Central Bank Digital Currency: The Legal Obstacles of the Digital Euro

 

Dr. (Annelieke) Anne Marieke Mooij, Tilburg University

The ECB has decided to launch the preparation phase for the digital euro. The digital euro is a digital currency (euro) issued by the ECB, a so called ‘Central Bank Digital Currency’ (CBDC). The ECB has currently evaluated different design options for the digital euro in its report. The designs vary from a limited form, only accessible to financial institutions. It could, however, also be designed to be accessible to all consumers via their national central banks. The ECB has not yet settled on a single design but the launch statement makes it unlikely that the ECB will opt for a digital euro only accessible by financial institutions. The different designs carry different legal obstacles. This blog will consider the main legal hurdles.

The power for the ECB to issue legal tender is founded in Article 128 TFEU, which provides the ECB with the exclusive power to issue banknotes. These are the only banknotes to carry legal tender. Secondary law refers to physical money such as banknotes and coins as carrying the status of legal tender. However, Grunewald et. al. consider that a purposive reading of Article 128 TFEU allows for a broader interpretation of this provision. The most convincing argument here is the change of financial systems. The possibility of digital legal tender was not expressly provided for because it was not yet a viable option when the Lisbon Treaty was adopted. Moreover, the Treaties do not provide any grounds for prohibiting the creation of digital legal tender. Therefore, it does not seem impossible that the ECB could issue digital banknotes based upon Article 128 TFEU.

Article 128 TFEU further raises a question of design, more specically can the digital euro accumulate interest? Grunewald et. al. conclude that digital notes should resemble cash, in the sense that no interest should be accumulated. The recent judgment of the CJEU in Dietrich & Häring v. Rundfunk, however, indicates that digital money under EU law may not have to resemble cash. Dietrich & Häring v. Rundfunk concerned the status of the cash money as legal tender. The CJEU considered that the “concept of ‘monetary policy’ is not limited to its operational implementation […] but also entails a regulatory dimension intended to guarantee the status of the euro as the single currency […]” (para 38). The Court furthermore argued that legal tender carries three criteria: mandatory acceptance, acceptance at full face value and the power to discharge debts (paras 48-49). Interestingly, the criterion on whether or not a currency accumulates interest – called ‘storage of value’ – is neither clarified by secondary legislation nor in the case law of the CJEU. Additionally, as the CJEU stated, the ECB’s authority is not limited to executing monetary policy but also includes a regulatory dimension (para 38). This regulatory dimension should be interpreted to include the design of legal tender, without violating the three primary criteria. Following the Court’s judgment in Dietrich & Häring v. Rundfunk, it seems likely that the ECB could introduce the digital euro as legal tender and include the use of interest rates.

The question of interest rates is particularly important when considering the potential use of the monetary policy. The first concern described by the ECB in their report is that of potential foreign currencies, i.e. other CBDCs and cryptocurrencies (see p. 9). If these currencies took hold in the Eurozone they could limit the transmission channels of the ECB. The ECB’s transmission of monetary policy depends on the euro as the dominant currency. If foreign CBDCs or commercial currencies such as Bitcoin became more prominent than the euro the ECB would not be able to influence monetary policy. A digital euro, however, could safeguard the status of the euro and the singleness of monetary policy in the Eurozone. Furthermore, economists doubt whether cryptocurrencies, as opposed to CBDCS, can provide price stability. As per Article 127(1) TFEU price stability is the primary objective of the ECB. To use a digital euro to prevent cryptocurrencies takingover would prevent the instability of cryptocurrencies. Such an objective is within the ECB’s monetary aim. Furthermore, the digital euro could provide a more direct transmission of monetary impulses. Currently the ECB influences interest rates in the real economy through the rates it charges commercial banks when they borrow from the ECB. Through a digital euro the ECB could directly change interest on the consumer accounts. To ensure the transmission of monetary impulses, the digital euro should be account-based and carry interest. Meaning that consumers would have access individual digital euro accounts with the ECB. Such accounts can be accessible through the commercial sector but consumers would have a claim upon the ECB or their national central bank. A design whereby the digital euro is only available to financial institutions carries limited legal questions. The account-based design, however, becomes more legally challenging. In such a system the digital euro might compete with commercial bank accounts.

It is clear that for the ECB to introduce the digital euro as part of its monetary policy, the ECB would have to comply with its monetary mandate established in Article 127 TFEU. According to the ECB’s monetary mandate under Article 127 TFEU, a measure must have a monetary aim and comply with the principle of proportionality. In Gauweiler, the CJEU considered the aim of the policy as the primary indicator of whether a policy is monetary or economic (para 46). In Weiss, the CJEU furthermore placed very few limits on the indirect effects of the ECB’s adopted policy. According to the CJEU in Gauweiler, the aim of safeguarding the status of the euro complies with the monetary aim of the ECB (para 48). The account-based and interest carrying design of the digital euro aims to introduce new transmission channels. The ECB will be able to directly change interest rates on consumer accounts through the digital euro. Whilst not being the same as restoring the available transmission channels, it does not render the design of a digital euro unlawful. The CJEU stated in Gauweiler that the “[…] objective of safeguarding an appropriate transmission of monetary policy […]” falls within the scope of monetary policy (para 49). The CJEU speaks of “transmission of monetary policy” rather than individual channels (para 49). There is clear evidence that current monetary policy transmission of the ECB? is not as effective as previously thought. The digital euro could improve transmission and reduce the concerns about the lower bound. The introduction of a digital euro should be considered as pursuing a monetary rather than economic aim. Even if fulfilling the monetary aim, the digital euro would still comply with the principle of proportionality.

The CJEU in Gauweiler and Weiss reviews the proportionality of an ECB measure by examining the  suitability and necessity of said measure (para 72). Regarding the suitability criterion, it should be noted that, at present, cryptocurrencies have never been implemented as a large-scale payment mechanism. The technology is, however, capable of facilitating such mechanisms in the near future. Economists, therefore, argue that the introduction of a CBDC is a natural progression of monetary policy. Whilst the effect of CBDCs on the markets is still debated, the ECB has been given a wide margin of discretion by the CJEU in adopting suitable measures. It is clear that the CJEU will only review whether the ECB has not made ‘a manifest error in judgment’ (Gauweiler, para 74). It seems unlikely that the Court would find the latter for the introduction of a digital euro.

