, an accelerated growth rate should not lead to excessive increases in government expenditure.”

Vice-President Valdis Dombrovskis added that the Estonian economy is well on track. We see strong economic performance. Both the employment rate and the labour force participation are highest in 20 years. GDP growth is revised up to 4.3% for this year, according to government estimates. The Commission will issue its forecast next month, and we expect these to also point out a strong economic performance. However, in good times it is also important to maintain fiscal discipline in order to ensure stability in a long term”.

Minister Tõniste and Vice-President Dombrovskis discussed how Estonia could hold on to its economic momentum. They also focused on how Estonia could achieve good progress with EMU during the last months of its Presidency. As Banking Union is of the cornerstones of the EMU, Estonia hopes to reach to Council’s general approach on the risk reduction package by the end of the year. This would allow proceeding with the negotiations of the European deposit insurance scheme (EDIS).

EU Banking Reform: new agreement reaches

Today’s agreements are the first deliverables of our banking risk reduction package. First, harmonised rules for bank bond holders in a situation of insolvency gives banks clarity for building up buffers to absorb losses and protect taxpayers. It is a key step towards complying with the global standard on Total Loss-Absorbing Capacity (TLAC). This measure will also enhance the effectiveness of bank resolution processes. The second agreement gives banks more time to adjust to the introduction of the new accounting standard IFRS 9 and to the expiry of certain exemptions from the large exposure limits, thereby avoiding disruption in lending and in government bond markets.” Said Valdis Dombrovskis, Vice-President responsible for Financial Stability, Financial Services and Capital Markets Union.

On Wednesday, the European Parliament, the Council and the Commission agreed on elements of the review of the Bank Recovery and Resolution Directive (BRRD) and of the Capital Requirements Regulation (CRR) and Directive (CRD) proposed in November 2016, an important piece of the Commission’s ongoing work to reduce risk in the banking sector and in line with the efforts to complete the Banking Union, as set out in the Commission’s Communication of 11 October 2017. The agreement on the BRRD creates a new category of unsecured debt in bank creditors’ insolvency ranking. It establishes an EU harmonised approach on the priority ranking of bank bond holders in insolvency and in resolution. The agreement on the CRR/CRD implements the new International Financial Reporting Standard (IFRS 9). This will help mitigate the impact of IFRS 9 standards on EU banks’ capital and ability to lend. It will also avoid potential disruptions in government bond markets that would result from rules limiting large exposures to a single counterparty.

EU calls for Banking Union by 2018

“A complete Banking Union is essential for the future of the Economic and Monetary Union and for a financial system that supports jobs and growth. We want a banking sector that absorbs crises and shares risks via private channels, thus ensuring that taxpayers are not first in line to pay. Today we are presenting pragmatic ideas to move forward with risk sharing and risk reduction in parallel. We hope that these will be useful food for thought for EU co-legislators to reach consensus on the remaining measures by 2018.” Said Valdis Dombrovskis, Vice-President for Financial Stability, Financial Services and Capital Markets Union.

The Banking Union must be completed if it is to deliver its full potential in making the Economic and Monetary Union (EMU) more stable and resilient to shocks, while limiting the need for public risk sharing. This is beneficial for the entire Single Market. Building on the significant progress already achieved, the Commission is today publishing a Communication that sets out an ambitious yet realistic path to ensure agreement on all the outstanding elements of the Banking Union, based on existing commitments by the Council. This comes ahead of the December Euro Summit, in an inclusive format, where completion of the Banking Union will be part of discussions on further deepening the EMU. Together with the Capital Markets Union (CMU), a complete Banking Union will promote a stable and integrated financial system in the EU.

EU VAT reform

 “Today, we are proposing to renew the current VAT system, which was set up a quarter century ago on a temporary basis. We need a definitive system that allows us to deal more efficiently with cross‑border VAT fraud. At the European Union level, this fraud causes an annual tax revenue loss of around €50 billion.” Said Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue.

The European Commission has today launched plans for the biggest reform of EU VAT rules in a quarter of a century. The reboot would improve and modernise the system for governments and businesses alike. Overall, over€150 billion of VAT is lost every year, meaning that Member States miss out on revenue that could be used for schools, roads and healthcare. Of this, around €50 billion – or €100 per EU citizen each year – is estimated to be due to cross-border VAT fraud. This money can be used to finance criminal organisations, including terrorism. It is estimated that this sum would be reduced by 80% thanks to the proposed reform.

The proposed VAT reform would also make the system more robust and simpler to use for companies. The Commission wants a VAT system that helps European companies to reap all the benefits of the Single Market and to compete in global markets. Businesses trading cross-border currently suffer from 11% higher compliance costs compared to those trading only domestically. Simplifying and modernising VAT should reduce these costs by an estimated €1 billion.

A definitive VAT system that works for the Single Market has been a long-standing commitment of the European Commission. The 2016 VAT Action Planexplained in detail the need to come to a single European VAT area that is simpler and fraud-proof.

 

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “Twenty-five years after the creation of the Single Market, companies and consumers still face 28 different VAT regimes when operating cross-border. Criminals and possibly terrorists have been exploiting these loopholes for too long, organising a €50bn fraud per year. This anachronistic system based on national borders must end! Member States should consider cross-border VAT transactions as domestic operations in our internal market by 2022. Today’s proposal is expected to reduce cross-border VAT fraud by around 80%. At the same time, it will make life easier for EU companies trading across borders, slashing red tape and simplifying VAT-related procedures. In short: good news for business, consumers and national budgets, bad news for fraudsters.”

With today’s package, the Commission proposes to fundamentally change the current VAT system by taxing sales of goods from one EU country to another in the same way as goods are sold within individual Member States. This will create a new and definitive VAT system for the EU.

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