Fed's Rate Hold Puts Economic Data in the Spotlight

U.S. President Donald Trump announced Thursday that he secured a one-week pause in Russian attacks on Kyiv and other Ukrainian cities from President Vladimir Putin, citing the region's severe cold temperatures. The Kremlin has yet to confirm any such agreement.

The announcement comes as Russia continues its campaign of targeting Ukraine's critical infrastructure, a strategy designed to weaken public resolve by cutting off heat and power during the coldest months of winter.

Figure 1: U.S. President Donald Trump (right) with Russian President Vladimir Putin. Trump announced he personally asked Putin to halt attacks on Ukrainian cities for one week during a severe cold snap.

A Temporary Halt to Hostilities?

Speaking at a White House Cabinet meeting, Trump said he personally requested the pause from the Russian leader.

"I personally asked President Putin not to fire on Kyiv and the cities and towns for a week during this ... extraordinary cold," Trump stated, adding that Putin "agreed to that."

The Republican president expressed satisfaction with the outcome. "A lot of people said, 'Don't waste the call. You're not going to get that,'" Trump remarked. "And he did it. And we're very happy that they did it."

However, details about the timing and scope of this limited ceasefire in the nearly four-year war remain unclear. Trump did not specify when his call with Putin occurred or when the pause would begin, and the White House did not immediately provide further information.

Kyiv's Skepticism Amid Russian Silence

Ukrainian President Volodymyr Zelenskyy had warned late Wednesday that intelligence suggested Moscow was preparing for another major barrage, casting doubt on the pause just as U.S.-brokered peace talks are scheduled for the weekend.

From Moscow, Kremlin spokesman Dmitry Peskov declined to comment when asked earlier on Thursday if a mutual halt on strikes against energy facilities was under discussion.

Ukraine is bracing for a brutal cold front, with temperatures expected to drop as low as minus 30 degrees Celsius (minus 22 Fahrenheit) in some areas starting Friday, according to the State Emergency Service. Ukrainian officials have consistently described Russia's strategy of targeting civilian infrastructure during winter as "weaponizing winter."

The War's Escalating Human Cost

The ongoing attacks continue to discredit the peace process, according to Zelenskyy. "Every single Russian strike does," he said Wednesday.

Last year was the deadliest for civilians in Ukraine since Russia's full-scale invasion on February 24, 2022. The U.N. Human Rights Monitoring Mission reported that intensified Russian aerial attacks behind the front line killed 2,514 civilians and injured 12,142, a 31% increase from 2024.

The daily bombardments persist. Overnight, a Russian drone attack in the southern Zaporizhzhia region killed three people and started a large fire in an apartment building. In the central Dnipropetrovsk region, two people were injured as firefighters battled blazes caused by strikes.

Diplomatic Tracks and Battlefield Realities

While diplomatic efforts continue, international partners remain wary of Russia's commitment. The European Union's top diplomat, Kaja Kallas, accused Russia of not taking the negotiations seriously and called for increased pressure on Moscow.

"We see them increasing their attacks on Ukraine because they can't make moves on the battlefield. So, they are attacking civilians," Kallas said Thursday in Brussels. She insisted that Europe must be fully involved in any talks, expressing concern that European security interests might be overlooked in a settlement process led primarily by the Trump administration.

In contrast, Trump's special envoy, Steve Witkoff, expressed optimism. He noted that "a lot of progress" was made in recent talks and anticipates more headway in the coming days. "I think the people of Ukraine are now hopeful and expecting that we are going to deliver a peace deal sometime soon," Witkoff said.

An international think tank report published Tuesday projected a grim milestone, estimating that the total number of soldiers killed, injured, or missing on both sides could reach 2 million by spring.

The Technological Front: Starlink in the Crosshairs

The conflict is also being fought on a technological front. Ukrainian Defense Minister Mykhailo Fedorov confirmed Thursday that Ukraine is working with SpaceX to address Russia's reported use of the Starlink satellite service for its attack drones.

Fedorov said on Telegram that his team had contacted the aerospace company run by Elon Musk and "proposed ways to resolve the issue." He thanked Musk and SpaceX President Gwynne Shotwell for their "swift response."

SpaceX has navigated a complex position throughout the war. A year after the invasion, Shotwell stated the company was happy to provide connectivity to Ukrainians but also sought to restrict the use of Starlink for military purposes.

U.S. Defense Secretary Pete Hegseth is expected to miss the upcoming NATO defense ministers' meeting in Brussels, a move that is fueling concerns about the United States' commitment to the military alliance. This marks the second consecutive time a top official from the Trump administration has skipped a key NATO gathering, deepening worries among European allies.

The expected absence comes at a time of strained transatlantic relations, recently tested by President Donald Trump's stated desire to acquire Greenland from Denmark, a fellow NATO member.

Figure 1: U.S. Defense Secretary Pete Hegseth speaking at a previous NATO event. His expected absence from the upcoming summit has raised concerns about U.S. commitment to the alliance.