This leaves the question of necessity. To comply with this second criterion, the digital euro may not go beyond what is necessary. The evaluation of this criterion depends on the aim that is pursued by the ECB: (1) the promotion of the euro as a single currency in light of commercial and foreign currencies, or (2) a more direct transmission of monetary policy. The first aim by itself would not justify the introduction of account-based and interest-bearing accounts. Commercial currencies are attractive because of their cheap and fast payment option. The potential for quick settlement through a digital euro does not require interest rates. Nor do cryptocurrencies accumulate interest rates, hence commercial euro accounts will remain attractive. Regarding international payments a mechanism of exchange using the digital euro and cryptocurrency should be considered. It is unlikely one cryptocurrency will take over the eurozone’s physical market. Meaning there will still be demand for a single currency in shops and restaurants. International payments are likely to be conducted with cryptocurrencies. An exchange mechanism can bridge the gap between euro’s and cryptocurrencies. Safeguarding the importance of both.  If one includes the introduction of a more direct transmission channel, the account-based system with interest rates would be necessary. Without individual accounts consumers cannot gather individual interest rates. The interest rates are necessary to transmit monetary impulses. This, however, does not yet settle the interest rate level that can be charged. In particular, the impact of the potential interest rate of a digital euro on commercial banks should be considered.

Economists disagree on the impact of CBDC on the commercial sector. Some argue that the uptake of CBDC will be limited. The introduction of CBDC will thus not have a large effect on the commercial sector. Whilst others argue that the ECB will have a competitive advantage due to their (perceived) stability, and thus the possibility for competition from the private sector is significantly decreased. It would therefore seem unlikely that the CJEU would qualify a digital euro which diminishes the commercial sector as necessary. The design of the digital euro should therefore allow the commercial sector to compete. The potential for competition stimulates technological growth and allows for consumer choice. A digital euro that diminishes the banking industry would reduce consumer options. This would not be beneficial to either consumers or the open market.

Based on the analysis above, the introduction of a digital euro thus seems legally possible. However, some questions remain. The interests that could be charged on the digital euro are not yet certain. Additionally, this post only considered a digital euro in a tiered system whereby consumer access would be realized through market infrastructer. The second option is a form of CBDC that is directly accessible through the national central banks. This system is considered a solution to the unbanked, i.e. consumers without a bank account. However, the number of such unbanked consumers in the EU is low. The aim of providing an inclusive banking sector is thus a primarily socio-economic rather than a monetary goal.

The economic objective of creating a digital euro which is directly accessible through national central banks is also not unlawful under EU law. In addition to its primary price stability mandate under Article 127 TFEU, this same Article states that the ECB also “shall support the general economic policies in the Union”. The scope of this secondary, economic mandate is not yet clear as there is no caselaw on this topic. However, it seems that the aim of economic inclusion fits the objectives of the Union. Article 153(j) TFEU includes the aim of social inclusion, which includes socio-economic inclusion. The economic mandate of the ECB, however, speaks of “support”. At present, no law or policy provides the authority for the ECB to introduce CBDC. It is furthermore unlikely that such a measure will be introduced.

At present access to a bank account is provided through Directive 2014/92. This directive focusses on increased competition within the EU to promote access to bankaccounts. A centralized approach to reduce the number of unbanked, through CBDC would require a 180 degree turn. The Dutch Central Bank (DNB) furthermore discovered there would be significant consumer uptake of CBDC. The DNB report states that 49% of consumers would open a CBDC account and, with an equal level of interests, 54% of consumer would deposit more than zero euro. This research was conducted when the concept of CBDC is relatively unknown (April 2021). When a CBDC becomes available and more known, the uptake should increase even further. The viability of the commercial sector would be in danger with such levels of uptake. The commercial banks require deposits from consumers to function. The deposits are used to provide loans and investments. Without consumer deposits the commercial banks would cease to exist. It is therefore unlikely that a centralized CBDC would comply with competition law.

Whilst consumers could be using a digital euro in the near future, it is unlikely that we will be banking with our national central banks. More likely the ECB will opt for a tiered-system whereby access to the digital euro is provided through market solutions.

For an extended analysis by the author click here.

Barnard & Peers: chapter 18

Photo credit: DXR, via Wikicommons media

The European Central Bank – judicial review of monetary policy and banking supervision

Introduction

The financial crisis has had broad political and economic effects across the European Union. It has had legal effects too – leading to the European Central Bank (ECB) not only developing controversial new means of intervention in monetary policy, but also being granted new powers of banking supervision and (with the ‘Troika’ of the Commission and the IMF) becoming involved in austerity policies in the Member States that needed financial assistance. 

The two blog posts below discuss recent developments in the case law on review of the monetary policy (Weiss: blog post by Annelieke Mooij) and banking supervision powers (La Banque Postale: blog post by Carlos Bosque and Alejandro Pizarroso) of the ECB. As for judicial review of austerity policy, the EU General Court recently followed up the CJEU ruling in Ledra Advertising (discussed here) with its judgments in Bourdovali and Chrysostomides.

While the recent judgments reaffirmed the limited judicial review of ECB measures on monetary and austerity policy, they suggest a contrary willingness to demand stricter judicial scrutiny of banking supervision. Whether this becomes a more general trend remains to be seen.

Judicial review of the ECB’s monetary and economic policy powers: the latest chapter

Annelieke Mooij, PhD student in EU law, Dublin City University

In June the last bail-out agreement was struck with Greece signalling the end (at least for now) of the Greek financial crisis. The Asset Purchasing Programme of the European Central Bank (ECB), also known as Quantitative Easing, has ended in December 2019. And the most recent case in the important euro-crisis case-law, the Weiss case, has been decided in December. This is not to say that the discussion surrounding the economic and monetary union is finalized, nor that no financial crisis will ever rise again. It is therefore important to reflect on the past crisis and prepare for the next.

During the euro-crisis several topics were an important point of discussion, but none was as prevalent as the question into the powers of the ECB. More precisely to what extend may monetary policy impact economic policy?  The Treaty on the Functioning of the European Union (TFEU) clearly splits economic and monetary policy. Whereby economic policy is left for the Member States to conduct and monetary policy is within the competence of the ECB. The euro-crisis, however, has shown that these two policies are not so easy to separate. Leading to separate cases where the Court had to decide upon the lawfulness of the OMT programme (Gauweiler, discussed here) and Public Asset Purchasing Programme (Weiss). With the crisis and the Decision of the Court behind us, it is time to add-up the scores and answer the question to what extent may the ECB enter the field of economic policy and what instruments has it gained?

