Even though there is only one cryptocurrency currently operating in the private sector, individuals who receive income in cryptocurrency are still required to pay taxes. The tax obligations for cryptocurrency holders are similar to those for traditional assets and income. These individuals must report their cryptocurrency earnings and transactions to the appropriate tax authorities. Failure to do so can result in penalties and legal consequences. It is important for cryptocurrency users to keep accurate records of their transactions and consult with tax professionals to ensure compliance with tax laws.
Conversation with La Repubblica
In an interview with Luis de Guindos, conducted by Tonia Mastrobuoni on 27 April 2021, the economic prospects for the euro area were discussed in relation to the ongoing pandemic. While the first quarter was weaker than expected, the pace of vaccination across Europe is gaining momentum, which is expected to have a major impact on the economy. Growth is estimated to be around 4%, and the second half of the year is expected to be very positive. The recovery plan presented by Mario Draghi for Italy is seen as crucial for the country’s future, as well as for the continent’s recovery. Draghi’s leadership skills and reputation have provided unity in the Italian Parliament, which is a positive signal for Europe. The NextGenerationEU plan is important to avoid large gaps between countries and stimulate potential growth in the medium term. It needs to be implemented quickly and accompanied by reforms to improve productivity and competitiveness. Cancelling public debt is not a solution as it would infringe on the Treaty and undermine the credibility of the central bank. The recent ruling in Germany regarding the “own resources” law is seen as an important step forward towards the issuance of joint bonds. The recovery of China’s and America’s economies compared to Europe’s recovery is not seen as a major risk, as Europe has implemented fiscal stimulus programs similar to the United States. Concerns about inflation and the strengthening of the euro are being monitored closely, and inflation is expected to rise temporarily due to temporary factors. The risk of excessive divergences between countries has been addressed through the recovery plan, which provides more funds for the hardest hit countries. The end of the pandemic and debt moratoria could lead to an increase in non-performing loans, but it is not expected to be as acute as initially feared. The possibility of a digital euro is being analyzed to benefit European citizens and the economy, and a decision on whether to initiate a project for its possible launch will be made in mid-2021.
Discussion with Dagens Industri TV
Philip Lane states that the European economy is at an inflection point. The first months of this year were dominated by measures to contain the virus, leading to restrictions on the services sector. However, manufacturing has been resilient due to the recovery of the world economy and trade. With progress in vaccinations, restrictions on the services sector are expected to be lifted, leading to a rebound and recovery throughout the rest of the year. While there has been a slight contraction in the first quarter, overall activity in 2021 is projected to be about 4% above 2020 values, although full recovery has not yet been achieved.
Hopeful anticipation in the aftermath of the pandemic
In his speech at the Finance & Leasing Association, Charles Randell, Chair of the FCA, highlighted the need for the FCA to enforce the gateway to authorisation, focus on the basics, focus on outcomes, and use their rulebook better and faster in order to be effective in the new world of financial services brought about by the coronavirus. He emphasized the need to reshape the FCA itself to meet the challenges and opportunities presented by the pandemic. Randell also discussed the importance of firms identifying and taking action to break the cycle of unaffordable debt for consumers, as well as the need for regulators and legislators to adapt to the rapidly changing world of digital activities. He concluded by stating that the transformation of the FCA requires clear commitments to stating and measuring outcomes and being transparent about whether those outcomes have been achieved.
Results of the public consultation on a digital euro released by the ECB
The European Central Bank (ECB) has released an analysis of its public consultation on a digital euro, which received over 8,200 responses. The analysis confirms that privacy is the most important feature for both the public and professionals, with 43% of respondents highlighting it as their top priority. Security, the ability to make payments across the euro area, no additional costs, and offline usability were also important factors for respondents. The majority of respondents expressed support for integrating the digital euro into existing banking and payment systems and suggested additional services on top of basic digital euro payments. Around a quarter of respondents wanted the digital euro to facilitate faster and cheaper cross-border payments, while also being usable outside the euro area with certain limitations. The consultation provided valuable input for the ECB’s decision on whether to launch a formal investigation phase for a digital euro.
Meeting the Expectations of Europeans with a Digital Euro
Fabio Panetta, Member of the Executive Board of the ECB, provided introductory remarks at the ECON Committee of the European Parliament regarding the outcome of the ECB’s public consultation on a digital euro. The consultation received over 8,000 responses, with the majority coming from citizens. The main findings from the consultation highlighted that privacy, security, and broad usability were the most important features of a digital euro according to respondents. Participants also emphasized the need for integration with existing payment infrastructures and the role of banks and payment institutions in providing services related to a digital euro. Additionally, respondents expressed a desire for faster and less costly cross-border payments. Privacy was identified as the most important feature of a digital euro, and Panetta emphasized that the ECB is committed to protecting users’ personal data. The security and usability of a digital euro were also highlighted, with Panetta noting that a digital euro would complement cash and contribute to a more diverse payments landscape. The ECB will continue its work on a digital euro and seek the views of stakeholders to find the right balance between privacy and other important considerations. The Governing Council will decide in the coming months whether to start a formal investigation phase on a digital euro, with the analysis expected to take around two years.
Conversation with El PaÃs
In an interview with Fabio Panetta, Member of the Executive Board of the ECB, conducted by Luis Doncel and published on 11 April 2021, Panetta highlights the fragility of the euro area’s recovery and the slow progress of the vaccine rollout. This slow progress is affecting the economy, as uncertainty remains high and the pandemic continues to spread in some countries, weighing on the economic outlook. Panetta notes that the euro area will not return to pre-crisis levels until mid-2022, and may have permanently lost two years of growth. Inflation is projected to remain below the ECB’s 2% target in the medium term, compared to other countries like the UK, US, and Canada. Panetta calls for more ambition to support economic activity and ensure inflation converges towards the ECB’s aim. He also emphasizes the need to provide consumers and investors with more certainty about the prospects for the European economy.
