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Week Ahead (19 July)



Tuesday, 20 July - Commission action plan on money laundering to be adopted

The College of Commissioners is aiming to adopt the action plan for a comprehensive Union policy on preventing money laundering and terrorism financing on 20 July. The package, released by the Commission in May 2020, aims to strengthen AML provisions across the bloc.

Measures to be included in the package include the conversion of parts of the existing AML directive into a regulation, making them directly applicable in member states. An EU-wide AML supervisory system, to be known as the Anti Money Laundering Authority, will also be created which will complement national anti-money laundering bodies. It will increase supervision of the non-financial sector as well as the supervision of financial institutions. The new AML package will also include measures to enhance co-ordination across member state Financial Intelligence Units (FIUs) and the provision of a support mechanism for same.

Thursday, 22 July - ECB Governing Council meeting to discuss implementation of new strategy

The Governing Council of the European Central Bank will meet on Thursday following a landmark week in which it confirmed a new inflation target and a move to the next phase of the development of the digital euro. As a reminder, the ECB announced the results of its 18-month strategy review on 8 July which included a change in its inflation target from "below, but close to, 2%" to a 2% medium-term target.

Part of the ECB's new strategy - which was adopted unanimously - says that it can let inflation across the eurozone rise above 2% when low interest rates prevail, as is the case now. The implementation of the new policy will be driven by the views of the members of the governing council on the economic outlook for the bloc and will consequently determine how long the pandemic emergency purchase programme (PEPP) will have to remain in place. Reports last week revealed distinct views within the governing council on the approach the ECB should take going forward. Portugal's Central Bank governor, Mario Centeno, and Italy’s Ignazio Visco, both said that the new strategy means the ECB should keep PEPP operational for longer than anticipated, while Klaas Knot, the Dutch central banker, has separately pushed for an early tapering of PEPP, which is due to expire in March 2022.

Friday, 23 July - Flash Eurozone composite PMI to be released

The next flash eurozone composite PMI will be released on Friday. Last month’s PMI results showed the eurozone private sector economy expanding at its fastest pace for 15 years, with a composite reading of 59.5 recorded, beating flash estimates for June by 0.3. This was underpinned by high levels of output in the manufacturing and services sectors; the earlier manufacturing PMI hit 63.4, a new record reading, while services reached 58.3. However, operating prices rose in June at a fast rate, with inflation at its strongest since September 2000. This helped increase output charges at the quickest rate in almost 19 years.

This month’s report will likely show continued strong economic growth as countries emerge from the Covid-19 pandemic, driven by pent-up demand in the services sector.

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