Brief recap

In order to assess the impact of the crisis it is first necessary to make a brief overview of the state of the art before the crisis. The monetary goal of the ECB in the TFEU was described as price stability which is by the ECB defined as inflation close to but under 2%. In addition the ECB may support, without undermining monetary policy, general economic policy.

The instruments available to the Bank are listed in the Protocol of the ESCB, Article 18.1 defines two clear instruments. The first is the purchase and sale of marketable instruments, the second is to conduct credit operations. According to the Article 123 TFEU the ECB is prohibited from directly financing Member States and according to Article 125 TFEU the ECB may not bail-out Member States. Pre-crisis these formed the most important contours of ECB’s powers with regard to monetary policy. Then came the euro-crisis.

Crisis case law

The euro-crisis case law exists of three major cases Pringle, Gauweiler and Weiss. The Pringle case did not involve the ECB but concerned the ESM programme, in the form of a treaty between Eurozone Member States to assist those among them which were having economic difficulties. It is nevertheless an important case as the Court accepted that there can be overlap between economic and monetary policies. This approach abandons the strict separation that flows forth from the Treaties. From the perspective of the ECB this is not very unexpected as the ECB is allowed to conduct monetary policy and support economic policy. The problem however is the definition of “support”. The word support entails that it may not determine economic policy, but the line between the two seems vague.

In the Gauweiler decision the Court stated that in order to determine whether a measure is of monetary or economic policy the objectives and instruments have to be assessed. The OMT programme under discussion in the Gauweiler case had as objective to restore the monetary transmission channels and the singleness of monetary policy (paras. 46-49). This included counteraction against the speculation of a break-up of the Eurozone. Adding the objective of keeping the euro together may not have fallen within a strict adherence to the law. It is however not strange that the ECB chose to save the euro. The Eurozone falling apart may have led to further implications for the price stability goal.

The second criterion in determining whether a measure is of monetary or economic policy is that of the instruments used. In the Gauweiler case it became clear that these operations may have economic effects (para. 52).  They may however not be violating either directly or in spirit the no-bail out clause and the prohibition upon direct lending. The Court determined the main criterion to evaluate this was by asking the question whether the impetus to keep a sound budgetary policy is kept.

The Weiss case added that these so called “indirect effects” do not have to be unforeseen and can be knowingly accepted (para. 62). The Court furthermore states that in order to reach inflationary goals the ECB’s policy will impact interest rates and the real economy – thereby accepting that monetary policy, in order to be effective, will often impact economic policy (para. 63). This conclusion is neither unexpected, nor unwanted per se as the Treaty clearly provides the ECB the power to support economic policy. Yet in the Gauweiler case the Court also accepted the role of the ECB within the so-called Troika.

The Troika consists of the Commission, ECB and the IMF and has been given shape in the ESM Treaty. This Treaty provides the Commission, IMF and the ECB, when a Member applies for support, with the task to negotiate and monitor the Memorandum of Understanding (MoU) with the Member in need of assistance. This MoU contains many aspects arguably economic in nature. The negotiation and monitoring is considered by the Advocate General as one of economic policy. The Court does not go into this matter in its judgement. By not going into the role of the ECB within the Troika the Court arguably accepts – or at least allows this function. It therefore seems that during the crisis the ECB has gained the power to negotiate and implement certain economic goals. These instruments are difficult to view as monetary policy instruments. The remaining option is to classify them as in support of general economic policy.

Weiss – the last chapter?

Arguably the last chapter, at least for now, in crisis case law is that of the Weiss case. In the Weiss case the programme under discussion was that of the Public Sector Purchasing Programme (PSPP). Unlike the OMT programme the PSPP has actually been implemented. Legally, however, this makes little difference as the OMT programme was adjudicated as if it would be implemented. This programme is technically one of four programmes conducted under the Asset Purchasing Programmes. The word technically is used in this context because the PSPP purchases far outweigh the other programmes. In the last month of the programme the PSPP volume was a rough 81% of the total purchases.

This is interesting to note as one of the criticisms after the Gauweiler case was that the arguments of the ECB were taken at face value. This seems the case for the argument given by the Advocate General (para. 150.) that PSPP is “just one of the four-programmes”. Part of this might be because the Court only assesses whether the ECB has made a “manifest error of assessment” (para. 91). In the same paragraph the Court however also states that monetary policy decisions are usually controversial and “nothing more can be required of the ESCB apart from that it use its economic expertise and the necessary technical means at its disposal to carry out that analysis with all care and accuracy”. This almost creates a situation whereby technical assessment of the ESCB’s judgement is impossible, as it is difficult to find a body appropriate to “second-guess” the ECB’s decision-making.

Another main difference between the two programmes was that the OMT programme was only to be applied to countries that fulfilled certain conditionality requirements.  The PSPP on the other hand was a general programme, which is arguably closer to the ECB’s monetary goals. The Court considers that a general programme can still breach the monetary assistance prohibition of article 123 TFEU if the ESCB creates a de facto certainty of purchase for the primary actors (para. 110). 

Interestingly it also considers that due to the division key the more debt a Member State accumulates, the lower the proportion the national bank buys (para. 140). Therefore despite the general application of the programme the ESCB is still able to uphold the incentives for individual Member States to keep a sound budgetary policy. Unlike the referring court the ECJ does not go into the numeral specifics of the volume of purchases. Thereby indirectly confirming the budgetary independence the ESCB enjoys. This, however, also indicates there are few or no organs within the EU to check the details of ESCB decisions.

Conclusions

With the euro-crisis slowly becoming history (at least for now) it is time to assess its impact. The impact of the euro-crisis upon the European Central Bank has been serious. Case law has shown that monetary policy and economic policy are not strictly separated and one may influence the other (Gauweiler). This influence cannot be contrary to monetary policy but the effects can be foreseen and knowingly accepted (Weiss). Secondly the power of the ECB to support general economic policy is more clearly defined. This power may include the task to negotiate and monitor compliance of fiscal reforms. The legality and consequences of the latter caused debate amongst scholars and could form a cumulative process that should be carefully watched.  The Weiss case did not bring major reforms, nor does it seem out of place. It however further demonstrated that there are few organs to check the specific arguments put forward by the ECB. Though the ECB was designed as a highly independent bank it is difficult to imagine that this level of independence was desired.

