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INTERVIEW

Still in restrictive territory

We haven’t finished the restrictive monetary policy cycle yet, President Christine Lagarde told euro area newspapers in an interview conducted on 7 June. Our latest decision doesn’t mean interest rates are on a linear declining path, so there might be periods where we hold rates again.

Read the interview
THE ECB BLOG 13 June 2024

Making the digital euro truly private

When paying, many people appreciate privacy and want their data protected. Current electronic means of payment are not optimal in this regard. We are designing the digital euro to be the most private electronic payment option. The ECB Blog explains.

Read The ECB Blog
PRESS RELEASE 12 June 2024

The international role of the euro

The euro continues to be one of the world’s most used currencies, our latest review finds. Its international role remained broadly stable in 2023. Enhancements in cross-border payment systems between the euro and other currencies will be pivotal in making the euro more resilient.

Read the press release
PODCAST 10 June 2024

Ask the ECB

Is there something you’ve always wanted to ask us? Now’s your chance! Send us your questions by Sunday, 23 June for the chance to feature on our #AskECB edition of The ECB Podcast. Find out more on our Instagram channel.

Ask us via Instagram
12 June 2024
Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Finance Committee of the German Bundestag in Berlin
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11 June 2024
Dinner speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, at the 2024 Annual ECB Banking Supervision Research Conference
11 June 2024
Speech by Philip R. Lane, Member of the Executive Board of the ECB, at the Banking & Payments Federation Ireland (BPFI) National Banking Conference
Annexes
11 June 2024
7 June 2024
Speech by Christine Lagarde, President of the ECB, at the Maurice Allais Foundation
English
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7 June 2024
Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Federal Ministry of Finance in Berlin
English
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Annexes
7 June 2024
English
OTHER LANGUAGES (1) +
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11 June 2024
Interview with Christine Lagarde, President of the ECB, conducted by Andrés Stumpf, Stefan Reccius, Isabella Bufacchi, Guillaume Benoit and Alexandre Counis in Paris on 7 June 2024
English
OTHER LANGUAGES (4) +
27 May 2024
Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Martin Arnold on 24 May 2024
24 May 2024
Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Steffen Clement on 16 May 2024
English
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23 May 2024
Interview with Luis de Guindos, Vice-President of the ECB, conducted by Dietmar Mascher and Alexander Zens
English
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17 May 2024
Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Shogo Akagawa and Takerou Minami on 13 May 2024
13 June 2024
Many people appreciate privacy when paying, and want their data protected. Current electronic means of payment are not optimal in this regard. We are designing the digital euro to be the most private electronic payment option. The ECB Blog explains.
Details
JEL Code
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
E49 : Macroeconomics and Monetary Economics→Money and Interest Rates→Other
E59 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Other
G29 : Financial Economics→Financial Institutions and Services→Other
12 June 2024
More reforms are needed if the euro is to maintain and strengthen its role amid geopolitical shifts. Europe needs to further develop the infrastructure for making cross-border payments in euro with key partners.
Details
JEL Code
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
F02 : International Economics→General→International Economic Order
F01 : International Economics→General→Global Outlook
F31 : International Economics→International Finance→Foreign Exchange
F33 : International Economics→International Finance→International Monetary Arrangements and Institutions
8 June 2024
The ECB has cut interest rates. President Christine Lagarde explains why and sets out what still needs to be done to bring inflation back to 2% over the medium term.
Details
JEL Code
E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest Rates: Determination, Term Structure, and Effects
E50 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→General
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E60 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→General
E61 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Policy Objectives, Policy Designs and Consistency, Policy Coordination
23 May 2024
Negotiated wage growth in the euro area increased in the first quarter of 2024. This post on The ECB Blog illustrates how the ECB wage tracker can help to put latest developments in negotiated wage growth into perspective.
Details
JEL Code
E20 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→General
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E37 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Forecasting and Simulation: Models and Applications
22 May 2024
Why do central banks mostly give their guidance for future monetary policy in qualitative terms rather than providing a numerical formula? The ECB Blog takes a look through the lens of the “ABCs” of the ECB’s qualitative reaction function.
