Weekend Edition Nº141

Introduction

Diane Fromage, Günter Herzig, Paul Weismann

e Way Forward in the EMU: Ination, Public Debt and Reforms for the Next Generation (III)

Filippo Annunziata

Private and Public Digital Currencies: Common Issues, and Tensions

Dominik Jordi Ornig

e Digital Euro’s Potential to Drive Procedural Efficiency across the European Union

Klaus Tuori

High Ination Challenges for the Revised ECB Monetary Policy Strategy

Rainer Palmstorfer

Monetary Policy aer the Eurosystem’s Monetary Policy Strategy Review: Some Remarks from a Legal Point of View

Highlights Insights, Analyses & Op-Eds

Week 8-12 May 2023

The Way Forward in the EMU: Inflation, Public Debt and Reforms for the Next Generation (III)

is is the last issue of a series of three Weekend Editions (the rst and the second edition are available and here here) presenting some of the most remarkable results of the conference ‘e Way Forward in the EMU: Ination, Public Debt and Reforms for the Next Generation’ which was held in December 2022 at the University of Salzburg. e rst issue was dedicated to the ECB’s role in combaing climate change and to new developments concerning the Banking Union. e second issue provided a critical analysis of the Stability and Growth Pact reform suggested by the Commission, partly in preparation of its most recent legislative proposals, and an account of the EP’s role in the legislative procedure leading to the creation of the Recovery and Resilience Facility. In the current issue Filippo Annunziata (Bocconi University) reects upon ve EU law-related points of tension he has identied with regard to on-going developments in the eld of private and public digital currencies, which analysis is complemented by Dominik Ornig’s (MPI Luxembourg) account of non-monetary use cases of nancial digitalisation, with a focus on a digital Euro. e second main topic of this issue is the ECB’s monetary policy strategy review For Klaus Tuori (University of Luxembourg), the currently high ination challenges the reviewed strategy with its increased exibility and variety of objectives. For him, the primacy of price stability must not be alleviated. Rainer Palmstorfer (Johannes Kepler University Linz) critically assesses the ECB’s new stance on price stability and secondary objectives, as well, but also takes account of the persistence of unconventionalmonetarypolicy

Diane Fromage, Günter Herzig, Paul Weismann

1.DianeFromage,ProfessorofEuropeanLaw,UniversityofSalzburg,andAffiliatedResearcher,LawSchool,SciencesPo,Paris

2.GünterHerzig,AssociateProfessorofEuropeanLaw,UniversityofSalzburg.

3.PaulWeismann,AssociateProfessorofEuropeanLaw,UniversityofSalzburg.

Private and Public Digital Currencies: Common Issues, and Tensions

Filippo Annunziata

Intheageofdigitaltransformation,theprivatesectorisdevelopinginnovative payment solutions, including crypto-assets purporting monetary functions (such as e-money tokens and stablecoins) that allow fast and easy transactions without directly involving at money, therefore challenging the central banks’ monopoly and the existing divide between public and private money. e upcoming Regulation on Markets in Crypto Assets (‘MiCA’), will establish the rst uniform and comprehensivelegalframeworkforprivatecrypto-assets.

On a different, but concurring plan, the European Central Bank (‘ECB’) isconsideringtheissuingofacentralbankdigitalcurrency(‘CBDC’).

e resulting model, based on the coexistence of new forms of public and private currencies, and the impact they have on existing rules and conceptualcategories,givesrisetocountlesspracticalandtheoreticalissues In this contribution, and without any claim for completeness, we intend to summarise ve different points of tension that result from thecurrentevolution

i) First: e two projects the European Union is carrying out with regards to digital currencies, namely MiCA and the digital euro, are, apparently, segregated from each other, moving on parallel tracks. MiCA, in fact, explicitly excludes from its perimeter ‘digital assets issued by Central Banks acting in their monetary authority capacity’. is approach is most likely due to the inherently different features of such currencies, conceived on a similar background but for a diverse use and purpose: CBDCs are strictly linked to monetary policy functions and to the role of the Central Bank, while private payment tokens are not. Differences intheunderlyingtechnologyalsocount:whileprivatecrypto-assets,accordingtothedenitionprovidedbyMiCA,usedistributedledgertech-

1.UniversitàBocconi, Milano–EuropeanBankingInstitute,Frankfurt

e two projects the European Union is carrying out with regards to digital currencies, namely MiCA and the digital euro, are, apparently, segregated from each other, moving on parallel tracks

nology (‘DLT’) or a similar technology to be issued and stored, it has not yet been decided on which technology thedigitaleurowillbebased.However,someareasoftheexistingnancialmarketarchitecture,suchascapitalmarkets, require at least some interconnection between private and public digital currencies: for instance, in order to properly address selement of transactions executed on secondary markets, or (even) in the metaverse. Interoperability among different private digital currencies, as well as between the laer and the digital euro, is an issue to addressquiteseriously,andurgently.

Moreover, it is still under investigation whether and, if so, to what extent the issuance and distribution of the digital euro shall involve intermediaries, as is the case for private crypto-assets for which MiCA establishes and regulates crypto-asset service providers (‘CASP’) e ECB has investigated two different distribution models: (i) an ‘issuance model’, where the Eurosystem would only be responsible for issuing the digital euro, without being involved in the selement infrastructure or in distribution; and (ii) an ‘ open access model’ – more similar to the approach pursued by MiCA– according to which the Eurosystem would only provide the selement infrastructure and identity access rules and every entity that fullled these rules could then use the infrastructure in their own way. is might lead to different models in the way in which digitalised means of payment are effectively conveyed to, and usedbyconsumers

ii)A relatestowhatwewouldrefertoasthe‘dialogue’betweencentralisationanddecentralisation secondtension

Although crypto-assets (by denition) rely on DLT, as a decentralised and disintermediated technology, MiCA pursues an entity-based approach, and does not cover crypto-assets issued in a fully decentralised manner, or servicesonassetswithouttheinvolvementofanintermediary(e g ,afullydecentralisedtradingplatform) MiCAthereby approaches the decentralised ecosystem it intends to regulate with a centralised and traditional supervision approach, by mirroring the regime adopted by existing EU nancial law: for instance, licensing rules set out by MiCAfollowthewell-establishedcriteriaofEUlegislation,suchasMiFID,CRD,PSD,EMD,etc.

Although crypto-assets (by denition) rely on DLT, as a decentralised and disintermediated technology, MiCA pursues an entity-based approach, and does not cover crypto-assets issued in a fully decentralised manner

iii) A concerns the different playing elds on which digital third tension euroandprivatecrypto-assetsoperate.

While the digital euro relies on specic primary legal sources and, in particular, on the TFEU, and is part of the ECB’s monetary policy, private crypto-assets are regulated according to the Digital nance package, a set of secondary legislative measures, such as regulations and directives, to whichMiCAbelongs,groundedinArticle114TFEU.