Welcome to Hard Look Review, ECB

Carlos Bosque* and Alejandro Pizarroso**

* Legal Counsel at the European Investment Fund. Doctoral Candidate at the Universidad Carlos III de Madrid

** Legal Counsel at the Bank of Spain. LL.M. Graduate at the Columbia Law School

The views expressed herein are those of the authors, and not of the European Investment Fund or the Bank of Spain

Discretion, like the hole in a doughnut, does not exist except as an area left open by a surrounding belt of restriction. It is therefore a relative concept. It always makes sense to ask, “Discretion under which standards?” or “Discretion as to which authority?”

-          Richard Dworkin

Some European cases (and many recent ones, like the decision on the lawfulness of the public sector asset purchase program, discussed in the post above) seem to immediately draw the attention they deserve. Others, however, tend to go unnoticed. Among these, we may find La Banque Postale (T-733/16), a General Court case (sided by five identical rulings concerning other French credit institutions) dealing with the review of ECB supervisory decisions, which resulted in the annulment, for the very first time, of one such decision. The case revolved around the degree of discretion that the ECB should enjoy in its supervisory action. The message sent by the General Court was, however, quite clear. It effectively welcomed the ECB to a heightened standard of review —to hard look review.

We will analyse this question here, but first we turn to the case.

 The facts are quite simple. In the aftermath of the Financial Crisis, the European Union legislator introduced a leverage ratio in order to discourage financial institutions from taking on excessive leverage risk. This ratio assesses the capital of an institution in relation to its exposures. But it does so independently of the risks associated to the latter, so as to measure the overall exposure of an institution. Some exemptions are nevertheless permitted. In 2014, Article 429(14) of Regulation 575/2013 was passed, creating a derogation for exposures arising from the deposits that an institution may be forced to transfer to a public sector entity for the purposes of funding general interest investments. The ECB, says Article 429(14), “may permit” these exposures to be excluded from the calculation of the leverage ratio of an institution.

Pursuant to this provision, La Banque Postale requested the ECB to exclude from the calculation of its leverage ratio the amounts collected through certain regulated savings accounts that it was legally bound to transfer to a public entity. The ECB, however, rejected its request. It advanced three reasons for its decision. First, it argued that the institution remained globally liable for these exposures. Secondly, it noted that La Banque Postale was obliged to reimburse its depositors for the amounts transferred to the public entity, independently of whether the latter returned the funds to the institution, and even in the event of France’s default. Finally, the ECB contended that the inevitable delay when retrieving the funds from the public entity could lead to a fire sale in the case of a bank run. La Banque Postale, whose leverage ratio denominator was to raise by 50% from such refusal, challenged this decision.

The case presented two issues: (1) whether the ECB had discretion in the application of the exemption; and, if so, (2) whether the ECB had exercised its discretion in a permissible manner.

While the first issue was relatively easy to decide, given the clear language (“may permit”) of the provision, the second issue was rather more thorny. Having established that the ECB enjoys discretion in the application of the exemption provided that the conditions in Article 429(14) are met, the General Court turned to the second question. The answer was clear: the ECB did not exercise its discretion in a permissible manner. To reach this conclusion, the General Court relied on its traditional standard of review for discretionary decisions. EU courts —it noted— must not substitute the judgment of administrative bodies; their assessment is confined to determine whether an administrative decision is based on materially incorrect facts, or is vitiated by an error of law, manifest error of appraisal, or misuse of powers. But the application of this standard was quite interesting.

According to the General Court, the first two grounds put forward by the ECB were affected by an error of law, because the ECB denied the exemption on reasons that were inherent to the exposures referred to in the provision, thus rendering the exemption almost inapplicable. The possibility that France may default —the main basis for its decision, as the ECB admitted during the trial— was specifically dismissed. Since the derogation in Article 429(14) refers only to amounts deposited in a public entity, which are thus state backed, the possibility that the country in question may default cannot be grounds for denying the exemption.

But the opinion also found that the third reason advanced by the ECB was vitiated by a manifest error of appraisal. The General Court noted that, even if the liquidity risk identified by the supervisor may materialize in some cases, the ECB had previously admitted that small delays in retrieving the funds from the public entity were immaterial for the assessment of the institution's liquidity ratio. The ECB, in fact, had established such view in a previous decision concerning the liquidity ratio of La Banque Postale, and its analysis was backed by the EBA. This incoherence, the court found, runs counter to the principle of sound administration that applies to all EU institutions. The ECB’s decision denying the application of the exemption was therefore annulled.

In our view, this ruling should not go unnoticed. Certainly, it is the first time that a supervisory decision of the ECB has been annulled since the Single Supervisory Mechanism became operational in 2014. But how should we read this case? The little attention that the judgment has drawn appears striking if, as we are inclined to think, the General Court is sending a clear message to the ECB with respect to its discretionary powers in the field of banking supervision.

The General Court, in fact, seems to be welcoming supervisory decisions to hard look review, a term coined in the United States to refer to the rigorous standard of judicial review applied to agency's action since the 1970s (the phrase is usually associated with the US Supreme Court decision in State Farm). The General Court recites its usual standard of review for administrative discretion, but as Professor Craig has taught us, what really matters is how the test is used, the intensity of review that the court applies (Paul Craig, EU Administrative Law 445 (3rd ed. 2018)). It is true that the two specific rules that can be extracted from the case (i.e. discretion cannot be exercised in a way that runs counter to the objective of the provision being applied or its effet utile, and discretion does not allow an administrative body to be incoherent in its assessment over a given subject) appear to be reasonable.

But what matters is how scrupulous the assessment of the General Court was, as evidenced by the (at times, excruciating) lengthiness and complexity of the ruling. The court avoids substituting the ECB’s judgment. However, it carefully weighs each and every one of its arguments, despite the clear discretion afforded by the governing rule, and regardless of the issue’s technical nature. The court seems to be telling the ECB that, unlike monetary policy, where it “must be allowed … a broad discretion” (Gauweiler, C-62/14, ¶ 68), banking supervision is an area of the law where stringent review of discretionary administrative action applies.

The General Court, though, offers a way out for the ECB —sufficient justification. While the opinion does not specifically highlight this aspect, it suggests that by formulating clear reasons for its decision the ECB could have denied the application of the exemption. By carefully examining the plausibility of France's default or the liquidity risk incurred by La Banque Postale for the transfer of funds to a public entity, the General Court seems to say, the decision could have been upheld. But it is now clear that, in its supervisory role, the ECB is but another administrative body of the EU, whose action will be subject to intense scrutiny on the part of the General Court, and whose decisions will have to be carefully justified in order to survive this heightened standard of review.