A Pattern of High-Level Absences

Hegseth's decision to miss the February 12 meeting follows U.S. Secretary of State Marco Rubio’s failure to attend the NATO foreign ministers' summit in December. While the Pentagon and NATO have declined to comment, the back-to-back no-shows signal a significant shift in U.S. engagement.

Historically, the absence of a top U.S. cabinet official from a NATO ministerial meeting was highly unusual. As the alliance's primary military and political power, consistent high-level participation from the United States has long been considered standard practice.

Oana Lungescu, a former NATO spokesperson now at the RUSI think tank, warned that the move would have consequences. "If confirmed, it will send a bad signal at a very tense time in transatlantic relations, and will only deepen the concerns of other allies about the U.S. commitment to NATO," she said.

The news also surfaced as the Trump administration weighs military options against Iran, a scenario where close coordination with NATO allies would typically be paramount.

A New Strategy: Limited Support for Europe

This apparent disengagement aligns with a new National Defense Strategy published by the Trump administration last week. The document explicitly redefines America's role, signaling a pivot away from its traditional security posture in Europe.

The strategy states: "In Europe and other theaters, allies will take the lead against threats that are less severe for us but more so for them, with critical but more limited support from the United States."

In place of Hegseth, diplomats expect Elbridge Colby to attend the Brussels meeting. As the Pentagon's policy chief, Colby was a key architect of the new defense strategy.

Analysts Warn of a "Missed Opportunity"

Experts argue that Hegseth's absence is a missed chance to repair and strengthen the alliance at a critical moment. Jamie Shea, a former senior NATO official and a fellow at the Friends of Europe think tank, noted that the timing is particularly poor. Trump and NATO chief Mark Rutte had recently agreed that the alliance should take on a greater role in Arctic security, partly to ease the tensions over Greenland.

"It has to be recognised that Hegseth has criticised NATO more than he has shown a desire to lead it," said Shea. "At a time when transatlantic security consultations at high level are more needed than ever, this is another missed opportunity for the U.S. to show leadership and initiative in the alliance."

A digital euro is essential to guarantee Europe’s economic sovereignty and reduce its dependence on foreign payment providers, according to European Central Bank Executive Board member Piero Cipollone.

"Today, Europe is significantly reliant on non-European payment systems and if we don't do anything this reliance will increase," Cipollone stated in Rome. He described this dependence as a "structural vulnerability" for the region's economy.

Breaking Dependence on Foreign Payment Giants

For years, the ECB has been developing a digital counterpart to cash, aiming to lessen the continent's reliance on US-based firms like Visa, Mastercard, and PayPal for everyday retail payments.

Concerns over this financial dependency have intensified amid recent trade threats from Donald Trump. However, Cipollone emphasized that the initiative is driven by the ECB's core mission, not external politics.

"It's not, however, about reacting to someone, but about acting on our mandate," he said. "The ECB must guarantee the proper functioning of payment systems and such a marked dependency on extra-European systems in such a crucial sector represents a systemic risk."

Project Timeline and Political Hurdles

The ECB's project, launched in 2021, is currently awaiting a solid legal framework. Cipollone reiterated a potential timeline where a pilot phase for the digital euro could begin in 2027, with a full issuance following in 2029.

Progress has been slow. While the European Commission presented a proposal in 2023 and member states reached a common position in December, the biggest roadblock remains the European Parliament, which has yet to finalize its stance. Some lawmakers reportedly favor a private-sector alternative over a public digital currency.

The Stablecoin Threat

Cipollone also addressed the risks posed by stablecoins, which have been championed by figures like Trump. He warned that these instruments could "threaten financial stability" in Europe. The International Monetary Fund has echoed these concerns, noting that stablecoins could disrupt traditional lending, weaken monetary policy, and trigger runs on safe assets.

The ECB official suggested that citizens should be provided with simple and reliable public alternatives. "The response is to guarantee an efficient combination of public and private money in euros," Cipollone explained.

While the primary objective of the digital euro is to serve the domestic economy, he noted that the infrastructure could eventually be expanded for use by countries outside the euro area.

DEMOCRATIC BACKING NEEDED TO PASS

Source: Reuters

The UK's approach to regulating stablecoins is now under review as the House of Lords Financial Services Regulation Committee initiates a formal inquiry. The committee is seeking public and expert input on the proposed regulatory frameworks drafted by the Bank of England (BoE) and the Financial Conduct Authority (FCA).

Baroness Noakes, the committee's chair, stated the goal is to determine if these proposals are "measured and proportionate" responses to the evolving stablecoin market. The inquiry will also explore the potential impact of stablecoins on traditional financial services like banking and payments, weighing the opportunities against the risks of their increasing adoption in the UK.

Industry participants, experts, and the public have until March 11 to provide written submissions. The committee is also set to hear oral evidence in a public session this Wednesday.