In particular, as specied by the ECB, the digital euro has been conceived for the specic purpose, as identied by Article 127 of the TFEU, of supporting‘thegeneraleconomicpoliciesintheUnionwithaviewtocontributing to the achievement of the objectives of the Union’ However, while, from one side, issuing a digital euro and identifying its technical features falls within the exclusive competence of the ECB, from the other side, the introduction of the digital currency will also require that the European Parliament and the Council lay down measures necessary for its issuance and use, in accordance with Article 133 TFEU. In April 2022, the European Commission has therefore published an impact assessment, supported by a public consultation, that will feed into the Commission’s proposalforaRegulationonthedigitaleuro

It should be noted that several interconnections between the public and private sector are to be identied: as also claried by the Financial Stability Board, crypto-assets pose risks to nancial stability, thereby implying that their role and relevance is not conned to a private dimension, but that they may potentially assume a public status within the nancial marketecosystem

Moreover, differently from the digital euro initiative, MiCA relies on ESMA and EBA for the purpose of developing (a signicant number of) regulatory technical standards aimed at promoting the consistent application of its provisions, and also for supervision over signicant asset-referenced tokens (ARTs) and e-money tokens (EMTs). It is also expected that a signicant volume of so law instruments will accompany and complement MiCA’snormativepackage is approachalsoopensupnewperspectivesconcerningtheroleoftheseagencies, compliance with MeroniandRomano (2), as already seen in the evolution of ESMA over the past yearsand the recentjurisprudenceoftheCourtofJusticefortheEBA(Balgarska,FBF)(3).

Crypto-assets pose risks to nancial stability, thereby implying that their role and relevance is not conned to a private dimension, but that they may potentially assume a public status within the nancial market ecosystem

2. , Meroni & Co , Case 9/56; , Giuseppe Romano v Institut national d'assurance mala- Judgmentof the Court of 13 June 1958 judgmentof the Court of 14 May 1981 die-invalidité,Case98/80.

3. , BT v Balgarska Narodna Banka, Case C-501/18; , Fédéra- Judgment of the Court of 25 March 2021 judgment of the Court (Grand Chamber) of 15 July 2021 tionbancaireançaise(FBF),CaseC-911/19.

iv) e arises from the coexistence of the new fourth tension rules and regulations discipling emerging technologies and the generalbodyoflaw.

In addition to public law (broadly dened so to include banking and payment laws, securities law, data protection law, etc.), several challenges may be identied, for instance, with respect to the application of private law concepts to digital assets, including propertylaw,companylaw,contractlawandbankruptcylaw

e nature of the digital euro as a legal tender may be also questioned. e TFEU states that the banknotes issued by the ECB and the national central banks are the only ones with the status of legal tender within the Union. A similar provision exists regardingthelegaltenderstatusofeurocoins eissuanceofadigital euro would therefore require assessing its potential to qualify as legaltender,anditcouldbetheoccasiontoclarifywithintheeuroareatheboundariesofthisnotionaccordingtotheTFEU.

v) e concerns the role of the public and private h tension sectorsinthedigitaleuroecosystem.

As mentioned, the digital euro is the institutional – and therefore public – side of the development of tokenised means of payment. However, despite the alleged dichotomy between public and private, the digital euro is going to be designed by also harnessing the synergies with the private sector: according to the ECB, ‘the combined efforts of the public and private sectors were key to building the European payment system we have today, which is one of the most efficient in the world. We now need to draw on this cooperation once again in order to build the digital euro ecosystem’ It is against this background that the ECB on 16 September 2022 announced that it would collaborate with ve companies (including Nexi and Amazon), chosen from a pool of 54rms,todeveloppotentialuserinterfacesforthedigitaleuro.

To sum up: we are facing an era of innovation, digital transformation; one that calls upon all of our forces so that it can be properly understood. Private and public actors will inevitably need tocooperate,inanever-increasingintegratedenvironment

Despite the alleged dichotomy between public and private, the digital euro is going to be designed by also harnessing the synergies with the private sector

The Digital Euro’s Potential to Drive Procedural Efficiency across the European Union

Dominik Jordi Ornig

Introduction

e overwhelming majority of central banks around the globe either started preliminary works for a Central Bank Digital Currency (‘CBDC’) project or have already started to issue a CBDC. e European Central (2) Bank (‘ECB’) is entering the nal stages of its investigation into a digital euro with ‘[t]he prototyping exercise [ ]expectedtobecompletedintherstquarterof2023’ (3)

e motivation driving these projects is typically rooted in efforts to enhance nancial inclusion, rival privately issued cryptocurrencies or simply to provide digital alternatives for cash as its use is declining in many countries. So far, however, the opportunities of non-monetary use cases of nancial digitalisation have not been given the aention they deserve. is potential is particularly compelling within the unique context of the European Union and its family of converging jurisdictions Seen through the prism of procedural law, the advent of a new payment channel could serve as an opportunity to increase procedural efficiency throughout the lifecycle of any dispute – from the verication of the involved parties’ identity and the integrity of presented evidence, to the delivery of documents, the monitoring of procedural progress and enforcement of resulting judgments. In the followinganalysis,themostpromisingusecasesshallbeintroducedtokindledebate

DocumentService

Just like their physical counterparts, digital wallets can be used to store money but also data packages, such as ID documents. In the context of the European Blockchain Services Infrastructure project (‘EBSI’), and the (4) eIDAS framework (electronic IDentication, Authentication and trust Services) both wallets and digital (5)

1. Research Fellow at the Max Planck Institute Luxembourg for International, European and Regulatory Procedural Law and a Member of the International Max Planck Research School for Successful Dispute Resolution. See the forthcoming entry in the Max Planck Encyclopaedia of International Procedural Law foramorein-depthanalysisoftheseissuesinthecontextofinternationaladjudication:DominikJordi Ornig,‘DigitalAssetsinInternationalAdjudication’,Max PlanckEncyclopediasofInternationalLaw(OxfordUniversityPress2023,forthcoming).

2. Atlantic Council, ‘ ’(accessed 7 February 2023); Igor Mikhalev and others, ‘ Central Bank Digital Currency Tracker Central Bank Digital Currency (CBDC) Tracker’(accessed7February2023).

3.EuropeanCentralBank(EU),‘ ’(2022)11(accessed19January2023). ProgressontheInvestigation PhaseofaDigitalEuro–SecondReport

4.EuropeanCommission(EU),‘ ’(accessed24February2023). EuropeanBlockchainServicesInfrastructure-ShapingEurope’sDigitalFuture

5.EuropeanCommission(EU),‘ ’(accessed24February2023). ConformantWallets-EBSI

identiers have been developed. However, to date the market penetration of such wallets among European citizens is relatively low. is could change very quickly once a digital euroisissued.

In order to maintain the same level of anti-money laundering and terrorist nancing safeguards in place with other payment channels, CBDCs are very unlikely to match the anonymity of cash. Depending on its nal design, however, ID-based wallets could be issued to virtually all inhabitants of the EU as part of the digital euro project as a consequence.is couldbeanunprecedentedopportunitytooverhaul documentservicewithintheUnion

In several court cases involving digital assets, document service has been allowed in unconventional ways when noothermeansofidentifyingtraditionalavenueswereavailable.InacaseinvolvingaDAO,adecentralisedautonomous organisation, for instance, a court allowed service through its ‘Help Chat Box, with contemporaneous noticebypostingintheOokiDAO’sOnlineForum’. Intwocasesrelatingtocriminalactivityinvolvingdigital (6) assets, the otherwise unidentied hackers were served with court documents, aer a scam and the hack of a digital asset exchange platform respectively. is was made possible through the transfer of tokens containing links tothesedocumentsintothewalletsthathadreceivedthestolenfunds (7)

6.