12 June 2024
WORKING PAPER SERIES - No. 2945
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Abstract
We investigate the impact of expectations about future climate policy on investment decisions of fossil fuel firms. Our empirical analysis reveals that firms with greater exposure to climate change significantly increased their investment in response to the Paris Agreement, in contrast to firms with lower exposure. Importantly, investment was directed towards traditional activities in the fossil fuel industry. By contrast, there are no indications that firms invested to transition towards renewable energy sources nor in making production less carbon-intensive. Our findings contribute to the ongoing discussion about the potential adverse effects of delays in the implementation of climate regulation.
JEL Code
G31 : Financial Economics→Corporate Finance and Governance→Capital Budgeting, Fixed Investment and Inventory Studies, Capacity
G38 : Financial Economics→Corporate Finance and Governance→Government Policy and Regulation
Q58 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Government Policy
12 June 2024
THE INTERNATIONAL ROLE OF THE EURO
Annexes
12 June 2024
THE INTERNATIONAL ROLE OF THE EURO - STATISTICAL ANNEX
Related
10 June 2024
WORKING PAPER SERIES - No. 2944
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Abstract
We use outages as natural experiments to study sovereign bond market functioning. When the euro area futures market goes down, trading activity on the cash market declines, liquidity evaporates, and transaction prices deviate from fundamental values. Tracing back this macrolevel market breakdown to the micro-level, we show that particularly dealers withdraw from the cash market during outages. While most of their remaining trades remain fairly priced, dealer’s capacity to intermediate trades on the cash market is reduced, forcing more clients to trade directly with each other, leading to substantial mispricing. Lastly, outages on cash trading venues barely affect the futures market, suggesting that price formation and liquidity provision is a one-way street, and outages on the US and euro area futures market barely affect each other, in stark contrast to the significant price spillovers. Our results reveal the trade-offs between a (de)centralized market structure, they support cross-asset learning models to explain the link between liquidity and arbitrage, and they demonstrate how financial intermediaries can impose important limits to arbitrage.
JEL Code
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
G14 : Financial Economics→General Financial Markets→Information and Market Efficiency, Event Studies, Insider Trading
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
10 June 2024
SURVEY OF MONETARY ANALYSTS - AGGREGATE RESULTS
10 June 2024
OCCASIONAL PAPER SERIES - No. 351
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Abstract
The European Union is aiming to foster digital transformation in all sectors by 2030. It has pioneered cross-sectoral legislation on artificial intelligence, cloud computing services and crypto-assets for this purpose. Yet compared with the work done on ESG, the prospective banking regulation regime has still to articulate more purposefully how the industry should manage the risks from digital trends and how supervisors should assess them. This paper discusses digital innovation in the banking sector in the context of the academic literature on financial innovation and non-banks. It also considers how to foster a risk-based Pillar 2 prudential framework, as well as market discipline through harmonised Pillar 3 disclosures. The paper concludes that these latter two propositions can help reconcile the challenges stemming from the short-term horizon applied in prudential assessment and the longer-term horizon over which digital innovation will take place in the banking sector.
7 June 2024
TARGET ANNUAL REPORT
7 June 2024
EURO AREA BALANCE OF PAYMENTS AND INTERNATIONAL INVESTMENT POSITION STATISTICS - QUALITY REPORT
Annexes
7 June 2024
OCCASIONAL PAPER SERIES - No. 350
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Abstract
The activities of multinational enterprises (MNEs) have become an increasingly important feature of the euro area economy, affecting output, trade and financial linkages. MNEs contribute to domestic output by maintaining large production facilities, offering high-paid jobs, bringing in new technologies and generating tax revenues. Following statistical changes implemented in 2015 to better capture the increasing importance of intangible investment, the economic impact of MNE activities has become much more evident in measures of intellectual property product (IPP) investment and external IPP trade flows. MNE activities, which often entail large and instantaneous transfers of IPP, are frequently highly volatile and can blur real-time assessment – and forecasting – of the business cycle, the current account and the capital stock in the euro area. Focusing on Ireland, given the strong prevalence of MNE activities in that economy and their importance for the euro area aggregate, this paper assesses the usefulness of the “modified” series for Irish non-construction investment and services imports. Using the modified series would provide a more accurate picture of the domestic dynamics of the Irish economy and enhance real-time assessment of the euro area business cycle, current account and capital stock. This paper brings insights into the unwinding of IPP shocks, which is a more straightforward exercise than seeking to anticipate the shocks themselves. The conclusions of this work underline the urgent need for more granular and internationally harmonised data on MNE activities to gain a clearer understanding of the dynamics of IPP operations and the implications for both short and long-term macroeconomic developments.
