- European Central Bank Did Not Change Interest Rates
- Biden Plans to Increase Tax on the Rich
- Norway Will Test Digital Currency
European Central Bank Did Not Change Interest Rates
On Thursday, the European Central Bank (ECB) said it decided to keep the euro area key interest rates unchanged following a regular monetary policy meeting.
Eurozone key interest rates will remain at record low levels, with the base interest rate, marginal lending rate, and deposit rate unchanged at 0.00%, 0.25%, and minus 0.50%, respectively, the ECB said in a statement.
Stating that the Pandemic Emergency Purchase Program (PEPP) worth 1.85 trillion euro will continue until March 2022, the ECB also emphasized that the asset purchase rate will increase in this quarter compared to the first months of the year.
Underlining that the Governing Council will make flexible purchases according to market conditions, the bank said that the council would reinvest by 2023 with principal payments from securities matured within the scope of PEPP.
Stating that net asset purchases will continue at a rate of 20 billion euros per month within the scope of the asset purchase program, ECB noted that they expect the Board of Directors to continue acquiring assets as required to maintain the effect of the expansionary monetary policy.
With its refinancing operations, the ECB said that abundant liquidity conditions would continue to be maintained and stated that the Governing Council is ready to adjust all its instruments to ensure that inflation is within targets and sustainably.
Lagarde said while the bank sees an eventual rebound this year, any steps to phase out its anti-pandemic emergency monetary plan would be “premature.”
It is “premature to talk about phasing out PEPP she said during a news conference. According to Lagarde, leaving the PEPP depended on various factors, including financing conditions and inflation.
“We still have a long way to go before we cross the bridge of the pandemic,” Lagarde said. “I have referred to the economy as being on crutches, one fiscal crutch and one monetary crutch.” She added that the bloc wasn’t ready to stand on its own.
Lagarde also appealed to EU member states to urgently get a 750-billion-euro EU coronavirus recovery fund into action.
“This would allow the next generation EU program to contribute to a faster, stronger, and more uniform recovery,” Lagarde said.
Biden Plans to Increase Tax on the Rich
According to sources familiar with the proposal, President Joe Biden would unveil a plan to raise taxes on the wealthiest Americans, including the largest-ever rise in levies on investment gains, to finance around $1 trillion in healthcare, universal pre-kindergarten education, and paid leave for jobs.
The proposal is part of the White House’s drive for a comprehensive reform of the United States’ tax system, which will raise taxes on the wealthy and large corporations and help pay for Biden’s ambitious economic agenda. According to reports, the plan calls for increasing the top marginal income tax rate from 37 percent to 39.6 percent. It would also nearly double taxes on capital gains to 39.6% for people earning more than $1 million.
After the 1920s, it will be the highest tax rate on investment gains, paid mainly by the wealthiest Americans. In the post-World War II period, the rate has never surpassed 33.8 percent.
This proposal could reverse the longstanding dominance of the tax law that tax returns on investment lower than the labor force. Biden had campaigned to equalize capital gains and income tax rates for wealthy individuals and said it was unfair for many to pay lower wages than middle-class workers.
Jen Psaki, the White House press secretary, said the president would talk about his “American Families Plan” during his speech to Congress, but she wouldn’t go into depth.
She said the administration’s funding plans had not yet been finalized, but she emphasized Biden’s determination to make the rich and corporations pay for new programs.
“His view is that that should be on the backs … of the wealthiest Americans who can afford it and corporations and businesses who can afford it,” Psaki said.
Biden has promised not to raise taxes on households earning less than $400,000.
Norway Will Test Digital Currency
The Norwegian Central Bank announced that it would test technical solutions for the digital currency (CBDC).
In the statement made by the bank, it was stated that after four years of research, the Norwegian Central Bank would test various technical solutions for CBDC in the next two years.
Stating that digital currency can provide several features in payments, Norwegian Central Bank Governor Oeystein Olsen said, ” “Additional knowledge is necessary for us to be able to decide whether issuing a CBDC is appropriate.”
While central banks worldwide are exploring whether they should launch digital versions of their national currencies, at least 52 countries around the world are working to develop their digital currency, according to the Bank for International Settlements (BIS).
Experts state that China is ahead of other countries in the creation of digital money.
In 2014, the Asian superpower started designing its digital currency electronic payment CBDC, and a pilot was conducted in 2020. According to a new Citi study titled Future of Money released this month, analysts expect China to “sprint to a cashless society” within five years.
The UK announced on April 19 that it is coordinating exploratory work on a potential CBDC, specifically “bitcoin.”
The European Central Bank (ECB) is also expected to decide whether to launch an official project on the digital euro in the middle of this year.
Meanwhile, the Bahamas became the first central bank to offer its digital currency as a “sand dollar” in 2020. Sand Dollar is the digital version of the Bahamian dollar (B$).