Refine
Document Type
- Working Paper (2)
Language
- English (2)
Has Fulltext
- yes (2)
Is part of the Bibliography
- no (2)
Keywords
The new German government will face a number of unresolved issues of varying urgency when it comes to EU economic governance. In the case of the fiscal rules, there is an urgent need for a decision on how to proceed after 2022. In the medium term, the future of EU finances and economic policy coordination is open; both have undergone drastic changes as a result of the Recovery Instrument. Last but not least, the new German government must decide whether and how to break the deadlock in negotiations on completing the banking union and breathe new life into the capital markets union.
The EU should seize the day: It should issue parts of the Recovery Instrument debt as green bonds and thereby boost that burgeoning market. But it is important to manage expectations: Issuing green bonds alone will not ‚green‘ recovery spending. This will depend on the criteria for climate-friendly spending in the legal texts governing the Recovery Instrument – and these so far lack teeth. So, there is a substantial risk that EU green bonds will set the wrong precedent now if backed by weak criteria. This would pre-empt future legislative work on the final EU green bond standard. If the criteria for climatefriendly spending are not strengthened, the Commission should scale back its ambition and should only issue green bonds for measures that fully match the
criteria set out in the EU Taxonomy Regulation.