Inside the Bank of England's Proposed Framework

This parliamentary inquiry coincides with ongoing efforts by UK authorities to establish clear oversight for digital assets. The Bank of England has made developing a framework for "systemic stablecoins" a priority, aiming to finalize its approach by the end of the year.

Sasha Mills, the BoE's Executive Director for Financial Market Infrastructure, highlighted that these initiatives are crucial for shaping the future of digital finance in the UK. The central bank's proposed regime for systemic stablecoins includes several key features:

• Central Bank Access: Issuers of systemic stablecoins could hold a deposit account directly with the Bank of England.

• Liquidity Support: A potential liquidity facility would act as a backstop for stablecoin issuers.

• Backing Requirements: Stablecoins would need to be backed by a specific asset mix: 60% in short-term UK government bonds and 40% in Bank of England deposits.

• Holding Limits: To manage risk, temporary holding limits are proposed at £20,000 for individuals and £10 million for businesses.

The BoE defines "systemic stablecoins" as fiat-pegged tokens, particularly those denominated in pound sterling, that are widely used for retail or corporate payments within the UK and could pose a risk to financial stability.

Currently, popular stablecoins like USDC and USDT, which are primarily used for crypto trading, are not classified as regulated payment instruments in the UK. However, this is expected to change under the new regime, with full implementation targeted for October 2027.

How the UK Stacks Up: US Regulation vs. China's Ban

The UK's regulatory efforts are developing against a backdrop of starkly different international approaches to stablecoins.

The US Approach: Legislating Guardrails

In the United States, the GENIUS Act, signed in 2025, provides a clear regulatory path. The law mandates that stablecoins must be backed one-for-one by US dollars or equivalent high-quality liquid assets, such as short-term Treasury bills. Issuers are also subject to US banking and anti-money-laundering regulations. Regulators are expected to release detailed implementation rules under the CLARITY Act by mid-2026.

China's Stance: A Complete Prohibition

In contrast, mainland China maintains a strict ban on all cryptocurrency-related activities. In December, Chinese authorities reiterated that any business involving virtual currencies, including stablecoins, is considered an illegal financial operation. The government views them as a risk to monetary sovereignty, citing concerns about money laundering and uncontrolled cross-border capital flows. Instead of allowing private stablecoins, China is focusing its financial innovation efforts on its central bank digital currency, the digital yuan (e-CNY).

President Donald Trump announced a major policy shift regarding travel and airspace over Venezuela.

President Donald Trump announced on Thursday that the U.S. will reopen all commercial airspace over Venezuela, clearing the way for American citizens to travel to the country. The president said he informed Venezuela's acting President Delcy Rodríguez of the decision.

Trump stated he directed Transportation Secretary Sean Duffy and military officials to implement the change by the end of the day. "American citizens will be very shortly able to go to Venezuela, and they'll be safe there," he added.

As of the announcement, the Venezuelan government had not issued a public comment.

Diplomatic Thaw: US Signals Intent to Reopen Embassy

This move follows earlier signals that the U.S. is exploring a restoration of relations with the South American nation. Earlier this week, the Trump administration notified Congress of its first steps toward possibly reopening the U.S. Embassy in Venezuela, which was shuttered after diplomatic relations collapsed in 2019. The move comes after a U.S. military raid that ousted then-President Nicolás Maduro.

In letters to 10 congressional committees, the State Department detailed its plan to send a growing number of temporary staff to perform "select" diplomatic functions. "We are writing to notify the committee of the Department of State's intent to implement a phased approach to potentially resume Embassy Caracas operations," the department stated.

Conflicting Signals: "Do Not Travel" Warning Persists

Despite the president's announcement encouraging travel, the State Department's official advisory for Venezuela remains at its highest level: "Do not travel." The department has not yet responded to inquiries about whether this warning will be updated.

The current advisory cautions that Americans face a high risk of wrongful detention, torture, kidnapping, and other dangers. When diplomatic ties broke down in 2019, the State Department strongly warned U.S. citizens against traveling to Venezuela.

Background on the Airspace Closure

The decision to reopen the airspace reverses a policy implemented in November. As part of a pressure campaign against the Maduro government, Trump declared that the airspace "above and surrounding" Venezuela was to be considered "closed in its entirety."

Following that declaration, the U.S. Federal Aviation Administration (FAA) issued a warning to pilots about heightened military activity in the region. In response, international airlines began canceling their flights to Venezuela.

American Airlines Plans Return to Venezuela

Responding quickly to the news, American Airlines announced on Thursday its intent to reinstate nonstop service from the U.S. to Venezuela in the coming months. The carrier was the last U.S. airline flying to the country before it suspended service in March 2019.

"We have a more than 30-year history connecting Venezolanos to the U.S., and we are ready to renew that incredible relationship," said Nat Pieper, American's chief commercial officer. "By restarting service to Venezuela, American will offer customers the opportunity to reunite with families and create new business and commerce with the United States."

The airline stated that it will share more details about its return to service as it works with federal authorities to complete security assessments and obtain the necessary permissions.