’ s Motion for Alternative Service (Case No 3:22Cv-05416-WHO,Document17)’(accessed9October2022).

7. Supreme Court of the State of New York, ‘Order to Show Cause and Temporary Restraining Order 01 - LCX AG v John Doe Nos 1-25 ( - NYSCEF Doc No 15 02.06.22 - Index No. 154644/2022)’ (accessed 10 December 2022); D’Aloia and Person Unknown & Others [2022] High Court of Justice - Business and PropertyCourtsofEnglandandWales(ChD)EWHC1723(Ch)[39–40].

United States District Court Northern District of California Pensacola Division, ‘Order Granting Plaintiff

Just like their physical counterparts, digital wallets can be used to store money but also data packages, such as ID documents

In several court cases involving digital assets, document service has been allowed in unconventional ways when no other means of identifying traditional avenues were available

If court documents can be safely and veriably served in close to real time on privatelyrundigitalnetworks,thenwhynotonapublicnetworkthatis setto onboard virtually the entire population of the Union? Naturally, the same effect can be achieved by many different means e opportunities arising out of CBDC issuance in this context, however, may allow swi and broad adoption e resulting efficiency gains need not be limited to judicial applications either, as any government agency could be included to streamline interactions with citizens, reduce friction across internal borders and ultimatelyenhancefreedomofmovementacrosstheUnion.

Enforcement

e Brussels Regulations have set new standards for cross-border enforcement and arguably contributed greatly to the functioning of the European Single Market as we know it today. Now, the digital euro project could drive yet another leap forward in efficiency regarding the enforcement of money claimsand,ifequallyintegrated,otherissues,suchasclaimsinvolvingrealestate.

Possible efficiency gains start with the required number of people and entities that give effect to a judgment. If judges were given direct access to accounts, no local courts would need to be involved, nor private entities, such as commercial banks . is ultimately translates into increased speed of (8) enforcement and reduced workload for the entities no longer be required in theprocess.

An avenue to implement this could take inspiration from privately issued digital assets that are oen held in so-called multi-signature or ‘multisig’ wallets, which require a pre-determined quorum of signatures to release (9) funds. Multisig wallets are already being used to support contract-based dispute resolution by issuing a tie-breaking signature to a third party in case the initial parties to a contract disagree. Notably, such wallets can also be set (10) up to allow ‘master keys’ that can bypass multi-signature majorities If is- (11) suedwithsucha ‘masterkey’,judgescouldgivedirecteffecttotheirrulings.

8. e precise mechanism would need to be ne-tuned to the nal design of the digital euro to avoid secondary issues For instance, should the digital euro be issued to citizens through intermediaries, such as banks, a transfer initiated by a judge giving direct effect to their ruling may involve an outow of funds from a commercialbankandtherebycreateliquidityissues

9.txstats.com,‘ ’(accessed26November2022). Grafana-P2SHStatistics

10. Alexander Gurkov, ‘Blockchain in Arbitration Development: Multi-Signature Wallet Showcase’ (2017) 4 International Journal on Online Dispute Resolution 63,63.

11.Bitcoin Wiki, ‘ ’(accessed26November2022). Multi-Signature

e digital euro project could drive yet another leap forward in efficiency regarding the enforcement of money claims and, if equally integrated, other issues, such as claims involving real estate

For judicial applications, however, a European oracle could be set up to this effect, which would at the same time provide an authoritative source of information for nancial markets and private dispute resolution alike

Naturally, this could also enable greater degrees of automation for enforcement proceedings and enable ideas that previously failed due to the constraints of the respective networks. Roughly a decade ago, for instance, the United Nations Commission on International Trade Law (‘UNCITL’) explored the possibility of resolving onlinedisputeswithasystemsimilartothechargebackmechanismsemployedbycreditcardnetworks–yetcrucially, UNCITL predicted that it ‘ may be limited in [its] utility given that they only apply to payments made bycreditcard’. Ahighlyliquiddigitaltokenwithlegaltenderstatuswouldnotsufferfromtheselimitations. (12)

For instance, a dynamic similar to the current European payment order could be envisaged, where the debtor is given a period of time to dispute a (low value) claim that would otherwise be enforced directly. Similarly, judges could issue conditional rulings that would unlock funds when the specied conditions are met. Depending on the complexity of the conditions, their fullment could also be detected by the network itself and avoid recurring workloads for the judiciary. In practice this function is enabled by private ‘data feeds that bring data from off the blockchain (off-chain) data sources and puts it on the blockchain (on-chain) for smart contracts to use’so-called ‘oracles’. For judicial applications, however, a European oracle could be set up to this effect, which (13) would at the same time provide an authoritative source of information for nancial markets and private dispute resolutionalike.

12. United Nations Commission on International Trade Law, ‘Online Dispute Resolution for Cross-Border Electronic Commerce Transactions: Overview of Private Enforcement Mechanisms’ Working Group III (Online Dispute Resolution) Twenty-Eighth Session, Vienna, 18-22 November 2013, A/CN.9/WG.III/WP.124paras35–39,44(accessed4November2022).

13.EthereumFoundation, ‘ ’(accessed5May2023). Oracles

TrustandEmbeddedSupervision

In the words of Agustín Carstens, the general manager of the Bank for International Selements, ‘[t]he soul of money is trust’. A (14) proceduralist cannot help but tie this notion of trust, not just to the stability in value or the availability of money, but to the reliability and efficiency of enforcement mechanisms underpinning it To inspire trust in their stability, decentralized private networks oen aim to limit any kind of interference from the outside – including from governmental agencies – and typically refer to this as ‘ censorshipresistance’ (15)

Achieving (or aiming for) this type of resilience to inspire trust, however, can be very costly, with the energy consumption of the Bitcoin network notoriously thwarting that of entire countries (16) e International Monetary Fund therefore believes that ‘central bankshaveawindowofopportunitytoinuencetheindustrybyencouraging vendors to compete on the energy impact of their platforms’ Several public institutions and central banks around the (17) world have started CBDC or digital bond initiatives by exploring issuance on private networks, such as the Ethereum blockchain (18) Instead,however,thedigitaleurocouldserveasalayeronenetwork withasustainableconsensusalgorithm

is could have great externalities as other networks could build upon the trust of the ECB instead of building socalled layer-2 networks that tie together with more established ones, such as Bitcoin or Ethereum. ese externalities would not be limited to positive impacts on the carbon footprint. It would also create an unprecedented opportunity to implement or embed supervisory mechanisms into the backbone of such a European digital nancial ecosystem. For instance, the Bank of Lithuania developed its ‘LBChain’, ‘the world’s rst-of-its kind blockchainsandbox’,whichaimsto‘combineregulatoryandtechnologicalinfrastructure’forntechcompanies.(19)

14.AgustínCarstens,‘ ’-SpeechatGoetheUniversity’sInstituteforLawandFinance(ILF)Conferenceon‘Data,Digi- DigitalCurrenciesandtheSoulofMoney talization, theNewFinanceandCentralBankDigitalCurrencies:eFutureofBankingandMoney’,18January2022’(accessed7February2022).

