Category Archives: Economy

The New Cold War is Digital – and it’s Already Reshaping Global Power

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From artificial intelligence to quantum tech, we’re witnessing a seismic shift in how countries define influence and sovereignty. This isn’t just about innovation anymore — it’s about values, governance, and global positioning.

As someone deeply interested in tech policy and diplomacy, I’ve been reflecting on how major powers are approaching this transformation. Here’s a high-level look at how governments are navigating this new digital landscape:

Key Global Approaches to Tech Governance

  • EU: Leading the way with the AI Act — a bold, risk-based framework grounded in ethics and digital rights.
  • US: Prioritizing innovation with executive orders and a $1.7T bioeconomy push — focused on resilience, competition, and security.
  • China: Driving state-led initiatives like Made in China 2025 and massive quantum R&D for tech sovereignty.
  • UK: Taking a flexible, pro-innovation stance while fostering transatlantic cooperation.

Strategic Tech Domains to Watch:

  • AI Governance: From the EU’s regulatory leadership to China’s national security-driven controls, the race to shape AI norms is on.
  • Cybersecurity & Digital Sovereignty: NIS2 in the EU, new US cyber strategy, and China’s walled cyberspace — all aiming to secure digital autonomy.
  • Biotech & Biosafety: With the US and EU aligning bio-innovation to health and sustainability, we’re seeing biotech become a strategic pillar, not just a science issue.
  • Quantum Tech: Quantum is no longer future talk — the US, EU, and China are investing billions in what could be tomorrow’s defining tech advantage.

Multilateral Moves that Matter:

  • EU–US Trade and Tech Council (TTC) is shaping AI and semiconductor coordination.
  • UNESCO, OECD, G7: Working on global ethical frameworks.
  • Digital Partnerships (EU–Japan, UK–Singapore, etc.) show a real appetite for trusted, cross-border digital cooperation.

What’s the Common Thread?

Despite differences in approach, there’s a shared recognition that the future must be built on:

  • Ethical AI
  • Sustainable innovation
  • Strategic investment
  • Digital rights and accountability

A call to Action:

We need governance models that are collaborative, values-driven, and future-proof. The digital world is too important to be left to chance or rivalry alone.

Let’s build a digital future that supports democracy, development, and dignity!.

Curious to hear your thoughts: How do you see your country, company, or community navigating this new era?

EU Sets Global Precedent with Comprehensive AI Act

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The European Union has just reached a landmark agreement on a comprehensive AI law, poised to set a global precedent. This new regulation, known as the AI Act, is one of the first of its kind and aims to manage the rapidly evolving AI technology with a risk-based approach.

Key highlights of the AI Act include:

  • Risk-Based Regulation: The AI Act will categorize AI systems based on their level of risk, with the most stringent regulations applied to high-risk models. This includes popular large AI models like ChatGPT.
  • Enforcement Across EU: All 27 member states will be involved in enforcing the law, with certain aspects taking up to 24 months to become effective.
  • Global Impact: The legislation is expected to influence AI development worldwide, serving as a model for other countries.
  • Comprehensive Prohibitions: The AI Act will ban AI use for social scoring, manipulating human behavior, and exploiting vulnerable groups. Strict restrictions are also placed on facial recognition technology and AI systems in the workplace and educational institutions.
  • Significant Fines for Non-Compliance: Companies that fail to comply with these new rules could face fines of up to €35 million or 7% of global revenue.
  • Two-Tier Approach for AI Models: The Act establishes transparency requirements for general-purpose AI models and stronger requirements for those with systemic impacts.
  • Encouragement for Innovation: Despite strict regulations, the Act aims to avoid excessive burdens on companies, promoting a balance between safeguarding AI technology use and encouraging innovation.
  • Future Perspectives: Looking ahead, this legislation is a crucial step in shaping the global AI regulatory landscape, with implications for AI legislation and automated decision-making rules in other jurisdictions, including Canada, the United States, and beyond.

