ECB - European Central Bankhttps://www.ecb.europa.eu/Latest releases on the ECB website - Press releases, speeches and interviews, press conferences.enCopyright 2024, European Central Bank webmaster@ecb.europa.eu (ECB Webmaster)Wed, 27 Mar 2024 16:50:23 +0100 Press Automatic http://blogs.law.harvard.edu/tech/rss Consumer participation in the credit market during the COVID-19 pandemic and beyondThis paper analyses the consumer’s decision to apply for credit and the probability of the credit being accepted in the euro area during a period characterized by the unprecedented concomitance of events and changing borrowing conditions linked to the global COVID-19 pandemic and the Russian invasion of Ukraine. We use data between 2020Q1 and 2023Q2 from the ECB’s Consumer Expectations Survey. We find that the credit demand is highest when the first lockdown ends and drops when supportive monetary compensation schemes are implemented. There is evidence that constrained households are significantly less likely to apply for credit. Credit is more likely to be accepted under favourable borrowing conditions and after the approval of national recovery plans. We also find that demographic, economic factors, perceptions and expectations are associated with the demand for credit and the credit grant.https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2922~1f550b10fb.en.pdfhttps://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2922~1f550b10fb.en.pdfWed, 27 Mar 2024 11:00:00 +0100 Letter from Piero Cipollone to Ms Irene Tinagli, ECON Chair, on technical considerations on the provision of multiple digital euro accounts to individual end usershttps://www.ecb.europa.eu//pub/pdf/other/ecb.mepletter240325_Tinagli~86a5d56ada.en.pdfhttps://www.ecb.europa.eu//pub/pdf/other/ecb.mepletter240325_Tinagli~86a5d56ada.en.pdfMon, 25 Mar 2024 13:00:00 +0100 Business as usual: bank climate commitments, lending, and engagementThis paper studies the impact of voluntary climate commitments by banks on their lending activity. We use administrative data on the universe of bank lending from 19 European countries. There is strong selection into commitments, with increased participation by the largest banks and banks with the most pre-existing exposure to high-polluting industries. Setting a commitment leads to a boost in a lender’s ESG rating. Lenders reduce credit in sectors they have targeted as high priority for decarbonization. However, climate-aligned banks do not change their lending or loan pricing differentially compared to banks without climate commitments, suggesting they are not actively divesting. We can reject that climate-aligned lenders divest from firms in targeted sectors by more than 2.6%. Firm borrowers are no more likely to set climate targets after their lender sets a climate target, which casts doubt on active engagement by lenders. These results call into question the efficacy of voluntary commitments.https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2921~603e225101.en.pdfhttps://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2921~603e225101.en.pdfFri, 22 Mar 2024 11:00:00 +0100 AnaCredit plausibility checks, version 2.0https://www.ecb.europa.eu//pub/pdf/other/ecb.anacreditvalidationchecks032024~8d4145ebdf.en.pdfhttps://www.ecb.europa.eu//pub/pdf/other/ecb.anacreditvalidationchecks032024~8d4145ebdf.en.pdfFri, 22 Mar 2024 11:00:00 +0100 The impact of regulatory changes on rating behaviourWe examine rating behaviour after the introduction of new regulations regarding Credit Rating Agencies (CRAs) in the European securitisation market. Employing a large sample of 12,469 ABS tranches issued between 1998 and 2018, we examine the information content of yield spreads of ABS at the issuance and compare the pre- and post-GFC periods. We find that the regulatory changes have been effective in tackling conflicts of interest between issuers and CRAs in securitisation. Rating catering seems to have disappeared in the post-GFC period. Yet we see limited effectiveness on rating shopping. It follows that rating over-reliance might be an issue, especially for investors of higher-quality ABS.https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2920~f44cdd68b2.en.pdfhttps://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2920~f44cdd68b2.en.pdfThu, 21 Mar 2024 11:00:00 +0100 US monetary policy is more powerful in low economic growth regimesWe use nonlinear empirical methods to uncover non-linearities in the propagation of monetary policy shocks. We find that the transmission on output, goods prices and asset prices is stronger in a low growth regime, contrary to the findings of Tenreyro and Thwaites (2016). The impact is stronger on private investment and durables and milder on the consumption of nondurable goods and services. In periods of low growth, a contractionary monetary policy implies lower expected Treasury rates and higher premia along the entire Treasury yield curve. Similarly, the corporate excess bond premium rises and the stock market drops substantially during recessions. We use the monetary policy surprises and their predictors provided by Bauer and Swanson (2023a), and identify an additional predictor, the National Financial Condition Index (NFCI), which is relevant in the nonlinear setting. A Threshold VAR, a Smooth-Transition VAR and nonlinear local projection methods all corroborate the findings.https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2919~6772f94014.en.pdfhttps://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2919~6772f94014.en.pdfThu, 21 Mar 2024 11:00:00 +0100 Economic Bulletin Issue 2, 2024https://www.ecb.europa.eu//press/economic-bulletin/html/eb202402.en.htmlhttps://www.ecb.europa.eu//press/economic-bulletin/html/eb202402.en.htmlThu, 21 Mar 2024 10:00:00 +0100 The ECB’s climate and nature plan 2024-2025Climate change is increasingly affecting the euro area economy. That is why the ECB is committed to integrating climate change considerations into its activities. On 30 January 2024 the ECB published its climate and nature plan 2024-2025, which identifies three focus areas for its future work: (i) navigating the transition towards a green economyhttps://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_08~ce78a64ada.en.htmlhttps://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_08~ce78a64ada.en.htmlThu, 21 Mar 2024 10:00:00 +0100 The euro as a global currency: a payments perspectiveThe global role of a currency can be measured in several ways, including by looking at its use in payments. After March 2023 the share of the euro in total Swift payment messages (i.e. payment