Whether this development should be praised (enhanced judicial review?) or not (ossification of administrative action?) is a matter of opinion. This is an issue where reasonable minds can reasonably disagree, but its importance justifies giving it the attention it demands. The conclusions drawn here are tentative, as we need to see whether subsequent judgments (by the General Court or the Court of Justice) will conform to this case law. However, La Banque Postale should serve as a warning —welcome to hard look review, ECB.

Barnard & Peers: chapter 19

Photo credit: Flickr

Towards a European Monetary Fund: Comments on the Commission’s Proposal

Michael Ioannidis, Senior research fellow, Max Planck Institute for Comparative Public Law and International Law, Heidelberg.

On 6 December, the European Commission presented a package of proposals on the further integration of the Eurozone. This was the first effort of European institutions to put on paper the rules that could shape post-crisis EMU, an issue that took centre stage in European politics after Macron’s election in France and will probably receive a new impetus after the formation of the new government in Germany. The most important part in Commission’s package is the proposal to bring the European Stability Mechanism (ESM) within the EU framework. The ESM, Europe’s main financial assistance mechanism, was set up in 2012 by an international treaty between Eurozone Members. For various reasons, legal and political, it was established as an organization of public international law, outside the EU. The Commission now proposes that the Council adopts a Regulation to make the ESM “a unique legal entity under Union law”, change its name, and add few more tasks to its mandate. Annexed to the proposed Council Regulation is a Statute governing the new body that is largely (but not entirely) based on the current ESM Treaty (ESMT).

Rebranding

The proposed Regulation starts with a marketing exercise, rebranding the ESM as EMF (European Monetary Fund). The name EMF was popularised by academics at the beginning of the crisis as part of the call to establish a European assistance mechanism, a suggestion that was practically largely realized with the establishment of the ESM in 2012. The name EMF remained, however, in the agenda of policy-makers as a symbol of Europe eventually getting its own regional equivalent of the IMF – and becoming less dependent on the latter in future crises. The Commission takes on board the widespread charm of the name EMF – but this is not a choice without its problems.

The new name, having “monetary” at its centre, alludes to the monetary tasks within the EMU that the TFEU (and the CJEU in Pringle) clearly distinguishes from economic policies and ascribes exclusively to the ECB. Quite expectedly, the body with the closest name to EMF in European institutional history was the European Monetary Cooperation Fund (EMCF), established by Regulation (EEC) No 907/73 with monetary-related tasks. Even if one admits the allure of IMF’s acronym, two things need to be reminded of. First, the original name under which the IMF itself was conceived was “International Stabilization Fund” (ISF). The reason for ultimately adopting IMF instead of ISF was United Kingdom’s (and JM Keynes’) insistence that the word “stabilization” alluded to the stabilization funds of the past, used to influence currency exchange rates and connected to unpleasant British experiences of keeping the pound pegged to the international gold standard. Such connotations are not of contemporary concern.

Second, the IMF, which has access to financial resources through the central bank reserves of its members, has closer connection with proper monetary authorities than the ESM, which is financed by issuing bonds in capital markets. The establishment of the European Financial Stabilisation Mechanism (EFSM) by the EU in 2010, a body within the EU framework and very similar function with the EMF, attests to the view that the words “Stability” or “Stabilization” are accurate descriptors of the function of the future EU financial assistance mechanism. ESF (European Stability Fund) could thus be a plausible alternative to EMF.

Conditionality

The Commission rebrands the ESM to mirror the IMF’s name, but it is much more hesitant to give the new body real IMF-like teeth. There is one single concept that made the Washington-based prototype famous: conditionality. That is, the power to set and monitor the conditions under which countries can access IMF resources. In Commission’s proposal, though, conditionality is not a job for the EMF but mainly for the Commission itself.

During the crisis, the conditionality task was shared by three, and later four, institutions: the Commission, the ECB, the IMF, and, at a later stage, the ESM. The Commission’s proposal deletes all references of the ESMT on the involvement of the IMF in Eurozone conditionality, but does not give this role to the EMF. Conditionality is for the Commission to keep. According to Art. 13 of the proposed EMF Statute, conditionality is negotiated by the Commission, in liaison with the ECB, and “in cooperation with the EMF”. “Cooperation” is admittedly a very weak form of involvement, especially if it’s compared with the phrase “together with” that previously described IMF involvement in the ESMT. Moreover, MoUs shall be signed both by the Commission and the EMF. In the ESMT, in contrast, MoUs where signed by the Commission “on behalf” of the ESM. The phrase “on behalf”, establishing an agent-principal relation between Commission and the ESM, is now stricken out, meaning that the Commission becomes legally a co-owner of EMF conditionality. Finally, under the proposed EMF Statute, compliance with conditionality is being monitored solely by the Commission, in liaison with the ECB. No role is explicitly provided for the EMF in this critical phase.

The no-bailout clause and conditions for assistance

At the beginning of the crisis, when the idea of a financial assistance mechanism for Eurozone Members was first tabled, Art. 125(1) TFEU appeared to many as a critical legal obstacle. Art. 125(1) TFEU contains two sentences with two identical prohibitions. The first is directed to the EU and the second to the Member States. Both the Union and the Member States “shall not be liable for or assume the commitments” of (another) Eurozone Member State.

Considering that ESM assistance could be seen as indirectly amounting to an assumption of commitments, the Member States thought necessary in 2011 to introduce Art. 136(3) in the TFEU. According to this provision, “[t]he Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality”. Drafted with the ESM in mind, Art. 136(3) TFEU only refers to the establishment of a fund by Member States and not by the EU. It thus “clarifies” only the second sentence of Art. 125(1) TFEU.

Does that mean that establishing the EMF as an EU body contravenes Art. 125(1) first sentence TFEU? The answer is no. In Pringle, the CJEU adopted an interpretation of Art. 125(1) TFEU that allows financial assistance if it is indispensable for the stability of the Eurozone and is coupled with “strict conditionality”. Although in Pringle the Court was called to interpret the second sentence of Art. 125(1) TFEU, that is directed to the Member States, the first sentence, which will be relevant for the EMF, should be read in the same way: a Fund established by the EU that meets Pringle-conditions is compatible with Art. 125(1) TFEU.