The EU AI Act is much more than just a set of rules; it’s a catalyst for EU startups and researchers to lead in the global AI race. With this act, the EU becomes the first continent to establish clear rules for AI use, potentially guiding future global standards in AI regulation.

More on: https://bit.ly/486f0n3

EU banking package and sustainability

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On 27 October 2021, the European Commission adopted a review of EU banking rules (the Capital Requirements Regulation – CRR – and the Capital Requirements Directive – CRD IV). These new rules will ensure that EU banks become more resilient to potential future economic shocks.

The package implements Basel III, stablishes new sustainability rules, and provides stronger enforcement tools for supervisors overseeing EU Banks.

Concerning Sustainability, it intends to strength the resilience of the banking sector to ESG risks, aligned with the Commission’s Sustainable Finance Strategy. It improves the way banks measure and manage these risks, ensuring that markets can monitor what banks are doing. This proposal will require banks to systematically identify, disclose and manage ESG risks as part of their risk management. It includes regular climate stress testing by both supervisors and banks. Supervisors will need to assess ESG risks as part of regular supervisory reviews. All banks will also have to disclose the degree to which they are exposed to ESG risks. To avoid undue administrative burdens for smaller banks, disclosure rules will be proportionate.

The proposed measures will not only make the banking sector more resilient, but also ensure that banks take into account sustainability considerations.

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European Sustainability Reporting Standards

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Cluster 2 of the EFRAG’s Project Task Force on European Sustainability Reporting Standards (PTF-ESRS)  has published a Climate Standard Prototype working paper as well as an accompanying basis for conclusions. EFRAG said that these documents are a “robust basis for future PTF-ESRS discussions and a further step towards a draft standard.” The PTF-ESRS continues to work on draft standards covering sustainability issues requested in the CSRD proposal

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Basis for conclusions: https://bit.ly/2WGO5i4

Climate standard prototype’ working paper: https://bit.ly/3la2vkh

Climate Change and prudential policy

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Central Banks’ objective of maintaining price stability, enables climate protection goals. For example, low inflation rates will allow households and firms to detect price signals from climate policy and adjust thus their behaviour. Putting the right price tag on greenhouse gas emissions is arguably the most powerful weapon  in the fight against climate change.

Central Banks should not slip into the role of a climate policy actor as they have different segregation of responsibilities. Unlike monetary policy, climate policy changes the distribution of resources and income distinctly and permanently. Democratic processes and direct political accountability are important when making such decisions. Central Banks should guarantee independence to safeguard price stability objective.

A clash of objectives could arise as well if, say, the Central Bank attempted to use its monetary policy asset purchase programmes  to pursue environmental policy objectives, as these programmes  need to be scaled back as soon as warranted  to ensure price stability. Ultimately, monetary policy is not a structural policy instrument: it is cyclical in nature, balancing each other out over the long run through  the interplay of monetary policy loosening and tightening.

However, Central Banks can step up their game to protect the climate without running the risk of overstretching their mandate of preserving price stability. As climate change affect firms and lenders, Central Banks need to ensure that climate-related financial risks are appropriately taken into account as part of risk management.

So, from a monetary policy, perspective, Central Banks are within their rights to request better information. The Eurosystem should consider purchasing or accepting as collateral only those securities whose issuers meet certain climate-related reporting requirements. Hence, the importance of the ratings of agencies to adequately and transparently reflect climate-related financial risks.

Other further measure may be to limit the maturities or the volume of securities from certain issuers in the monetary policy portfolio, if required to contain financial risk.

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Sustainable Finance Disclosure Regulation (SFRD) – Q&A published by the EU Commision

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The following points were addressed:

1. The 500-employee criterion includes employees of a parent undertaking and of subsidiary undertakings regardless of whether they are established inside or outside the EU.

2. The definition of ‘financial market participant’ outlined in the regulation includes both EU Alternative Investment Fund Managers (AIFMs) and non-EU AIFMs.