15.DennisJarvis,‘ ’Bitcoin.com(accessed25February2023). Don’tForgettheImportanceofCensorshipResistance

16.CambridgeCentreforAlternativeFinance,‘ ’(accessed26February2023). CambridgeBitcoin ElectricityConsumption Index(CBECI)

17. ItaiAgur and others, ‘ ’ (International Monetary Fund 2022) IMF FinTech Notes NOTE/2022/006 (accessed Digital Currencies and Energy Consumption 1November2022).

18. Samburaj Das, ‘ ’ CCN (accessed 15 March 2021); Ledger Insights, ‘ World Bank to Sele $73 Million Blockchain Bond on Ethereum Next Week Bank of ailand to Use Enterprise Ethereum for Retail CBDC Prototype with ConsenSys Ethereum Jumps to ’ Ledger Insights (accessed 1 May 2021); Reuters and others, ‘ RecordHighonReportofEIB DigitalBondIssuance’Reuters(accessed28April2021).

19.BankofLithuania,‘ ’ ,(accessed24February2023). LBChain

e digital euro could serve as a layer one network with a sustainable consensus algorithm. It would also create an unprecedented opportunity to implement or embed supervisory mechanisms into the backbone of such a European digital nancial ecosystem

811

In this way, ‘efficient supervision could become a key use case for DLT’ and possibly for a European CBDC. In the hands of the ju- (20) diciary, however, the same tools proposed to supervise nancial markets could provide access to rst hand veried evidence in nancial disputes or allow greater control over insolvency proceedings – in particular when those disputes involve several European jurisdictions.Itcouldalsoenableenhancedtransparencyofproceduraldynamics,suchasexternalfundingagreements.

Conclusion

e use cases and opportunities outlined above are all proposals de lege ferenda that would require changes to the current legal framework. ey also depend on the nal design chosen for the digital euro or the interoperability with other networks that could support andenablethesefunctionalities,suchasEBSI.

Overhalfacenturyago,thefamousWernerReportthatlaidthefoundations for the European Monetary Union found that it was ‘necessarytocarryoutmeasuresof“technical”harmonisationin[ ]thelegal instruments of nancial transactions.’ e upcoming issuan- (21) ce of a digital euro is an unparalleled opportunity to foster further integration of our European family of jurisdictions to increase efficiencyoflegalproceedingsandallowtheinternalmarkettothrive

20.RaphaelAuer,‘ ’(BankforInternationalSelements2019)BISWorkingPapers EmbeddedSupervision:HowtoBuildRegulation intoDecentralisedFinance

20(accessed24February2023).

21. Pierre Werner, ‘Report to the Council andthe Commission on the Realisation byStagesof Economic andMonetary Union in the Community - “WernerReport”’(EuropeanCommission(EU)1970)21(accessed21February2023).

e upcoming issuance of a digital euro is an unpara-

lleled opportunity

to foster

further integration

of

our European family of jurisdictions to increase efficiency of legal proceedings and allow the internal market to thrive

High Inflation Challenges for the Revised ECB Monetary Policy Strategy

Klaus Tuori

e European Central Bank (ECB) has entered its third decade of existence with a revised monetary policy strategy that should guide its actions for the years ahead. Incidentally, it should also guide the ECB as well as the public through the new situation of high ination and increased concerns for future price stability. How should the newstrategybeassessed?WhydidtheECBchangeitsstrategyandwhatdoesthisentailgoingforward?

is Long-Read takes largely an institutional economic perspective on the revised ECB monetary policy strategy with a particular focus on the challenges raised by the recent increase in ination . e Long-Read starts (2) by describing the reasons for the ECB strategy review and summarises the main changes. It continues by assessing how the new reality with high ination has changed the set-up for monetary policy, and how the ECB’s credibility in maintaining low ination has resurfaced as a major issue. e Long-Read concludes by claiming that the new, more exible strategy has increased pressure on the ECB’s communication to guide the public’s expectationandtomaintainaproper ‘monetarydialogue’withthepeopleandalsonancialmarketsoftheeuroarea.

ereviewoftheECBmonetarypolicystrategywaslongoverdue

In January 2020, the ECB decided to start a broad review of its monetary policy strategy for a few reasons. e new ECB president, Christine Lagarde, had just started her 8-year term, marking a natural occasion to assess the conduct of monetary policy in a forward-looking and perhaps also more engaging manner Formally, the ECB still relied on its original strategy from 1998 that had been moderately updated in 2001 . is made the ECB’s (3) strategy the longest serving among the major central banks, and the long list of changes in the actual conduct of monetary policy, particularly since the eruptions of the Great Financial Crisis in 2008, remained outside the ECB’s formal strategy Importantly, the US Federal Reserve had launched a review process in late 2018 that included so-called Fed Listens events to involve the academic community alongside its internal analytical work. is work was concluded in the US Federal Reserve with the announcement of a revised Statement on LongerRun Goals and Monetary Policy Strategy in August 2020 (4). is arguably became the benchmark for most other centralbankswhentheyembarkedonassessingtheirconductofmonetarypolicy.

1.Dr KlausTuoriisaresearcherattheUniversityofLuxembourg.

2. e substantive developments are more thoroughly described in Klaus Tuori, e European Central Bank and the European Macroeconomic Constitution: FromEnsuringStabilitytoFightingCrises,CambridgeUniversityPress,2022.

3. ECB press release (13 October 1998), ‘ ’ , and ECB press release (8 May 2003), ‘ A stability-oriented monetary policy strategy for the ESCB e ECB’s monetarypolicystrategy’

4. (lastaccessedon10December2022). Seehere

Fromasubstantiveperspective,theECBstrategyreviewincludedsimilarelementstothatoftheUSFederalReserve. Firstly, it was acknowledged that the interest rate environment had most likely changed in such a manner that the natural rate of real interest rates was expected to be permanently lower than before. is had the consequence that the room for effective monetary policy expansion had become more limited due to the zerointerest rate constraint, making monetary policy potentially less efficient against downside risks. Secondly, the risks for price stability were seen to have changed to arise as much from deation fears as from ination. is resulted from a few, partially mutually re-enforcing, factors such as global disinationary forces, reduced bargaining power of labour, and also ageing population. Indeed, at least for a decade, deation had been a regular threattotheeuroareaeconomy.irdly,andasaconsequenceoftheprevioustwofactors,lowinterestrateenvironment and re-occurring deationary threats, the conduct of monetary policy could not rely solely on seing the official short-term interest rates (the main renancing rate). It was thus foreseen, and as had been the case at least since 2015, that the conduct of monetary policy required recourse to asset purchases as a complementary tool.Finally,theECBhadbecomekeenlyawareoftheexistentialthreatsposedbyclimatechangeandofitsobligation to incorporate climate change mitigation within the conduct of monetary policy Climate change was at the time still an issue that was outside the existing analytical and monetary policy framework. e strategy review aimed at nding ways to incorporate climate change mitigation within the economic-constitutional frameworkoftheECB.