Whether the Commission’s proposal is fully Pringle-compatible, however, is not straightforward. The proposal introduces a fundamental difference to the ESMT that seems to go unnoticed in Commission’s explanations of the proposal. It refers to the objective of the EMF and the conditions for offering assistance. Currently, under Arts 3(2) and 12 ESMT, assistance is possible “if indispensable to safeguard the financial stability of the euro area as a whole and of its Member States”. According to the Commission’s proposal, however, the EMF can provide assistance if “indispensable to safeguard the financial stability of the euro area or of its Members” (emphasis added). Deleting the phrase “as a whole” (in Art. 12) and replacing “and” with “or” (in Arts 3(2) and 12 of the proposed Statute) means that a crisis that threatens the stability of a single Member State but not the euro area as a whole can (and shall) prompt action from the EMF. This is a very important shift of focus from Eurozone to the Member States.

This change needs to be assessed in light of the judgment of the CJEU in Pringle and the spirit of Art. 136(3) TFEU. In paras 136 and 142 of Pringle, the Court follows para. 5 of the ECB Opinion on the draft amendment to Art. 136 TFEU, presenting as condition of financial assistance that such assistance is indispensable for the euro area’s stability. Moreover, Art. 136(3) TFEU, although not directly applicable to the Regulation proposal because EMF will be a Union body, expresses the same central idea: an assistance mechanism may be established with the objective to offer assistance “if indispensable to safeguard the stability of the euro area as a whole.”

Control by the Council and the European Parliament

Under the proposal, the EMF is a “unique body of EU law”, independent, and governed by its own Board of Governors and Board of Directors. In order to be compatible with the Meroni principle (the EU law principle which limits the delegation of powers), Art. 3(1) of the proposed Regulation requires that the Council is responsible for approving a series of important decisions of the EMF Board of Governors and Board of Directors. The Council approves these decisions following the qualified majority rules provided in Art. 238(3) TFEU.

This arrangement creates two complications. First, the majority required for Council approval is different from that envisaged in Art. 4 EMF Statute both in terms of the necessary thresholds and the basis for their calculation. Art. 238(3) TFEU requires 55% of the members of the Council representing the participating Member States, comprising at least 65% of the population of these States while Art. 4 EMF Statute requires 85% of voting rights that are equal to the number of share allocated to it in the authorised capital stock of the EMF. It is thus legally possible that a decision that has the support of 85% of voting rights/shares is not backed by the minimum of 11 Member States required in the Council. Second, the Council approval makes the Council, an institution of the whole of the EU, responsible (also judicially) for the decisions of the EMF, a body of the euro area.

Moreover, the proposed Regulation claims to make the EMF accountable to the European Parliament. The EMF is required to submit reports, respond to oral and written questions, and accept invitations to its Managing Director. There are two difficulties with such an accountability scheme. First, these are only reporting obligations and do not allow the Parliament any influence in the actual decision-making of the EMF. Second, the European Parliament may not be an adequate forum for EMF accountability purposes in the first place. Members of the EMF are only euro area Members, but in the European Parliament and the Council all EU Member States are being given seats, not only those that have adopted the euro. The EMF is thus made accountable to institutions with a different composition than the Members that provide for its capital.

Is Art. 352 TFEU a sufficient legal basis?

The Commission suggests as legal basis of the proposed EMF Regulation the flexibility clause of Art. 352 TFEU. Art. 352 TFEU allows the Council to adopt measures when Union action is necessary to attain one of the objectives set out in the Treaties and the Treaties have not provided the necessary powers in other provisions. The latter condition is easily met in this case. In Pringle, the CJEU ruled that the Treaties, and Articles 2(3), 5(1), 122(2), and 143(2) TFEU in particular, do not contain an appropriate legal basis for the establishment of a stability mechanism. Moreover, the objective of the EMF, namely to ensure the financial stability of the euro area, does fall within the Union objective to establish an economic and monetary union.

The critical question for the applicability of Art. 352 TFEU is whether the establishment of the EMF is also “necessary” to attain those objectives. Here, the picture gets more complicated. Since the establishment of the ESM in 2012, the Eurozone disposes of a financial assistance mechanism to assist Members in distress and to safeguard Eurozone stability. That might mean that the establishment of the EMF by means of a Regulation is not any more necessary. In order to satisfy Art. 352 TFEU, what needs to pass the necessity test is not the existence of an assistance fund – such a fund already exists; it is rather the integration of the fund in the EU framework that the Commission must prove to be necessary. This is a more difficult test for the EMF proposal.

A final issue with regard to Art. 352 TFEU has to do with the extension of Union competences. In its Opinion 2/94, the CJEU has ruled that Art 352 TFEU “cannot serve as a basis for widening the scope of [Union] powers beyond the general framework created by the provisions of the Treaty as a whole and, in particular, by those that define the tasks and the activities of the [Union].” The question in this context is whether a future EMF – a Union body – that employs “strict conditionality” to its funding programmes goes beyond the allocation of powers the Union, which in the field of economic policy has simply coordinating competences. The Eurozone experience shows that this is possible. The macroeconomic conditions that have been tied to financial-assistance packages since the beginning of the crisis seem to go beyond coordination in intensity and beyond EU competences in breadth. As long as ESM was an intergovernmental organization this did not pose such critical competences question – although it has been raised with regard to the Two Pack reforms. This critical question, which goes directly into the question of the extent to which the Treaties allow a real economic Union, will need to be revisited if the EMF plans succeed.

Barnard & Peers: chapter 19

Photo credit: www.bibliotecapleyades.net

The European Fiscal Board’s first report and the future of the EU’s fiscal framework

Paul Dermine (PhD candidate in EU institutional law, Maastricht University) and Diane Fromage (Assistant Professor of European Law, Faculty of Law, Maastricht University)

EU Fiscal Governance in the post-crisis era: The start of the reflection period and the European Fiscal Board’s first report

Recent events suggest that the Eurozone may soon be entering a new phase of its short but already tumultuous life. As the dust of the sovereign debt crisis starts settling, and the continent slowly returns to growth, winds of change are blowing across the zone, and EMU reform is back on the agenda and hence ardently debated at EU and Member States level. The context is thus ripe to critically reflect on the economic governance system the crisis has brought about, and on the actions carried out by the EU institutions and the Member States within that setting.