3. Registered AIFMs must also fulfil the requirements laid down in the SFDR.

4. In addition to ‘sustainable investments’, Article 9 products may also include investments for specific purposes such as hedging or liquidity, which must meet minimum environmental or social safeguards.

5. A financial product that promotes environmental, social or sustainability requirements or restrictions laid down in law, including international conventions or voluntary codes, in its investment policy is subject to Article 8. Additionally, financial products having an environmental objective but not meeting the DNSH principle should also qualify as Article 8 products.

Furthermore, the promotion of ESG characteristics does not refer solely to pre-contractual disclosures, but also to a broad range of documents including marketing communications, advertisements, use of product names or designations, and factsheets.

This Q&A was published in response to questions asked by the European ESAs (ESMA, EIOPIA and EBA). It provides clarity for financial market participants in response to a broad range of questions relating to the disclosure requirements specified in the Sustainable Finance Disclosure Regulation 2019/2088.

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Spain’ Sovereign Green Bond Issuance in September

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The Spanish Sovereign Green Bond Framework is aligned with the four core components of the Green Bond Principles 2021 (GBP) and follows best market practices identified by Vigeo Eiris (VE). The Kingdom of Spain’s Sovereign Sustainability Rating from VE is 78/100, which indicates an ‘advanced’ sustainability performance, the highest level on VE’s four-point scale.

Spain will sell its inaugural green bond in September. The Spanish Treasury’s first such bond will have a 20-year maturity. Spanish government did not specify how much it plans to raise, though the government has identified 13.6 billion euros ($16.1 billion) of projects to finance or refinance projects tied to the country’s environmental objectives, including renewable energy, biodiversity protection, and climate change adaptation.

In addition, Spain will invest around 20 billion euros on other environmental programs through 2023 that will be financed by the European Union’s executive arm. The bloc is also expected to make its green bond debut later this year and ultimately become the world’s biggest seller, channelling those funds to member states as part of its pandemic recovery package.

The EU has also laid out a voluntary green bond framework and Spain plans to align its spending with the bloc’s classification of sustainable investments, or taxonomy. The first green bond is included in the country’s plan to issue 80 billion euros of net debt this year.

Spain’s Sovereign Green Bond Framework: https://bit.ly/3zNr22V

Vigeo Eiris’ Second Party Opinion: https://bit.ly/3rGEP8v

ESG Ratings and Data Products Providers

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The International Organization of Securities Commissions (IOSCO) has made a fact-finding exercise on these topic, revealing that:

A. There is little clarity and alignment on definitions, including on what ratings or data products intend to measure;

B. There is  a lack of transparency about the methodologies underpinning these ratings or data products;

C. While there is wide divergence within the ESG ratings and data products industry, there is an uneven coverage of products offered, with certain industries or geographical areas benefitting from more coverage than others, thereby leading to gaps for investors seeking to follow certain investment strategies;

D. There may be concerns about the management of conflicts of interest where the ESG ratings and data products provider or an entity closely associated with the provider performs consulting services for  companies that are the subject of these ESG ratings or data products; and

E. Better communication with companies that are the subject of ESG ratings or data products was identified as an area meriting further attention given the importance of ensuring the ESG ratings or other data products are based on sound information.

To understand the implications of the activities of ESG ratings and data products providers the the Board of IOSCO has published a consultation. Comments may be submitted before 6 September 2021.

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The EU Fit for 55 Package

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It is intended to fundamentally revise the EU’s energy policy framework and thus adapt it to the EU updated climate targets. By 2030, the EU’s GHE are to be reduced by 55% compared to the amount emitted in 1990. While the focus in December 2021 will be on decarbonised gas and the buildings sector, ten initiatives was planned last 14 July 2021. Overall, the “Fit for 55 Package” with the initiatives listed below is the central measures package of the European Green Deal:

1.- Revision of the EU Emissions Trading System (ETS), including maritime transport, aviation and CORSIA

2.- Carbon Border Adjustment Mechanism (CBAM)