Regarding the Spanish Government’s forecasts for this year, Panetta cautions against betting on a rapid recovery and highlights the potential damage to the economic fabric that may not be immediately visible. He suggests that injecting too much stimulus is a prudent policy approach to support the economy.
Panetta acknowledges the risk of divergence in the recovery across countries and emphasizes the importance of using the EU recovery instrument wisely to achieve a more uniform exit from the crisis. He suggests that investing the funds in future-oriented growth sectors can lead to a more balanced recovery and serve as a prototype for a future common fiscal instrument.
In response to whether Europe should follow the United States’ example and provide greater fiscal stimulus, Panetta acknowledges the ambitious fiscal stimulus program in the US and its positive impact on growth. He calls for making the EU recovery instrument operational and considering more fiscal support to drive demand back to its potential level faster.
Panetta expresses hope that the German Federal Constitutional Court will make a decision on the EU recovery plan soon, as the release of European funds is crucial for a faster and stronger recovery for all Member States.
Regarding the increase in debt market yields, Panetta highlights the effectiveness of the ECB’s decisions to protect the European bond market and exert downward pressure on real interest rates. He emphasizes the importance of favorable financing conditions for achieving the ECB’s primary objective of inflation close to 2%.
Panetta discusses the diverging inflation outlook between the United States and the euro area. He notes that the US is seeing a return to healthy levels of inflation due to forceful monetary and fiscal policies, while the euro area’s medium-term inflation outlook is unsatisfactory. He suggests that with a more dynamic policy mix, the euro area could fully benefit from the improved global outlook.
Panetta expresses his desire for central bankers to become less relevant in the future by ensuring an improved economy and reaching the inflation objective. He emphasizes the need for essential decisions and action when necessary to avoid having to take even more action at a later date.
On the topic of a digital euro, Panetta highlights the need for caution and careful analysis of all key factors before deciding on its introduction. He acknowledges that other countries like China, Canada, and Sweden are more advanced in their digital currency efforts but emphasizes that it is not a race and that cooperation and learning from each other are important.
Panetta reassures stakeholders about the risks of a digital euro and emphasizes that the ECB will proceed with caution to avoid compromising financial stability or intermediation.
Regarding the ECB’s ongoing strategy review, Panetta mentions discussions on fighting climate change and changing the inflation aim. He believes that 2% is the most suitable inflation level, and it should be symmetrical. He notes that the ECB is committed to incorporating climate change as an important factor while maintaining its primary objective of price stability. An answer on these matters is expected later this year.
Monitoring High-Speed Electronic Markets in Rio
Project Rio is a live monitoring tool that connects to multiple FX trading venues and analyzes activity in real-time. It uses data streaming technology to identify market dislocations, liquidity issues, and spillovers as they occur. A user-friendly dashboard, designed for central bankers, allows for intuitive and interactive visualization of market developments. With today’s fast and interconnected markets generating millions of transactions per second, central banks face the challenge of monitoring and understanding these markets to implement policy, manage reserves, and assess risks. Rio addresses this challenge by providing real-time monitoring and analysis capabilities. It is built on open-source technologies with a modular architecture, allowing for the addition of new markets, metrics, and visuals. Rio is a cloud-based tool that will continue to evolve to meet the needs of central banks and potentially expand into other use cases beyond financial markets.
Preparing for the Future: The Implementation of Digital Central Bank Money in Europe
In a blog post by Fabio Panetta, Member of the Executive Board of the ECB, and Ulrich Bindseil, ECB Director General Market Infrastructure and Payments, they address the misconceptions surrounding the digital euro. Firstly, they clarify that it has not yet been decided whether a digital euro will be introduced at all. The ECB is still exploring the possibility and considering it conceptually. A decision to actually issue a digital euro would come at a later stage.
Questions and Answers on Twitter
Frank Elderson, a Member of the Executive Board of the ECB, conducted an interview on Twitter on March 16, 2021. During the interview, Elderson addressed various topics and answered questions from the public. One question raised was about the potential negative consequences of ECB policies, to which Elderson acknowledged that while their policies are effective, they are aware of possible side effects and have taken steps to mitigate them. Another question focused on how the ECB evaluates and quantifies climate risk associated with its investment portfolio. Elderson explained that the Eurosystem is working on measuring greenhouse gas emissions and other sustainable investment-related metrics using specialized data providers. In terms of inflation, Elderson stated that while inflation has increased in recent months, it is mainly due to transitory factors, and underlying inflation remains subdued due to weak demand and economic slack. Elderson also addressed concerns about the ECB’s massive stimulus potentially leading to the zombification of the EU economy. He stated that the risk of zombification is less pronounced in this pandemic compared to previous downturns, and the share of zombie companies in the euro area has actually declined since 2014. Elderson expressed pride in his family and his commitment to helping improve the lives of Europeans during the pandemic. Regarding interest rates, Elderson reiterated the ECB’s forward guidance, stating that they expect rates to stay at their present level or lower until inflation reaches their objective of close to, but below, 2 percent. Elderson also discussed the ECB’s stance on crypto-assets, highlighting their volatility and lack of intrinsic value, and emphasized the potential benefits of a digital euro backed by the ECB. The interview also touched on topics such as climate change, inflation, inequality, and market neutrality, with Elderson providing insights and clarifications on the ECB’s approach and priorities.