instructions sent via the Swift network) appeared to drop. This coincided with a major infrastructure change in Europe – namely, the launch of the Eurosystem’s next-generation large-value payment system for the euro, T2, which replaced TARGET2 – and a move to a new Swift message standard. The associated technical changes have altered the ways in which banks make euro payments and manage euro liquidity, resulting in a break in the data on euro‑denominated Swift payment messages. In fact, the total value of euro payments settled in T2 has actually remained largely stable relative to figures for its predecessor, TARGET2, and so has the global reach of the payment system. This analysis shows the importance of accounting for technical factors when interpreting indicators based on payment traffic.https://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_07~4279fee463.en.htmlhttps://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_07~4279fee463.en.htmlThu, 21 Mar 2024 10:00:00 +0100 Liquidity conditions and monetary policy operations from 1 November 2023 to 30 January 2024This box describes liquidity conditions and the Eurosystem monetary policy operations during the seventh and eighth maintenance periods of 2023, from 1 November 2023 to 30 January 2024.https://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_06~dd80f9e4ff.en.htmlhttps://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_06~dd80f9e4ff.en.htmlThu, 21 Mar 2024 10:00:00 +0100 An update on the accuracy of recent Eurosystem/ECB staff projections for short-term inflationThis box looks at errors in Eurosystem and ECB staff inflation projections over the post-pandemic period, updating and extending earlier analysis published in 2022 and 2023. Projection errors have come down considerably since the end of 2022 and now stand close to pre-pandemic levels. The low predictability of energy commodity prices (which surprised markets on the downside in 2023) explains a significant share of the recent errors in HICP inflation projections. The remaining errors are likely to stem from non-standard transmission of the exceptional shocks to commodity prices and global supply chains – which, together with demand shocks, explain a large share of the post-pandemic dynamics of HICP inflation excluding food and energy (HICPX), including in 2023. Eurosystem and ECB staff continue to refine their forecasting toolkits, providing additional analysis that informs projections in times of high uncertainty.https://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_05~10d8d08f79.en.htmlhttps://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_05~10d8d08f79.en.htmlThu, 21 Mar 2024 10:00:00 +0100 How geopolitics is changing tradeRising trade tensions and a spate of policies aiming to bring national security concerns to bear in trade relations have sparked growing concern about the potential implications of global trade fragmentation. Yet, empirical evidence that geopolitical concerns are already materially affecting trade patterns is scant. This box addresses the issue using a structural gravity model augmented with a geopolitical distance measure based on UN General Assembly voting to investigate the role played by geopolitical factors for trade in manufacturing goods over the period 2012-22. It provides evidence that the degree of geopolitical alignment is playing an increasing role in determining bilateral trade flows. The impact of geopolitical distance on trade is heterogeneous: in particular, geopolitical considerations mostly affect European trade in strategic products.https://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_02~c81f58179e.en.htmlhttps://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_02~c81f58179e.en.htmlThu, 21 Mar 2024 10:00:00 +0100 Speculation in oil and gas prices in times of geopolitical risksRecent volatility in oil and gas prices has rekindled interest in understanding how much fundamental factors – global supply and demand – and non-fundamental factors contribute to price movements. This box constructs indices of speculation based on futures positions. Overall, speculation has only a limited role in both oil and gas price dynamics, although the degree of speculation is somewhat higher in European gas markets than in US gas markets. Empirical estimates also suggest that the role of speculation in amplifying the transmission of fundamental shocks to oil prices is limited, including in times of heightened geopolitical risk.https://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_01~b3d857ae05.en.htmlhttps://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_01~b3d857ae05.en.htmlThu, 21 Mar 2024 10:00:00 +0100 What were the drivers of euro area food price inflation over the last two years?Food price inflation was one of the main contributors to the strong rise in euro area headline inflation in 2022 and to the period of disinflation that followed. An extraordinary surge in energy costs was the main factor behind higher consumer food inflation in 2021 and 2022. Increases in global food commodity prices and euro area farm gate prices also contributed significantly. In the high inflation environment, domestic factors – such as wage and profit developments – have gradually emerged as increasingly important factors in keeping food inflation elevated. The exceptional, largely externally driven shocks to energy, global food commodity and euro area farm gate prices are fading, and this is expected to contribute to a moderation in food inflation in the course of 2024. However, strong wage growth implies only a gradual unwinding going forward.https://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_04~9b36bced23.en.htmlhttps://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_04~9b36bced23.en.htmlWed, 20 Mar 2024 10:00:00 +0100 How have households adjusted their spending and saving behaviour to cope with high inflation?This box investigates how households have responded to the 2021-23 inflationary episode using evidence from the ECB’s Consumer Expectations Survey. The findings suggest that households have primarily adjusted their consumption spending to cope with higher inflation. However, noteworthy adjustments were also observed through the saving and income margins. The decline in the saving rate in 2022 and 2023 was mainly attributed to increased spending on recreation and travel, mostly driven by high-income consumers.https://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_03~289573ea78.en.htmlhttps://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202402_03~289573ea78.en.htmlWed, 20 Mar 2024 10:00:00 +0100