3.- Revision of the Effort Sharing Regulation (ESR)

4.- Revision of the Energy Tax Directive (ETD)

5.- Amendments to the Renewable Energy Directive (RED) to implement the ambition of the new 2030 climate target

6.- Amendments to the Energy Efficiency Directive (EED) to implement the ambition of the new 2030 climate target

7.- Reduction of methane emissions in the energy sector

8.- Revision of the regulation on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry (LULUCF)

9.- Revision of the Directive on the Deployment of Alternative Fuels Infrastructure

10.- Revision of the Regulation setting CO2 standards for new passenger cars and for new light commercial vehicles

11.- Revision of the Third Energy Package for gas (Directive 2009/73/EU and Regulation 715/2009/EU) to regulate competitive decarbonised gas markets in Q4 2021

12.- Revision of the energy performance of Buildings Directive (EPBD) in Q4 2021

Vice-President Franz Timmermans presented the plans in Brussels last Wednesday. That was the kick-off for a long process, looking for agreement among the Commission, the Parliament, and the Member States. This will be a challenge, as the new seems to be on achieving the reduction targets, which open to the countries’ challenges of what adjustments are necessary to achieve them. Another key aspect is how to support industries and companies that compete with others abroad EU, maintain international competitiveness. Specially with competitors in countries where the financial burden of environmental protection is lower. Nowadays, these are only draft initiatives, we do not know yet when the implementation will begin in the individual Member States, and what specific content will have agreed on at that time.

This stablishes the EU positioning of climate policy in everyday Europeans’ life, impacting firms and the way Europe makes business. It is key to ensure no one must be left behind in the process, to guarantee a social and society fair transition.

More on: https://bit.ly/2VJlB6i

Overhaul of the EU Emissions Trading System (ETS), the Energy Taxation Directive (ETD), and the introduction of a Carbon Border Adjustment (CBAM)

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The European Commission has adopted a package of measures intended to put the EU firmly on the road to climate neutrality by 2050 with the intermediate step of a minimum 55% reduction in net greenhouse gas emissions by 2030. An overhaul of the EU Emissions Trading System (ETS) and of the Energy Taxation Directive (ETD), and the introduction of a Carbon Border Adjustment (CBAM) form part of the package:

A.- ETS overhaul: it would bring maritime transport within the scope of the ETS and accelerate the reduction of the number of emissions allowances that can be issued each year. A separate proposed directive would lead to the gradual reduction of free emissions allowances available to the airline industry. It also envisages the establishment of a separate emissions trading system for road transport and heating fuels which would apply from 2026 at the fuel supplier level. Its introduction would be accompanied by the establishment of a Social Climate Fund.
B.- ETD overhaul: the ETD does not reflect the current mix of energy products and criticized that it does not link the minimum tax rates to energy content and CO2 emissions.
Minimum tax rates would be based on the real energy content and environmental performance of each product, with most polluting fuels taxed at the highest level. The tax base would also be expanded – including through the removal of existing exemptions. An eye-catching change in this respect is that fuels for the aviation and maritime industries would lose existing exemptions.
The burden of higher minimum levels of energy taxation may be felt disproportionately by consumers and poorer households. The mitigation of this risk does, however, appear to be left mostly to each Member State’s tax system and the commission encourages Member States to consider using energy tax revenues to support vulnerable households.
C. CBAM introduction: the overarching aim is to prevent carbon leakage. The CBAM has been designed as a system of certificates to complement the ETS rather than, for instance, an import tax. Importers will be required to purchase certificates at a price to be set by the Commission on a weekly basis to mirror average ETS prices (which are established on a daily basis) in respect of relevant goods (being, at least initially, only iron and steel, cement, fertiliser, aluminium and electricity generation as per Annex I to the proposed CBAM regulation) imported into the EU customs territory from third countries. Imports from countries that participate in the ETS or have an emissions trading system linked to it are exempt from CBAM.

More on: https://bit.ly/3yYDk8a