e ECB had become keenly aware of the existential threats posed by climate change and of its obligation to incorporate climate change mitigation within the conduct of monetary policy

echangesinthestrategyturnedouttobesmallatrstsight

When the revised ECB strategy was announced in July 2021 , it was not perceived as a major change in euro (5) area monetary policy. It gained even a surprisingly subdued reception in the media and nancial market commentators, which clearly reected the fact that the new strategy was not assumed to fundamentally change the conductofmonetarypolicy.Itratherformalisedtheearlierchanges,includingtheassetpurchases.

e main headline of the strategy revision was the new numerical denition of price stability of 2% over the medium term, changed from the previous ‘below but close to 2%’ target. is aimed at providing slightly more room for interest rate changes within the positive interest rate territory. In numerical terms, it could be read as a new neutral nominal interest rate of perhaps between 2.5-3%, instead of 2.2-2,7% earlier, where I have assumed that the earlier point target for ination would have been roughly 1.7%. e ECB did not use the term ‘average’ ination rate, but it has continued to outline the idea that deviations should balance each other over the medium term. What this means in practice, is still open to debate and demands further communication effort from the ECB.

e ECB also opened the door for a broader denition of price stability to include some asset price changes as well. is reects the reality that the very expansionary monetary policy of the last decade and particularly the quantitative easing (QE) programmes have led to a substantial asset price ination, while the impact on consumerpriceshadbeenmuted.

e strategy review also formalised and institutionalised asset purchases as a more regular part of monetary policy, particularly to overcome the zero-bound interest rates constraint. Terminology-wise asset purchases are now ‘non-standardmonetarypolicy’insteadof‘unconventionalmonetarypolicy’ Hence,QEisnowamoreconventional measure than before but still used only when the standard monetary policy of seing short-term officialinterestratesisdeemedinsufficient

Finally,thestrategyreviewdiscussednumerouseconomicaimsandalsopotentialconsequencesofmonetarypolicy. Most clearly, the strategy review addressed the importance of the ght against climate change and also means to incorporate it in the conduct of monetary policy. However, from a constitutional perspective, the review le open the dening of climate change mitigation as a formal secondary objective. Up to that point, the ECB’ssecondaryobjectivehadneverhadanindependentrole,norhaditbeenreferredtoexplicitlybytheECB It remained unclear whether the secondary objective was even intended to be dened, as the procedure of dening thegeneraleconomicpoliciesintheUnionwasunaddressedintheTreaty 5.

e generals and previous wars: ination rising whentheECBpreparesfordeation?

As soon as the new ECB strategy was announced, ination started to accelerate throughout the euro area. e initial reaction of the ECB followed other major central banks, albeit on the slower end of the spectrum. e initial ination shock was considered both externally driven and temporary. e main external elements were the supply side problems that stemmed from the COVID pandemic, and from early 2022 onwards, high energy prices as one repercussion of the Russian invasion of Ukraine. Focusing on this external explanation and perhaps also hoping that ination would come down by itself led to a slow realisation and response. Only in April 2022, the ECB acknowledged that ination was more sustained, and still hesitated in ending its asset purchases early. Only in July 2022 did the ECB halt asset purchasesandraisepolicyrates.

It seems that the strategy review has, if anything, slowed the ECB’s response. It could even be argued that the new strategy gives less guidance on how the ECB should react to ination fears, particularly in the case that the Eurosystem holds a massive balance . Indeed, ination shocks were surprisingly scarcely ad- (6) dressed in the new strategy, although it remains the bread and buer of traditional central banking. Hence, the major central banks, the ECB among them, wipe the dust from the old textbooks and look to how to maintain or regain credibility in ensuringlowination

In practice, the ECB rst aempted to control ination expectations by expressing its conviction that the inationshockwasashort-livedevent.However,thatapproachfailedwhentheECBhadtoadmitthatalsointernalination processes were taking over and that its earlier optimistic forecasts needed to be substantially revised. is led to a catch-upsituation for the ECB and the aim of bringing ination closer to the target level had to be postponed well into 2024 e US Federal Reserve took a slightly different approach It indicated a strong willingness to take all the measures necessary to ensure a sustained lowering of ination, which it underlined by actual policy movesthatincludedearlierandmoredrasticinterestratehikesandalsoareversalofitsQE.

Ination shocks were surprisingly scarcely addressed in the new strategy, although it remains the bread and buer of traditional central banking

6. Bytheendof2022,theEurosystembalancesheetwasnearly8,000blneuros

e rise in ination has put the ECB and its revised strategy under a serious test. As the new strategy aims at more exibility, the downside is that it provides less elements for anchoring expectations

How the new strategy and the ECB’s credibility in ghting inationaddup

e ECB is currently in a situation where high ination and particularly increasing wage demands are puing its credibility in safeguarding price stability into question Its slow initial reaction to rising ination has put it in a position where further negative surprises risk having even destabilising consequences. Here, I would argue, the new strategy could actually add to its problems, because it does not address some key issues of today, particularly the potential reversal of QE from the position of being the ‘controlling’ market participant. Indeed, if QE has led to market mispricingofthemostvulnerablesegmentsoftheeuroareabondmarkets,howcanthe ECB reduce its balance sheet without causing major market disruptions? At the same time, the ECB and national central banks of the Eurosystem are facing enormous losses from their bond holdings, should the interest rates remain at their current level. e ECB will need to communicate what enormous losses and potentiallynegativecapitalmeaninpractice

Another key question is: what does a symmetric 2% ination target mean? It could be argued that the previous 2% ceiling was a clearer objective and hence potentially more credible in anchoring ination expectations A further communication complication is that the ECB has previously advocated for the interpretation that a substantialdownsidedeviationfromtheinationtargetshouldbecompensatedbyasimilar overshooting, an average 2% target of sorts. Whether this applies symmetrically to an initial overshooting has not been claried. In reality, given that the headline ination reached 10% during 2022, it is unlikely that the ECB will aim at a symmetricaldeviationtothedownsideoverthecomingyears.

In conclusion, the rise in ination has put the ECB and its revised strategy under a serious test. As the new strategy aims at more exibility, the downside is that it provides less elements for anchoring expectations. In particular, it is even more likely thattheECBneedstoaddresstherelationshipbetweenitsprimaryobjectiveandother aims and, even, objectives. ere should not arise any expectations that the ECB could hesitate in restoring price stability due to considerations related to nancial stability, scal stability or environmental aims. I should add that, particularly for the environmental aims, the maintenance of a stable longer-term investmentenvironmentis criticalforwhichwell-anchoredinationexpectationsarecritical. More generally, the increased exibility and many aims of the new ECB strategy can serve the euro area only if the ECB remains accountable and credible towards the public and markets is true monetary dialogue with the euro area citizensandmarketswillbetestedthroughthereactionstoincomingeconomicdata.