This post offers to do just that with regard to fiscal governance. As is well known, the crisis precipitated a substantial upgrade of the rules making up the European fiscal discipline, and an unprecedented strengthening of the surveillance paradigm in the field of budgetary affairs. Since it entered into force, this new normative catalogue introduced mainly by the Six-Pack and the Two-Pack reforms, as well as its main enforcer, i.e. the European Commission, have attracted a great deal of criticism (from the European Central Bank (ECB), the International Monetary Fund and some Member States).

The last blow came recently, from the newly established European Fiscal Board (EFB), which did not wait long before hitting hard. Indeed, the EFB’s creation was first announced in the June 2015 Five Presidents report. The EFB was to ‘coordinate and complement the national fiscal councils that have been set up in the context of the EU Directive on budgetary frameworks. It would provide a public and independent assessment, at European level, of how budgets – and their execution – perform against the economic objectives and recommendations set out in the EU fiscal governance framework. […Furthermore, s]uch a European Fiscal Board should lead to better compliance with the common fiscal rules, a more informed public debate, and stronger coordination of national fiscal policies.’ Its Chair – the Dane Niels Thygesen (a former member of the Delors Committee) – and its four members were designated at the end of 2016 when it hence started to function.

In its first annual report ever, published on 15 November, the EFB presents a mixed picture of the current regulatory framework, and the Commission’s action as its guardian. It focuses on three issues: an evaluation of the implementation of the EU's fiscal framework, a review and assessment of the fiscal stance for the euro area as a whole, and the identification of best practices in the functioning of national fiscal councils. It concludes with some suggestions on the future evolution of the EU’s fiscal framework.

In performing its evaluation, the EFB in fact underlines three characteristics of the current fiscal governance framework that will guide our analysis: its complexity, its persistent asymmetry and the important discretion left to the Commission in the application of the rules in place. It furthermore analyses the possibility of centralized fiscal stabilization within the Euro area.

This report constitutes a welcome opportunity to explore some of the main challenges the EU fiscal governance currently faces, and to suggest potential reform avenues.

Such endeavour is all the more timely as the reincorporation of the Fiscal Compact into EU law and the review of the Six-Pack and Two-Pack reforms will constitute key priorities of the upcoming December EMU package of the Commission. Such political momentum will certainly offer broader opportunities to further enhance and streamline the Stability and Growth Pact (SGP), and the other instruments making up EU fiscal governance.

Background to the EFB’s first report

Before proceeding with an analysis of the EFB’s first report, a few reminders are in order. As is well known, the crisis precipitated a fundamental overhaul of EU fiscal governance. On the one hand, the procedural framework for fiscal surveillance and coordination was substantially strengthened, most notably by increasing the scope and intensity of the oversight exercised by the EU on national public finances. On the other hand, the very substance of the fiscal rules Member States are subject to was tightened and further expanded.

In a nutshell, the fiscal targets are now defined more strictly, requiring stronger yearly adjustment efforts from the Member States. If the deficit remains the central criterion of the EU fiscal discipline regime, the debt criterion has been further operationalized, and an expenditure benchmark was added. The reliance on structural rather than nominal indicators has been further generalized. These developments show the clear intent of the EU to exercise close and continuous scrutiny over all aspects of national budgets, in order to enhance their overall sustainability.

However, conscious of the need to accommodate a range of contingencies, and eager to preserve a certain room for flexibility, the Six-Pack reform has also multiplied the escape clauses entitling Member States to derogate from their budgetary obligations under certain circumstances (i.a. structural reforms implementation, severe economic downturn).

The overpowering complexity of EU fiscal governance

Certainly, a major shortcoming of this new normative body is its overwhelming complexity. In the post-crisis era, EU fiscal discipline consists of a dense web of detailed rules and sub-rules governing public debt, deficit and expenditure. Those rules display a high level of prescription and specificity, and yet, are tempered by an equally complex array of general escape clauses and potential loci for flexibility and derogation. Further increasing the systemic intricacy of the EMU fiscal discipline regime, the rules are spread over different EU regulations and directives, partially replicated in international treaties and national laws (which do not always fully overlap).

Against that background, it is proven that national authorities struggle to understand the exact rules they are to abide to, and the margin of manoeuvre they still enjoy under the current framework. Such lack of clarity also undermines transparency with regard to the rules’ ‘indirect’ addressees, namely the general public and the markets, and may in the long run harm the efficiency of public oversight and market mechanisms as enforcement channels of fiscal discipline in the EMU.

Quite obviously, there is a strong need for simplification. Even the European Commission seems to acknowledge that. Too many rules, too many operational targets do not favor compliance, monitoring, enforcement and overall intelligibility, thereby undermining the legitimacy of the EU’s actions. In that regard, interesting proposals for reform are currently on the table. Correctly positing that the ultimate aim of the EU fiscal regime is the preservation of debt sustainability, IMF officials and, although to a lesser extent, the EFB consider that the system would gain in readability and overall efficiency if it were to revolve around one fiscal anchor (the debt ratio instead of headline deficit) and one operational target (possibly the ‘fiscal effort’ variable). In a similar fashion, a substantial streamlining of the existing escape clauses would also appear necessary.

The structural asymmetry of EU fiscal discipline

Another important issue inherent to the current regime is its structural asymmetry. From the outset, the SGP was designed as a tool to correct excessive deficit and debt levels and tame profligate States. Its rules and procedures are thus exclusively driven by that objective, and the crisis further strengthened this focus. Conversely, the rules do not contemplate that States may be too frugal. Under the SGP, surplus equals balance, and surplus countries are under no parallel duty to bring their fiscal position back to equilibrium. As an asymmetric construct, the SGP is one-sided, and toothless when it comes to dealing with too ‘virtuous’ countries.

This has proven particularly problematic over the last few years, as the Commission was seeking to achieve a positive fiscal stance for the Euro area, and sought to enjoin the few Member States accumulating large budgetary surpluses (such as Germany, Luxembourg or the Netherlands) to engage in mildly expansionary policies by using the available fiscal space and boosting public investment. Under the current regime, such injunctions are at best wishful thinking, and lack any kind of legal support in the texts.

In our view, such asymmetry ought to be corrected, especially at a time when Europe heavily suffers from an investment backlog. Does this mean that an ‘Excessive Surplus Procedure’ should be established? This would probably be a step too far. But if the achievement of budgetary equilibrium is to be the ultimate rationale of the SGP, its provisions should be amended so that when appropriate, fiscal expansion too can be commanded.

