The Access to COVID-19 Tools Accelerator (ACT-A) is a global initiative to promote the development, production and fair distribution of COVID-19 tests, treatments and vaccines and to strengthen health care systems (see also COVAX below, which is ACT-A’s vaccines pillar). ACT-A pools the expertise of governments, scientists, businesses, global health organisations and civil society. It was launched in April 2020 by authorities including the World Health Organization, the European Commission and the French government.
Germany has already given €2.2 billion to the initiative and is its second-largest donor. On 1 March 2022, German Finance Minister Christian Lindner announced that Germany will provide a further $1.5 billion to ACT-A and other support measures. In this way, Germany is paying its fair share of $1.22 billion and providing a further $253 million or so for supplementary measures on the ground in developing countries.
The European Commission has provided an additional €1 billion on behalf of “Team Europe”.
Carbon leakage occurs when businesses move carbon-intensive economic activity to other countries that have less stringent rules on carbon emissions (such as low or no prices on carbon emissions and/or few or no emissions regulations). This not only hurts the economy in countries with ambitious climate policies but is also bad for the climate.
In order to limit global warming to the levels set out in the 2015 Paris Agreement – below 2°C, and if possible 1.5°C – and thereby avoid threatening the foundations of human life on Earth, greenhouse gas emissions must be reduced swiftly. To facilitate such reductions, systems are being adopted that put a price on carbon emissions. In Germany and Europe, one instrument for doing this is a fuel emissions trading scheme: companies that want to sell fossil fuels must acquire emissions allowances for every tonne of carbon that is emitted as a result. These companies then pass the extra costs on to consumers in the form of higher prices for heating oil, natural gas, petrol and diesel, for example.
All of the revenue from Germany’s carbon pricing scheme is being (a) reinvested in climate action measures or (b) paid back to taxpayers, for example through reductions in the “EEG surcharge”, a levy that is charged on electricity consumers to promote renewable energy. Another carbon pricing instrument in the EU involves allowance trading within the EU Emissions Trading System (ETS). Energy-intensive industries and the energy sector are required to participate in the ETS.
Germany has proposed the establishment of an open and cooperative “climate club” and aims to advance this initiative during its G7 presidency. The climate club would bring together various countries to lead the way in pursuing ambitious climate policies. The driving idea behind the climate club is to coordinate national climate policies more effectively, with the joint objective of limiting global warming to 1.5°C. Teaming up in this way would help to prevent competitive disadvantages and trade distortions between participating countries. In addition, the climate club would facilitate the green transformation of industry by promoting partnerships and cooperative efforts between countries.
COVAX stands for COVID-19 Vaccines Global Access. It is the ACT Accelerator’s vaccines pillar. The COVAX facility’s principal task is to order vaccines from manufacturers and distribute them to the countries that have signed up to participate in the programme. Developing countries in particular rely on vaccine supplies from COVAX. To date, Germany has pledged €980 million to COVAX for the purpose of vaccine procurement in developing countries (as of 16 February 2022).
Cryptoassets exist only in digital form. They represent values or rights that can be assigned using distributed ledger technology. There are crypto financial products (such as securities) that are subject to existing financial market regulations, and there are cryptoassets that remain largely unregulated. Unregulated cryptoassets are highly speculative investments that can bear significant risks. For this reason, the Federal Financial Supervisory Authority (BaFin) has published warnings (in German) about cryptoassets on its website. Cryptoassets do not possess the legal status of a currency and are not legal tender.
Many emerging and developing countries have bilateral debt with the German government. One of the Finance Ministry’s responsibilities is to ensure that these countries service their debt as agreed. If countries run into financial difficulties, it is often necessary to explore whether and how the debt can be restructured or even cancelled.
G7 finance deputies act as representatives of the finance ministers and central bank governors of their respective countries. The finance deputies meet on a regular basis to prepare high-level discussions. Carsten Pillath, former State Secretary at the Federal Ministry of Finance, was Germany’s finance deputy.
G7 finance deputies’ deputies act as representatives of the finance deputies who represent the finance ministers and central bank governors of their respective countries. They are in regular contact with each other and make formal preparations for the discussions held by the finance deputies. The deputies’ deputies do the nuts and bolts work of the Finance Track.
In the G7, the heads of state and government of seven leading economies coordinate joint positions on global policy issues. Alongside the main meetings, the Finance Track brings together the G7 finance ministers and central bank governors to discuss international economic and fiscal policy as well as current challenges and long-term issues. Given the growing interdependence of the global economy, these issues need to be addressed jointly and in close cooperation.
The Common Framework for Debt Treatments beyond the DSSI, which was set up by the G20, allows for case-by-case debt restructuring for many developing countries and can also include debt cancellation if necessary. The principles of the Common Framework largely correspond to those of the Paris Club, especially the equal treatment of creditors (including private creditors), cooperation with the IMF/World Bank, and debt transparency. Creditor coordination – especially with China, but also with other G20 countries that are not part of the Paris Club – represents a particularly significant achievement.
Macroeconomic stability is a crucial precondition for robust economic growth. Measures to maintain or restore macroeconomic stability include, for example, the prudent handling of different countries’ divergent monetary and fiscal policies as well as efforts to ensure sustainable public finances and a resilient financial system. Pandemic-related support measures of historic proportions are also playing a key role in stabilising the global economy.
Stablecoins are cryptoassets designed to maintain a stable value relative to a specific asset, such as a currency or a currency basket. They are frequently used to make payments.
There is no universal definition of sustainable finance, but rather a variety of views on what the term means. In the German government’s view, sustainable finance is when private-sector and public-sector financial market participants incorporate sustainability-related issues into their decisions.
For the German government, the “sustainable” in sustainable finance includes climate and environmental protection as well as economic and social factors. The “finance” in sustainable finance refers in particular to sustainability in financial market policy.
From the German government’s perspective, this policy area includes the regulation and supervision of financial markets (e. g. banking supervision, insurance supervision, pension fund supervision, securities supervision, asset management, stock market supervision, resolution, consumer protection within the scope of capital market supervision, and money laundering prevention). It also includes the German government as a financial market participant (for example, as an investor and bond issuer on capital markets), along with development banks and guarantee programmes.