Monetary Policy after the Eurosystem’s Monetary Policy Strategy Review: Some Remarks from a Legal Point of View

Rainer Palmstorfer

On 8 July 2021, the ECB announced its new monetary policy strategy (2). is strategy consists of a series of documents produced by the ECB’s Governing Council: the strategy statement, an overview note and an accompanying climate action plan . In fact, the ECB has not (3) developed this strategy from scratch. Rather, we may see in this document a review of the existing strategy that was shaped in 1998 and had been reviewed in 2003 for the last time. Given the fact that since then the Economic and Monetary Union (EMU) has been confronted with a series of crises (e.g., euro-crisis, pandemic crisis), observers were curious as to what to expect in this review On the whole, the review consists of three main points, which we may refer to as follows: a new denition of price stability, the persistence of unconventional monetary policy and a more prominent role for the ECB’s secondary objectives In the following analysis, we will try to shed some light on these threemainaspectsfromalegalpointofview.

Anewdenitionofpricestability

Against the background of looming deation in the years before, the ECB has come up with a new denition of the Treaty term ‘price stability’. is is of prime importance because the TFEU refers to price stability as the ‘primary objective’ (Article 127(1) TFEU) of the European System of Central Banks (ESCB) . Now price stability is iden- (4) tiedwithatwopercentinationtargetoverthemediumterm .Pre- (5)

1.Univ.-Prof.MMMag.Dr RainerPalmstorfer,LL M.(Sacramento)isProfessorofEuropeanLawatJohannesKeplerUniversityLinz,Austria

2.ECB,‘ ’ ,ECBPressRelease,8July2021. ECB’sGoverningCouncilapprovesitsnewmonetarypolicystrategy

3.ECB,‘ ’ ,ECBPressRelease8July2021. ECBpresentsaction plantoincludeclimatechangeconsiderationsinitsmonetarypolicystrategy

4. e ESCB consists of the ECB and the national central banks of the MS. As Article 127(1) TFEU does not apply to MS that have not introduced the euro (Article 139(2) lit c TFEU), the actual system is the Eurosystem (i.e ECB and the 20 national central banks of the memberstates belonging to the euro area). As theEurosystemisgovernedbythedecision-makingbodiesoftheECB,thetext,forthesakeofsimplicity,thetextwilljustrefertotheECB

5.Cf.Overviewnote,availablehere

Against the background of looming deation in the years before, the ECB has come up with a new denition of the Treaty term ‘price stability’

viously,pricestabilitywasdenedasaninationtargetofbelow,butcloseto,twopercentoverthemediumterm.

is new denition of price stability is considered to offer a safety margin against the risk of deation As negativeandpositivedeviationsofinationfromthetargetareconsideredtobeequallyundesirable,pricestabilityisreferred to as a ‘symmetric target’ Interestingly enough, shortly aer this new denition was published, ination in the eurozone saw a sharp increase, with Euro area annual ination having reached a level of 8.5 % in January 2023

(6) With hindsight, one cannot resist the impression that the new monetary policy strategy is rather concerned withdeationthanwithination.Itdoesnotseemtohaveanticipatedtheforthcomingsharpincreaseineurozoneination.

From a legal point of view, it has to be stressed that the ECB has come up with a new interpretation of the Treaty term ‘price stability’. e ECB does not have the power to adopt a legally binding act to dene the term. And yet, the ECB enjoys ‘ a broad discretion’ when required ‘to make choices of a technical nature and to undertake complex forecasts and assessments’. is discretion is only limited by a ‘manifest errors of assessment’ on the (7) (8) part of the ECB. More importantly, the Court of Justice has granted this kind of discretion to the ECB also as regards its interpretation of price stability made in 2003, the laer being held to be in conformity with the Treaties (9). is being said, it is nevertheless questionable whether the ECB may also later on change a denition once adopted by it, for this would ultimately boil down to the fact that an EU institution could redene the objective it iscommiedtoachievebytheTreaties.

6.Cf.Eurostat,‘ ’ ,EurostatPressRelease16/2023

February2023. Flashestimate-January2023:Euroareaannualination downto8.5%

7.See,e g., ,Weissandothers,C-493/17,EU:C:2018:1000,para24. judgmentoftheCourtofJusticeof11December2018

8.See,e g.,judgmentoftheCourtofJustice, ,para24. Weiss

9.See,e g.,judgmentoftheCourtofJustice, ,para56. Weiss

epersistenceofunconventionalmonetarypolicy

e new monetary policy strategy also shows that the Governing Council considers its repertoire of unconventional monetary policy measures (i.e., negative interest rates, forward guidance, asset purchases and longer-term renancing operations) to have been successful tools to counter deation . is also shows that unconventional monetary policy (10) measures and, in particular, the Public Sector Purchase Programme (PSPP), a government-bond-buying programme, have been primarily used in a situation in which the core instrument of the ECB – key interest rates – no longer worked to increase the ination rates in the context of persistently low ination and the risk of deation . However, the (11) ECBisalsowillingtousethepurchaseofgovernmentbondsinacontext marked by high ination rates On 21 July 2022, the Transmission ProtectionInstrument(TPI)wasannounced .LikePSPPandotherpre- (12) decessors, TPI is meant to be a government bond purchasing programme. e reasoning behind TPI is reminiscent of previous bond pur- (13) chasing programmes, because these programmes were meant to serve the transmission of monetary policy and, ultimately, price stability .(14) e fact that government bond buying programmes are evidently used both in times of the risk of deation (PSPP) and in times of high ination (TPI) gives the impression that such programmes are not specically linked to the prevailing ination rate. From a legal point of view, it is very difficult to assess the ECB’s reasoning on such programmes, for the issues of their transmission effects and, more importantly, their nexus with price stability clearly fall into the domain of economics is being said,onecannothelptheimpressionthatpricestabilityisatdangerofbecoming a magic word justifying almost any ECB measure. For this reason, it will be necessary to clarify which elements are covered by ‘price stability’ and which are not. is will be of particular importance against the background of the ECB’s climate action plan. However, as will be shown in the next section, it is not necessary to base ECB measures only on the price-stability objective, because the Treaty also provides for secondaryobjectives.

10.Cf.Overviewnote,availablehere

11.See,e.g.,thereasongivenforthePublicSectorPurchaseProgramme(PSPP)injudgmentoftheCourtofJustice, ,para80. Weiss

12.ECB,‘ ’ ,ECBPressRelease21July2022. eTransmissionProtection Instrument

13. In the relevant ECB Press Release, available , we learn that ‘by safeguarding the transmission mechanism, the TPI will allow the Governing Council to here moreeffectivelydeliveronitspricestabilitymandate’

14. Concerning PSPP see judgment of the Court of Justice, , paras 65, 66 and 68; concerning OMT see , Weiss judgment of the Court of Justice of 16 June 2015 Gauweilerandothers,C-62/14,EU:C:2015:400,paras48-50and64.

e new monetary policy strategy also shows that the Governing Council considers its repertoire of unconventional monetary policy measures to have been successful tools to counter deation

One cannot help the impression that price stability is at danger of becoming a magic word justifying almost any ECB measure

A (more) prominent role of Article 127 (1) sentence 2 TFEU: secondary objectives of ECBmeasures

e new monetary policy strategy also refers to Article 127(1) sentence 2 TFEU, that is the secondary objectives of ECB measures Doing so, it stresses that a high level of protection and improvement of the quality of (15) the environment is also covered by these objectives . Interestingly enough, these secondary objectives have (16) so far led a rather shadowy existence. It is noteworthy that the ECB’s unconventional monetary policy has not been based on these objectives. It does not come as a big surprise that the scope of Article 127(1) sentence 2 TFEU has also not been a major issue in the literature, for the simple reason that the provision has been a sleeping beauty. However, this changed in September 2022, when the ECB adopted a decision by which it incorporated climate change considerations into the benchmark allocation of its corporate sector purchase programme (CSPP), which shall serve the management of the Eurosystem’s exposure to climate-related nancial risks .(17) is decision was (also) based on Article 127(1) sentence 2 TFEU . Without any doubt, this premiere will (18) soon lead to further measures based on the same reasoning. From a legal point of view, it will be necessary to shedmorelightontheelementsofthesaidprovisiontoclarifyitsscope.

