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Rolf H. Weber

The creation of a digital single market is an important objective of the European Union (EU), as can be seen in the ‘Digital Single Market Strategy for Europe’ (‘DSM Strategy’), presented by the European Commission on 6 May 2015. The main aim of the DSM Strategy consists in the strengthening of the digital ecosystem. Therefore, the Commission proposes putting more emphasis on a ‘free flow of information and of data’; such a concept should remove cross-border restrictions on international data transfers. In the meantime, the Commission submitted several legislative proposals, for example, on the sale and purchase of digital content, on copyright issues in the digital era, and on the rights and obligations of Internet platform intermediaries. In addition, a working document on the collaborative economy is available for discussion. These initiatives must be partly seen in the context of rising difficulties with global and regional agreements governing international (digital) trade. The potential success of the plurilateral Trade in Services Agreement (TiSA) of the WTO appears to be more than doubtful, not only due to political changes in national governments but also due to the increasing opposition from nongovernmental organizations and civil society. The same holds true for the EU/US project of the TTIP. The only agreement having finally a chance to be adopted seems to be the EU/Canada CETA. Apart from these more political difficulties with a proper implementation of international digital trade rules, the EU General Data Protection Regulation, having been endorsed in Spring 2016, is another important potential stumbling block for the objective of ‘free flow of information and data’. This objective can come into conflict with the data protection principles if the recipient country does not provide an equal level of data protection. The respective tensions have not been addressed in the DSM Strategy but should be dealt with in further EU Communications in 2017. Nevertheless, the lack of data protection/security standards and of compliance procedures with fundamental rights in some countries is an intensively debated topic that merits to be discussed in more depth.

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Christine Kaufmann and Rolf H Weber

Prior to the Great Financial Crisis (2008/9) Central Banks used a single instrument, control over the short term interest rate, to achieve a single inflation target. The experience of the GFC has led Central Banks to give much more emphasis to financial stability, reverting to an earlier historical tradition. To hit two objectives efficiently, two instruments are required. A second set of instruments, macro-prudential measures, has been developed for this purpose. Macro-pru measures differ from micro-pru, since the former should vary according to the state of the banking (or wider financial) sector as a whole and be applied across the board, whereas the latter relates to the individual institution. There is, however, a large overlap between macro-pru and monetary policy on one side, and macro-pru and micro-pru on the other. Given such overlaps there is a strong efficiency argument for combining the conduct of all three within the Central Bank, but this not only greatly extends the powers, but also blurs the mandate, of an unelected technocratic agency, which is problematical. Much may depend on how successful Central Banks become in employing macro-pru measures, such as counter-cyclical capital requirements and varying limits on housing finance, since experience with these remains quite limited.