JEL Code
E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
F23 : International Economics→International Factor Movements and International Business→Multinational Firms, International Business
F62 : International Economics→Economic Impacts of Globalization→Macroeconomic Impacts
7 June 2024
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 4, 2024
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Abstract
Since the end of the pandemic, employment dynamics in the euro area have been significantly stronger than economic activity. The fall in real wages has been key in supporting employment growth following the energy crisis in Europe: real wage growth has been lower than productivity growth, bolstering job creation and leading to labour hoarding. Looking through the lens of an empirical model that explains deviations from historical regularities, we find that a key factor which has helped employment growth decouple from output dynamics is a substitution effect across production inputs in favour of labour. Employment dynamics have also been sustained by demand-side factors, including fiscal policy, as well as by labour market-specific effects related to fewer hours worked per worker. Given the temporary nature of these factors, much of the recent fall in productivity – measured as output per worker – is likely to be reversed in the coming years.
JEL Code
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
J21 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Force and Employment, Size, and Structure
7 June 2024
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 4, 2024
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Abstract
Why are there more firms able to hoard labour than before the pandemic? Firm-level estimates suggest that a 1 percentage point increase in the profit margin of a firm raises the likelihood of that firm hoarding labour by 0.2 percentage points. This suggests that the higher profit margins of firms in recent years have, on average, improved their ability to hoard labour when their own economic outlook has worsened. As a result, a tightening of profit margins may have implications for employment growth.
JEL Code
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
J23 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Demand
6 June 2024
MACROECONOMIC PROJECTIONS FOR THE EURO AREA
29 May 2024
LETTERS TO MEPS
27 May 2024
WORKING PAPER SERIES - No. 2943
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Abstract
Amid the growing financial vulnerabilities posed by climate change, we investigate macroprudential capital buffers to mitigate systemic risks and increase the resilience of the banking sector. Leveraging granular data and state-of-the-art stress testing methods, we quantify potential bank losses attributed to climate-related transition risks. Focusing on short-term transition scenarios, we document a significant variance among banks in their risk exposure, with the most exposed institutions being those characterized by lower excess capital. Subsequently, we introduce a methodological framework for tailoring bank-specific buffer requirements to cover these losses, offering macroprudential authorities a practical method for calibrating climate-related macroprudential capital buffers, complementing microprudential policies. While we focus our application on transition risks, the framework can be extended to capture all climate risks in general. The study demonstrates the potential of macroprudential capital buffers to mitigate potential climate-related losses and contributes to the understanding of the appropriate prudential policy response to these challenges.
JEL Code
E61 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Policy Objectives, Policy Designs and Consistency, Policy Coordination
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
27 May 2024
RESEARCH BULLETIN - No. 119
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Abstract
Households’ willingness to take on risks has clear implications for the transmission of financial shocks, both in the long run and over the business cycle. This article introduces a newly published research dataset from the ECB’s Consumer Expectations Survey (CES) and summarises insights these data provide into household risk-taking. In particular, it examines how an increase in wealth affects a household’s decision on whether or not to invest in the stock market. The evidence suggests that all but the wealthiest households have a substantial aversion to investing in the stock market. Other reasons for avoiding stocks likely include information processing costs, as well as beliefs about stock prices, lack of trust, inertia and other behavioural biases.
JEL Code
D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
G51 : Financial Economics
24 May 2024
OCCASIONAL PAPER SERIES - No. 349