15.Article 127(1)sentence2TFEUreadsasfollows:‘Withoutprejudicetotheobjectiveofpricestability,theESCBshallsupportthegeneraleconomicpolicies intheUnionwithaviewtocontributingtotheachievementoftheobjectivesoftheUnionaslaiddowninArticle 3oftheTreatyonEuropeanUnion.’

16.Cf.Newmonetarypolicystrategy,available .here

17. of 9 September2022 amending Decision (EU) 2016/948 on the implementation of the corporate Decision (EU) 2022/1613 of the European Central Bank sectorpurchaseprogramme(ECB/2016/16)(ECB/2022/29),OJ2022,L241,p 13.

18. See Decision (EU) 2022/1613, recital 3. However, in recital 2, the decision also refers to the price-stability-objective We may conclude that the decision followsbothobjectives.

It does not come as a big surprise that the scope of Article 127(1) sentence 2 TFEU has also not been a major issue in the literature, for the simple reason that the provision has been a sleeping beauty

8 to 12 May 2023

General Court to hear an action for failure to act against Commission concerningStateaid

Monday 8 May

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Official publication was made of case Merlin and Others v Commission (Case T-141/23) concerning an action for failuretoactagainsttheCommission

Court of Justice to hear preliminary reference on the protection and safety of workers at the working place and issues ofprimacyofEUlaw

Monday 8 May

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Official publication of case Energotehnica (Romania; C-792/22) was made, whereby the Court of Justice is set to hear a case concerning the protection and safety of workers at theworkingplace.

Request for preliminary ruling concerning the coordination of social security systems

Tuesday 9 May

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Official publication was made of a request for a preliminary ruling in Familienkasse Sachsen (C-36/23) from the Finanzgericht Bremen (Germany) concerning the coordination of social security systems in dispute over the partial revocation of a child benet assessment and the recovery of the child benetoverpaidfollowingthatassessmentintheperiodatissue.

Request for a preliminary ruling on the compatibility of changes in civil status with EU fundamental rights, freedoms, andcitizenshippublishedintheOJ

Monday 8 May

Official publication was made of a request for a preliminary ruling, in Asociaţia Accept (Romania; C-4/23), concerning the compatibility of national law provisions on the crossborder recognition of changes in civil status with European citizenship and certain fundamental rights and freedoms of the EU.

Court of Justice to clarify Regulation 853/2004 laying down specic hygiene rulesforfoodofanimalorigin

Tuesday 9 May

Official publication was made of a request for a preliminary ruling from the Înalta Curte de Casație și Justiție (Romania) concerning the interpretation of Regulation No 853/2004 layingdownspecichygienerulesforfoodofanimalorigin:RemiaComImpex(CaseC-10/23).

Court of Justice to hear preliminary reference on the exclusion of tax debt fromthedischargeofdebt

Tuesday 9 May

Following official publication of case Instituto da Segurança Social and Others (Portugal; C-20/23), the Court of Justice will hear a preliminary reference on the exclusion of tax debt fromthedischargeofdebt.

ECtHR: No violation of Article 9 ECHR in prohibiting Jehovah’s Witnesses from collecting and processing personal data without data subjects’ consent

Tuesday 9 May

e European Court of Human Rights (ECtHR) delivered its judgment in Jehovah’s Witnesses v. Finland (application no. 31172/19) ruling that a decision prohibiting Jehovah’s Witnesses religious community from collecting and processing personal data during door-to-door preaching without data subjects’ consent does not constitute a violation of Article 9 ECHR.

CourtofJusticestreaminghearingincase concerning the application of the principle of the more lenient criminal law

Wednesday 10 May

e hearing of the Court of Justice in Lin (Romania; C-107/23 PPU) concerning a preliminary ruling request, whereby clarication is sought on the compatibility, with certainfundamentalprinciplesofEUlaw,ofalegalsituationwhere the appellants are seeking to set aside a nal judgment resulting from national criminal proceedings and requesting the application of the principle of the more lenient criminal law,isavailableontheCourt’swebsite.

ECtHR adopts Memorandum ahead of the Fourth Summit of Heads of State and Government of the Council of Europe

Tuesday 9 May

Preceding the Fourth Summit of the Council of Europe, set to take place in Reykjavik, the European Court of Human Rights (ECtHR) adopted, on 20 March 2023, a Memorandum, whereby the role of the Council of Europe, particularly the Court, in preserving a high standard of democracy, human rights protection and rule of law in the Member States is understood and fullyendorsedbythem

GeneralCourtannulsCommission’sapproval of Germany’s recapitalization of Luhansa during COVID-19 pandemic

Wednesday 10 May

e General Court annulled the decision of the Commission to approve the recapitalisation of Luhansa by Germany, amounting to €6 billion euros, in the context of the COVID19 pandemic: Ryanair v Commission (Luhansa; COVID-19) and Condor Flugdienst v Commission (Luhansa; COVID-19) (JoinedcasesT-34/21andT-87/21).

Bastion Hotels’ action for annulment of Commission Decision on COVID-19 Aid SchemeintheNetherlandsdismissedbytheGeneralCourt

Wednesday 10 May

e General Court dismissed an action for annulment brought by Bastion Holding BV, Bastion Holding Een BV, Bastion Holding Twee BV, and 33 individual Bastion hotels (collectively referred to as ‘Bastion’) against the Commission’s decision C(2020) 8286 nalregardingStateAidSA.59535(2020/N)intheNetherlands.edecisioninquestionpertainstotheamendmentofthescheme SA 57712, specically the direct grant scheme designed to support small and medium-sized enterprises (SMEs) affected by theCOVID-19outbreak:BastionHoldingandOthersvCommission(caseT-102/21).

