Also in this newsletter: Why the ECB thinks the digital euro is a good idea
Good morning. Henry is away today so you are getting the newsletter from me. Today, I’m previewing a meeting of EU home affairs ministers which comes only a few days after Brussels was shaken by a terrorist shooting. And our Frankfurt bureau chief has an update on the ECB’s plans for the digital euro.
Close to home
EU home affairs ministers are meeting today at a fraught time for security in Europe, following a number of threats and violent incidents over the past days.
Context: Since the outbreak of the Israel-Hamas conflict almost two weeks ago, a sense of unease has spread in Europe over fears of reverberations at home. A teacher was stabbed in France, and three people were shot in Belgium in incidents politicians have linked to terrorism. Airports and other public places had to be evacuated owing to bomb threats.
The security implications for Europe of the Middle East conflict will be the main dish at the ministers’ lunch today. Part of this discussion is also how to deal with antisemitism, Islamophobia and hate speech, officials say.
But the pièce de résistance at today’s discussions will be migration once again, in particular partnerships with third countries.
Member states are keen to work closer with countries like Egypt, Morocco and others to curb arrivals to the bloc, and also make sure they take back their citizens who have no right to stay in Europe. The recent attacks, which were perpetrated by people whose asylum claims were denied, have given this greater urgency.
The European Commission is due to present progress on talks with Morocco and Egypt today, with special attention on the latter given the Israel-Hamas conflict and possible movements of flight.
“We need to engage actively with Egypt to make sure that Egypt gets all the backing they merit for their very important role in the region as a transit country,” commission vice-president Margaritis Schinas told journalists yesterday, but refused to offer a state of play of the discussions. A senior EU diplomat however said they were “far advanced”.
The EU recently scored a success on the topic of returns with the so-called post-Cotonou agreement, under which 79 countries agreed to “accept the return of and readmission of any of its nationals who are illegally present” in EU countries.
But the question is whether such promises will be kept.
The attack in Brussels was perpetrated by a Tunisian man, and Belgian authorities have pointed out Tunisia is notoriously difficult when it comes to taking back its citizens — despite Tunis’s recent agreement with the EU on this very topic.
The US economy has powered ahead of Europe’s, with one reason being the continent’s rapidly ageing population. And the gap between the US and Europe is likely to widen further in the coming years.
Token project
The EU is one step closer to its very own digital currency, after the European Central Bank yesterday announced it would start preparations on the digital euro, writes Martin Arnold.
Context: A few smaller countries have launched central bank digital currencies and China is well advanced in its preparations. Among western central banks, the ECB is the furthest ahead on an electronic version of its currency.
The ECB said yesterday that it was moving from a period of investigation to a two-year preparation phase, and provided details of how the project may work — including selecting third-party providers, testing and writing the rules.
But it left many questions unanswered.
Critics have asked whether we even need digital euros. ECB president Christine Lagarde addressed this by saying: “We need to prepare our currency for the future”. The aim was to provide “a digital form of cash that can be used for all digital payments, free of charge, and that meets the highest privacy standards”, Lagarde said.
How will it work? The ECB expects people to access digital euros through a bank or other payment services provider, but it also plans to launch its own app. Anyone without a bank account or digital device could also get digital euros on “a card provided by a public body such as a post office,” it said.
Digital euros could even be transferred offline, using the same near-field communication technology behind contactless payments.
But the biggest uncertainty is when a final decision will be made on launching a digital euro. For now, the ECB can defer to the EU to finalise legislation that lays the groundwork for the project.
What to watch today
EU home affairs ministers meet in Luxembourg.
EU experts and ECB meet to discuss Russian frozen assets, after an earlier meeting was rescheduled over security concerns.
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Swaparound: Brussels wants EU countries to share vital medicines this winter to avoid shortages of antibiotics and other drugs.
Far-right fodder: Muslim and Arab in Europe populations fear the Israel-Hamas conflict and recent Islamist attacks will unleash an Islamophobic backlash.
Digging deep: The Ukrainian city of Kharkiv is building underground infrastructure to keep life going despite Russian attacks.
