Tag: econ

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AUTHORS

 Ignazio ANGELONI, Cédric TILLE 

Abstract

We discuss the possible effects of the US administration’s Digital Assets Strategy (DAS), on the US and Europe. If pursued consistently over time, DAS would tend to weaken the Fed’s payments oversight and monetary control mechanisms, with possible adverse consequences including for the dollar’s international role. Europe’s monetary sovereignty is unlikely to be affected. To ensure that it is indeed the case, the EU crypto markets regulation (MiCA) and the euro’s legal tender status may need strengthening. While wholesale CBDCs would benefit the cross-border payment infrastructure, the digital euro in itself would not contribute significantly to protecting Europe’s monetary sovereignty.

This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 23 June 2025.

AUTHORS

Cinzia ALCIDI (CEPS), Ignazio ANGELONI (IEP Bocconi and SAFE), Cédric TILLE (Geneva Graduate Institute of International and Development Studies)

Abstract

Were the US to impose large and lasting tariffs on its imports from the EU, the effect on the euro area (EA) would be substantial and far-reaching. We expect the direct impact to be inflationary in the US and contractionary on EA aggregate demand and output. The indirect impact through an appreciation of the dollar (partly already occurred) tends to transfer inflation from the US to Europe. The ECB should be mindful that both deflationary and inflationary influences may ensue, and be ready to adjust monetary policy promptly if necessary to maintain price stability. This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 20 March 2025.