Executive Vice-President Margrethe Vestager issues Statement on General Court’s judgment regarding State Aid casesofLuhansaandSAS

ursday 11 May

Following the General Court’s judgment in cases Ryanair v Commission (Luhansa; COVID-19), Condor Flugdienst v Commission (Luhansa; COVID-19) (Joined cases T-34/21 and T-87/21) and Ryanair v Commission (SAS II; COVID19) (T-238/21), by which it annulled the decisions of the Commission to approve the recapitalization of (i) Luhansa by Germany; and (ii) SAS AB by the Kingdom of Denmark and the Kingdom of Sweden in the context of the COVID-19 pandemic, the Executive Vice-President Margrethe Vestager madeastatement

VAT Exemption for Cross-Border Social Services claried by Court of Justice

ursday 11 May

e Court of Justice delivered its judgment in MOMTDE RUSE (C-620/21) concerning a request for a preliminary ruling regarding the interpretation of Article 132(1)(g) of Council Directive 2006/112/EC on the common system of value-added tax, as amended by Council Directive 2008/8/EC(the‘VATDirective’)

Romanian laws on Judicial Inspectorate likely incompatible with EU law, rulesCourtofJustice

ursday 11 May

e Court of Justice delivered its judgment in Inspecţia Judiciară (Case C-817/21), the latest case concerning the Romanianjudiciary.

Court of Justice rules on the transferring liability for transport rules infringements

ursday 11 May

e Court of Justice delivered its judgment in the case Bezirkshauptmannscha Lilienfeld (C-155/22), concerning the national rules on the transfer of liability for infringements of road transportrules

Unexpected illness or death of crew member not an ‘unexpected circumstance’ exempting air carriers from compensation obligations, Court of Justice rules READ

ursday 11 May

eCourtofJusticehandeddown itsjudgmentinTAPPortugal (Joined cases C-156/22 to C-158/22), a preliminary ruling request from the Stugart Regional Court concerning the obligation of an airline to compensate passengers due to the cancellation of a ight resulting from the unexpected deathoftheco-pilot.

AG Szpunar delivers Opinion on materialscope,directeffectofGDPR

ursday 11 May

Advocate General Szpunar delivered his Opinion in Österreichische Datenschutzbehörde (C-33/22), a preliminary reference from the Supreme Administrative Court of Austria concerningthescopeanddirecteffectoftheGDPR

AG Campos Sánchez-Bordona interprets scope of contracting authorities’ discretion under the procurement directive

ursday 11 May

Advocate General Campos Sánchez-Bordona delivered his Opinion in Inaestructuras de Portugal, S.A. and Futrifer Indústrias Ferroviárias, S.A. (Case C-66/22), a case concerning contracting authorities’ powers, under Directive 2014/24/EU on public procurement (the Directive), to excludetenderersfromprocurementprocedures.

Court of Justice rules on compatibility ofnationaltaxlawprohibitingataxconsolidation system with freedom of establishment

ursday 11 May

e Court of Justice laid down its judgment in Manitou BF (Joined Cases C-407/22 and C-408/22) a request for a preliminary ruling from the Conseil d’État (France) regarding the compatibility of national legislation that disallows a tax consolidation system, under which a parent company benets from thereintegrationofdividendsreceivedfromitssubsidiaries,established in a Member State other than that of the parent company,withthefreedomofestablishment.

AG Szpunar: ‘Operating leasing’ activities are not excluded from the scope of theServicesDirective

Friday 12 May

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Advocate General Szpunar delivered his Opinion in case AUTOTECHNICA FLEET SERVICES (C-278/22) concerning the scope of application of Directive 2006/123/EC (‘the Services Directive’). e AG recommended the Court of Justice to rule that ‘operating leasing’ activities are not excluded from the scope of the Services Directive as they do not constitute nancial services within the meaning of Article 2(2)(b)ofthatdirective

takes action against EEA EFTA States regarding the implementation of the Enforcement Directive on Posting ofWorkers

Friday 12 May

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e EFTA Surveillance Authority (ESA) initiated infringement proceedings against Iceland, Liechtenstein, and Norway for their inadequate implementation of the Enforcement Directive on Posting of Workers. Accordingly, the ESA seeks to ensure that employers can send workers to other EEA Statessmoothlywhilesafeguardingtherightsofpostedworkers

ESA

Insights, Analyses & Op-Eds

Proportionality and CoronavirusRelated State Aid: (T-142/21, Wizz Air HungaryvCommission)

by Dimitrios Kyriazis

AnalysisoftheGeneralCourt’sdecisionincaseWizzAirHungary v. Commission (T-142/21), whereby an action for annulment, brought by Wizz Air Hungary, was dismissed in relation to a Commission decision approving the granting of State aid to a Romanian airline within the context of the COVID-19pandemic.

e payment of one-off commissions and the commission lost: Court of Justicein02CzechRepublicC-574/21

by João Zenha Martins

Op-Ed on the Court of Justice’s ruling in case 02 Czech Republic (C-574/21) concerning the interpretation of Directive 86/653 on the coordination of the laws of the Member States relating to self-employed commercial agents, whereby the Court on the relevance of commissions awarded to commercial agents in determining and calculating the indemnity providedinArticle17(2)ofthesaidDirective.

Unity, diversity and the language of EU law

by Marek Saan

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Op-Ed on the constant tension between unity and diversity as an inalienable characteristic and driving force of the developmentoftheUnion.

Is it time to start dealing with cyberaacks as a reality?: AG Pitruzzella’sOpinioninCaseC-340/21

by Bashar Fteiha

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Solidarity rules? State aid and public hospitals: Case C-492/21 P Casa ReginaApostolorumdellaPiaSocietàdelleFigliediSanPaolovCommission

by Mary Guy

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What if the new adequacy decision for theEU-USDataPrivacyFrameworkwere to be declared invalid – again? Ways forward and out of the internationaldata-transferdilemma

by Susanne Dehmel

Op-Ed, part of the EU Law Live Symposium on the 5th Anniversary of the GDPR, concerning the Court of Justice’s ruling in Schrems III and the new EU-US Data Privacy Framework, particularly focusing on the economic effects the decision has had, the impact another failed EU-US agreement would have, and arguments for shiing the lines that were drawn in the sand,inthatregard.

e Troubled Transnational EnforcementoftheGDPR

by Orla Lynskey

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Op-Ed, part of the EU Law Live Symposium on the 5th Anniversary of the GDPR, on the institutional, technical, and procedural innovations brought about by the GDPR within the context of public transnational enforcement of that regulation.

Reframing the Reform to Transfer Preliminary Rulings to the General Court with the Meaning of Judicial Cooperation:aLookintoRecentVAT

by Ricardo García Antón

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Op-Ed on the judicial reform encompassing the transfer of competence to adjudicate preliminary rulings to the General Courtinspecicareas,suchastheValueAddedTax

Library - Book Review

Psychogiopoulou and de la Sierra

Stevi Kitsou

Digital Media Governance and Supranational Courts, Selected Issues and Insights from the European Judiciary

e book by Evangelia Psychogiopoulou and Susana de la Sierra analyzes challenges posed by digitalization and the laer’s impact on legal scholarship Psychogiopoulou and de la Sierra argue that,with the clash between market-oriented economic interest and liberal constitutionalism,resultingintheintensicationoftherealmofdigitalconstitutionalism,thejudiciary is required to adjudicate and dene the applicable law in a multi-layered and fragmented quasi-regulatory landscape. According to Kitsou, the value of Psychogiopoulou and de la Sierra’s book lies in its ability to bring together a diverse range of perspectives and arguments in a single piece, making it an inspiring resource for anyone seeking to understand thecomplexlegallandscapeofdigitalisation.

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