Talking point
Global economy not running smoothly despite falling oil prices
Taking the global PMI as the benchmark, the global economy has lost momentum over recent months. However, the slump in oil prices to just USD 60 per barrel of late, a drop of 45% yoy (Brent Blend), is likely to provide a major boost to the global economy – at least temporarily. Oversupply on the global oil market has expanded markedly due to the huge increase in petroleum production in the US – it is now the world's biggest producer – and the unwillingness of OPEC to reduce its production quotas. Even if things turn out as we expect and oil production in OPEC and elsewhere is likely to be curtailed in the next few months because of the price slump, we expect the average price of Brent in 2015 to be USD 72.50 per barrel and thus nearly 30% down on the previous year. [more]
Global financial markets
Deposit guarantee reform in Europe: A systemic perspective
The financial crisis has led to substantial reforms of the system of financial regulation and supervision in Europe – not limited to but including deposit guarantee schemes (DGSs), which play a key role in consumer protection and financial stability. The most recent DGS reform follows a gradual approach, i.e. focuses on adapting existing national systems rather than replacing them. Nevertheless, new rules for bank resolution and the emerging Banking Union are considerably changing the environment DGSs operate in. Given the complexity of the new setup, cooperation between the different players in the financial safety net – including DGSs – is indispensable. [more]
Natural resources
CO2 emissions from cars: Regulation via EU Emissions Trading System better than stricter CO2 limits
The integration of road transport into the EU Emissions Trading System (EU ETS) using an upstream approach (with refineries and fuel importers as participants) is superior to the instrument of CO2 limit values for cars on the counts of ecological effectiveness and macroeconomic efficiency. This applies in particular if a cap on CO2 emissions enjoys top political priority. Higher taxes on fuel would also be more appropriate than a further tightening of limit values after 2020/21. Nonetheless, if policymakers should decide that (stricter) CO2 limit values for cars are to remain the instrument of choice after 2021, it would be appropriate to gear them to the (lower) targets in other large auto markets. [more]
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