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EU studies measures in cryptocurrencies and before the rise in light due to the war

EU studies measures in cryptocurrencies and before the rise in light due to the war

The European Union (EU) is studying adopting measures to prevent cryptocurrencies from being used to avoid the economic sanctions imposed on Russia for the invasion of Ukraine, as well as to mitigate the impact of the increase in energy prices for community companies.

We have decided to work on additional measures to further strengthen the effectiveness of these sanctions and prevent any circumvention. In particular, we will take provisions on cryptocurrencies, which must not be used to circumvent the financial sanctions decided by the EU.”, announced the French Minister of Economy and Finance, Bruno Le Maire, without giving details of the actions contemplated by the Twenty-seven.

Le Maire, whose country is presiding over the Council of the EU this semester, spoke in this way after the extraordinary telematic meeting of Ministers of Economy and Finance of the Twenty-seven convened to analyze the impact of the sanctions on the EU economy.

Since the beginning of the invasion last Thursday, the EU has adopted several rounds of sanctions aimed at undermining the foundation of the Russian economy, with measures affecting its financial and banking sector, transport or trade flows, and include freezing of assets in community territory of the Russian president himself, Vladimir Putin, and the circle of oligarchs closest to him, among some 700 individuals and entities sanctioned.

The economy ministers of the Twenty-seven consider that the sanctions are already proving their effectiveness with the collapse of the ruble, the “disorganization” from the Russian financial system by excluding seven of its banks from the Swift system or the “paralysis” from its central bank after the blocking of its assets, as explained by Le Maire.

But they recognize that these will have an economic cost for the EU itself, above all due to the high inflation that would derive from the increase in energy prices. The EU calculates that a 10% increase in prices would translate into an additional 0.2 points of inflation, Le Maire said.

The sanctions will have an immediate impact on our economy. It is difficult to quantify because the situation is moving fast, there are many unknowns”, added the vice president of the European Commission Valdis Dombroviskis, who stressed, however, that the European economy starts with some “solid fundamentals” and this “is a price worth paying for democracy and peace”.

Brussels believes that the crisis will slow growth, impact energy prices and supplies, including raw materials, knock down confidence and have a “direct tax cost”.

energy prices

Although the cost for the community financial system should be “contents” since its exposure to Russia is “limited”, According to the Commission, the biggest blow would come from the dependence on Russian gas, which in some countries reaches one hundred percent.

Hence, in the short term, the measures focus above all on helping those companies with an intensive use of this source of energy, more fragile or with a lot of international competition, which could be done with State aid or loans, explained Le Maire.

For this reason, the countries will explore with the Commission measures in terms of public aid, as well as energy policy, for which the Community Executive will present a communication next week.

Some of the possible actions, such as storage or the joint purchase of gas, have already been put on the table in recent months, Dombrovskis recalled.

tax support

For governments, the need to pull their budgets to help companies and households in the face of the crisis, as well as assist Ukraine and its refugees, comes after two years of fiscal stimulus to combat the pandemic and just when they planned to withdraw the bulk of some aid that escalated their debt levels.

In this context, Brussels has opened the door to keep fiscal discipline rules frozen beyond 2022, which were suspended in 2020 so that governments could spend without being penalized and were to be reactivated in 2023.

It will make a decision in May on the basis of new economic forecasts that quantify the impact of the Ukrainian crisis.

For now, the fact that less aid is needed due to the pandemic leaves more room to respond to the situation in Ukraine and countries could even redirect European funds for this purpose. Brussels is also studying the possibility of using cohesion funds for this, said Dombrovskis.

Source: Gestion

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