How complexity and flexibility empower the European Commission

The current regime’s inherent complexity and flexibility, combined with the conceptual indeterminacy of some of its founding concepts (such as that of the output gap), have also created significant room for administrative discretion, which the Commission has been very eager to exploit. It is indeed impressive to note that at any key stage of the surveillance procedure organized by the SGP (either under its preventive or corrective arm), the Commission enjoys discretion and needs to exercise judgement.

Under a supposedly rules-based system, this appears to be problematic (to some extent at least), and obviously comes at the expense of the predictability, even-handedness and efficiency of the entire regime. The main risk is that certain choices of the Commission may no longer be economically motivated, but founded on political or ad hoc considerations that may run counter to the economic rationale underlying the EMU fiscal framework. In that regard, one may for example mention the very generous decision of the Commission that Italy was eligible to the ‘structural reforms’ escape clause, or its lenient stance in the framework of the Excessive Deficit Procedure against France, which was never stepped up despite the clear insufficiency of the French consolidation efforts ('Because it is France' was the main justification expressly advanced by Juncker).

The surprising decision of the Commission in the summer 2016 not to impose sanctions (even symbolic) on Spain and Portugal for failing to take corrective action in the framework of their EDP, also shows that discretion may come at the expense of enforcement and, ultimately, of compliance. This notwithstanding, it is clear that a system of smart rules cannot do without a dose of flexibility and discretion. In the future, the focus should therefore not be on trying to erase the loci for administrative judgement, but on making sure that such judgement is primarily driven by an economic, non-political rationale.

This might however prove difficult as the Commission (also) needs to ensure that its actions remain legitimate in the eyes of the citizenry in addition to guaranteeing the EU’s fiscal stability and it arguably has to take account of the fact that its decisions to impose fines on non-complying Member States can only be overcome by qualified majority in the Council. Simplifying the normative corpus should nevertheless help in pursuing this objective of economically-based decisions. The Commission should also be more transparent on its methodologies, and consistent in their application. On a different note, the risk of biased, political application of the SGP by the Commission primarily comes from its current hybrid nature: “between an independent executive agency and a political government”, as the EFB rightly puts it (p. 63).

Such risk may be mitigated by a stronger reliance on economic advice independent of short-term political considerations. Where this input should come from remains to be seen. Quite naturally, the EFB has already offered its services. On the face of it, the EFB’s role is significantly different from that of national fiscal councils since it is not bound to take an active role in the implementation of the EU fiscal framework; rather it has to evaluate the Commission’s actions in this regard.

By contrast, even if national councils in most cases do not issue decisions binding on their governments, they have to produce or endorse macroeconomic previsions, they declare the activation of the automatic correction mechanism etc. In its evaluation, the EFB offers to endorse responsibilities closer to that of national councils.

Finally, in an attempt to further reduce discretion, EMU fiscal discipline could gain in consistency, foreseeability and congruence if it were to rely on smarter enforcement mechanisms by means of financial sanctions. Financial sanctions have shown all their limits in the past. In our view, macroeconomic conditionality, i.e. linking access to EU funds to (an almost) compliance with the fiscal rules of the SGP, could be the way to go. It is already used under the current multiannual financial framework, although in a much limited way. The pattern could be generalized under the next framework.

Towards a Fiscal Union?

Next to the issues of complexity, asymmetry and discretion visible in the EU fiscal framework, the question of centralized fiscal stabilization also deserves attention. The Eurocrisis has brought out in the open the founding insufficiencies of the rules-based paradigm, and the necessity to transcend such approach by endowing the supranational level (the EU or the Eurozone) with a fiscal capacity of its own is now clearer than ever.

This shift from negative to positive fiscal integration could take the form of unemployment insurance or investment protection, with the exemption of investments from the golden rule or not. The introduction of a rainy-day fund – also envisaged by the Commission – could also be a possibility. In our view, such a fund could appear to be a valuable option since it would function on the basis of accumulated resources regularly paid by Member States which would have a direct incentive to follow SGP rules. To this type of fund or an unemployment insurance the EFB however favors the protection of investment, which admittedly should be guaranteed too; perhaps it is also the least bold shift towards an unpopular Fiscal/Transfer Union.

Another possibility could be the introduction of an EU budget. Although the EFB acknowledges that this debate falls outside of its remit, it provides its opinion ‘as economists involved in the analysis of public finance more generally’ (p. 67), thereby arguably affirming its standing in the more global EU financial area. The form this budget should take – whether as a dedicated euro area budget (as recently suggested by President Macron) or as a dedicated budget euro area budget line in the EU budget (as envisaged by the European Commission) – is left open; in the absence of a dedicated euro-area parliamentary arena, perhaps the latter option is preferable to avoid further increasing the European democratic gap.

Beyond this, such a move would significantly go beyond the sole fiscal stabilization and adopt a broader stance on fiscal policy. This move, which would in fact represent the return to a perspective adopted at previous stages of the European integration process, would indeed be particularly welcome as it would (eventually) provide remedy to some of the shortcomings of the current fiscal policy design.

What does this report tell us?

This report is, in our view, important for at least two reasons. First, it bears a valuable assessment of the current EU fiscal framework as implemented by the Commission at a time when reflections on the future of the Eurozone architecture are high on the EU agenda. Second, it clears up certain doubts that could have existed when the EFB was first established, in particular as to its capacity to provide a truly independent assessment of the Commission’s actions. Indeed, concerning the latter point, a certain degree of uncertainty existed in light of the close ties between the EFB and the Commission, as well as in light of the absence of the EP’s involvement.

Furthermore, the EFB’s ability to act as an authoritative institution was not a given since it was established as a completely new institution that hence had to first prove its reliability (and independence). The content of the first report analysed here appears to indicate that the EFB is likely to surpass both hurdles successfully, at least as long as it is chaired by the prominent and respected expert Niels Thygesen.

Concerning the future of the EU fiscal framework, it certainly provides a useful and timely assessment. It both highlights the weaknesses in the current fiscal framework and in its enforcement by the Commission and makes a valuable contribution to the debate on its reform; this contribution is all the more valuable as it stems from the EU institution tasked with performing this assessment and not from the ECB or the IMF as had been the case thus far. We will now have to wait until the beginning of December to see if and how these proposals have been picked up by the Commission.

Barnard & Peers: chapter 19

Photo credit: Supertrader