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Abstract
This paper reviews the main arguments underpinning the reform of the EU’s fiscal framework, which has culminated in the adoption by the EU legislators of a revised set of rules for the European economic governance including the Stability and Growth Pact (SGP). It takes a chronological approach by first discussing the Commission’s legislative proposals of April 2023 against the pre-reform set of fiscal rules, before assessing the final political agreement which has materialised in the revised set of rules. In view of the multi-dimensional reform outcome, it is argued that the success of the reform of the fiscal framework will ultimately depend on its future implementation by the Commission and the Council. Combining the reform of the fiscal rules with better fiscal coordination through the establishment of a permanent euro area fiscal capacity was not proposed in the context of this reform. This paper argues that completing the architecture of Economic and Monetary Union (EMU) is an important missing element and should remain a policy priority.
JEL Code
H6 : Public Economics→National Budget, Deficit, and Debt
H11 : Public Economics→Structure and Scope of Government→Structure, Scope, and Performance of Government
H50 : Public Economics→National Government Expenditures and Related Policies→General
21 May 2024
SURVEY OF MONETARY ANALYSTS
17 May 2024
T2S ANNUAL REPORT
17 May 2024
WORKING PAPER SERIES - No. 2942
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Abstract
While global supply chains have recently gained attention in the context of the Covid-related crisis as well as the war in Ukraine, their role in transmitting and amplifying climate-related physical risks across countries has received surprisingly little attention. To address this shortcoming, this paper for the first time combines country-level GDP losses due to climate-related physical risks with a global Input-Output model. More specifically, climate-related GDP-at-risk data are used to quantify the potential direct impact of physical risks on GDP at the country or regional level. This direct impact on GDP is then used to shock a global Input-Output (IO) model so that the propagation of the initial shock to country-sectors around the world becomes observable. The findings suggest that direct GDP loss estimates can severely underestimate the ultimate impact of physical risk because trade can lead to losses that are up to 30 times higher in the EA than what looking at the direct impacts would suggest. However, trade can also mitigate losses if substitutability across country-sectors is possible. Future research should (i) develop more granular, holistic, and forward-looking global physical risk data and (ii) examine more closely the role of both partially substitutable outputs, and critical outputs that are less substitutable or not substitutable at all, such as in the food sector.
JEL Code
E01 : Macroeconomics and Monetary Economics→General→Measurement and Data on National Income and Product Accounts and Wealth, Environmental Accounts
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
Q56 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Environment and Development, Environment and Trade, Sustainability, Environmental Accounts and Accounting, Environmental Equity, Population Growth
F18 : International Economics→Trade→Trade and Environment
16 May 2024
LEGAL ACT
16 May 2024
FINANCIAL STABILITY REVIEW - BOX
Financial Stability Review Issue 1, 2024
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Abstract
Recent stress episodes have shown how leverage in the non-bank financial intermediation (NBFI) sector can be a source of systemic risk and amplify stress in the wider financial system. Prominent examples of leverage-related risk in the NBFI sector include the role of leveraged hedge funds in the US Treasury market in March 2020, liability-driven investment funds in UK gilt markets in September 2022 and the failure of Archegos Capital Management in March 2021. In response to these events, policymakers around the world have launched a range of initiatives to contain risks from leverage in the NBFI sector more broadly. A key takeaway from these recent experiences and policy initiatives is that no single tool can be uniformly applied to address risks stemming from NBFI leverage. An effective policy response requires a broad range of tools to be made available, which should be appropriately tailored to the specific circumstances and can serve as complements to each other. Given the significant cross-border and cross-sector dimension of these risks, close coordination and cooperation between various authorities is essential, ensuring that risks are addressed from a system-wide perspective.
JEL Code
G01 : Financial Economics→General→Financial Crises
G10 : Financial Economics→General Financial Markets→General
G15 : Financial Economics→General Financial Markets→International Financial Markets
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation

Interest rates

Marginal lending facility 4.50 %
Main refinancing operations (fixed rate) 4.25 %
Deposit facility 3.75 %
12 June 2024 Past key ECB interest rates

Inflation rate

Inflation dashboard

Exchange rates

USD US dollar 1.0784
JPY Japanese yen 169.58
GBP Pound sterling 0.84468
CHF Swiss franc 0.9668
Last update: 13 June 2024 Euro foreign exchange rates