European Union

Interest rates in the European Union will need to stay high “as long as necessary” to slow still-high inflation, Christine Lagarde, president of the European Central Bank, said Friday, the Associated Press reported. “While progress is being made," she said, “the fight against inflation is not yet won.” Lagarde’s remarks, at an annual conference of central bankers in Jackson Hole, Wyoming, came against the backdrop of the ECB's efforts to manage a stagnating economy with still-high inflation.

European Union banks' plans for surviving a major crisis without having to tap central bank money will undergo intense scrutiny next year, the bloc's banking watchdog said, Reuters reported. The need for credible options was reinforced after the Swiss central bank stepped in with a liquidity backstop for Credit Suisse in March, before it was taken over by rival UBS.

South American trade bloc Mercosur officials met on Tuesday to agree on their counterproposal to a European Union addendum on a long-awaited trade deal before meeting with EU negotiators in August in the hopes of closing the accord by year-end, Brazilian diplomats told Reuters. The four-nation Mercosur will seek to unify its positions on Wednesday and Thursday to respond to the EU on environmental additions the European body made to the trade deal, said Brazil's foreign ministry, where the talks are being held.

The European Union and Australia have failed to conclude talks on a planned free trade agreement, a European Commission spokesperson said on Tuesday, Reuters reported. The EU and Australia opened negotiations in 2018 and had hoped to conclude talks this week. However, differences remained, particularly over the degree to which the EU will open its markets to Australian farm products, notably beef. "We regret it was not possible to conclude our talks with Australia this week. We made progress but more work is required to address key outstanding issues," the spokesperson said.

The European Union signed a free trade agreement with New Zealand on Monday that the two sides expect will increase bilateral trade by up to 30% within a decade, the Associated Press reported. New Zealand will gain up to 1.8 billion New Zealand dollars ($1.1 billion; €1 billion) in exports to the 27-country bloc every year, a government statement said. The European Union signed a free trade agreement with New Zealand on Monday that the two sides expect will increase bilateral trade by up to 30% within a decade.

The European Commission announced a new data transfer pact with the United States on Monday, seeking to end the legal uncertainty plaguing thousands of companies which transfer personal data across the Atlantic, Reuters reported. However, the move was immediately criticised by non-profit group noyb, led by privacy activist Max Schrems, which said it would challenge the agreement.

The European Union on Wednesday proposed making the payments sector more competitive, giving legal backing to a digital euro, and preserving the role of cash as fewer people use coins and notes, Reuters reported. The package of European Commission reforms seeks to further prise open a payments market long dominated by banks and U.S. duo Visa and Mastercard, which are now being challenged by fintechs that offer rival services using data from customers' bank accounts.

The UK and the European Union signed a long-awaited memorandum of understanding on financial services on Tuesday, marking a moment of accord amid years of wrangling over post-Brexit co-operation, Bloomberg News reported. Jeremy Hunt approved the memo with Commissioner Mairead McGuinness during the first visit to Brussels by a UK chancellor in more than three years.

The European Union is due on Wednesday to publish draft rules that give legal underpinnings for a digital euro, if the European Central Bank decided to issue one in coming years, Reuters reported. Central banks across the world, from China and Japan to Brazil, Britain and Canada are looking into digital versions of their currencies to avoid a gap in faster payments being filled by the private sector as the use of cash dwindles.

The European Commission on Tuesday unveiled a new trade doctrine aimed at curbing China’s ability to squeeze Europe’s economy, and at preventing European companies from exporting sensitive, military-linked technology that could give China an edge, the New York Times reported. The policy, still in its early stages, highlights how the European Union is seeking to align itself with the United States in limiting China’s access to sensitive markets and industrial secrets. It also reflects growing concerns about Beijing’s deepening alliance with Moscow.