ECONOMIC BULLETIN
22 March 2021
The paradox of banknotes
The “paradox of banknotes” is when demand for banknotes increases even though their use in retail transactions decreases. People have been storing up euro banknotes as a precaution for a decade, and this has increased even more during the pandemic.
Economic Bulletin
THE ECB BLOG
18 March 2021
The economy-wide climate stress test
The damage caused by more frequent and severe natural disasters far exceeds the costs of transitioning to a greener economy, writes Vice-President Luis de Guindos in his ECB Blog post on our first climate stress test for banks and companies.
The ECB Blog
DIVERSITY
21 March 2021
#FightRacism
On 21 March we marked the International Day for the Elimination of Racial Discrimination. There is no place for racism at the ECB, in the EU or anywhere else. We each have a responsibility to stand up against intolerant attitudes.
Our initiatives to fight racism- 22 March 2021
- BALANCE OF PAYMENTS (MONTHLY)
- 18 March 2021
- PRESS RELEASES
- 16 March 2021
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 16 March 2021
- WEEKLY FINANCIAL STATEMENT COMMENTARY
- 11 March 2021
- MONETARY POLICY DECISIONSEnglishOTHER LANGUAGES (22) +
- 10 March 2021
- EURO AREA SECURITIES ISSUES STATISTICSAnnexes
- 10 March 2021
- EURO AREA SECURITIES ISSUES STATISTICS
- 10 March 2021
- EURO AREA SECURITIES ISSUES STATISTICS
- 18 March 2021
- Vortrag von Isabel Schnabel, Mitglied des Direktoriums der EZB, beim Rotary Club (Distrikt 1900), 18. März 2021
- 18 March 2021
- Speech by Luis de Guindos, Vice-President of the ECB, at the High-level conference on “Strengthening the EU’s bank crisis management and deposit insurance framework: for a more resilient and efficient banking union” organised by the European Commission
- 18 March 2021
- Introductory statement by Christine Lagarde, President of the ECB, at the Hearing of the ECON Committee of the European Parliament (by videoconference)
- 11 March 2021
- Christine Lagarde, President of the ECB, Luis de Guindos, Vice-President of the ECB, Frankfurt am Main, 11 March 2021EnglishOTHER LANGUAGES (22) +
- 3 March 2021
- Intervention by Isabel Schnabel, Member of the Executive Board of the ECB, at the “Greening Monetary Policy – Central Banking and Climate Change” online seminar, organised as part of the “Cleveland Fed Conversations on Central Banking”, 3 March 2021
- 17 March 2021
- Interview on Twitter with Frank Elderson, Member of the Executive Board of the ECB, conducted and published on 16 March 2021
- 17 March 2021
- Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Guillaume Benoit, Elsa Conesa, Lucie Robequain and Sophie Rolland
- 16 March 2021
- Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Martin Arnold
- 2 March 2021
- Interview with Luis de Guindos, Vice-President of the European Central Bank (ECB), conducted by Sérgio Aníbal
- 26 February 2021
- Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Andrés Stumpf on 22 February
- 22 March 2021
- Blog post by Christine Lagarde, President of the ECBDetails
- Summary
- Our pandemic emergency purchase programme (PEPP) has provided crucial support to euro area citizens since its launch a year ago, writes President Christine Lagarde in The ECB Blog. The PEPP has been, and remains, at the core of our pandemic policy response.
- 18 March 2021
- Blog post by Luis de Guindos, Vice-President of the ECBDetails
- Summary
- The damage caused by more frequent and severe natural disasters far exceeds the costs of transitioning to a greener economy, writes Vice-President Luis de Guindos in his ECB Blog post on our first climate stress test for banks and companies.
- 8 March 2021
- Blog post by Christine Lagarde, President of the ECBEnglishOTHER LANGUAGES (15) +Details
- Summary
- One year into the pandemic, we can clearly see that the social and economic impact of the virus is particularly hard for women, writes President Christine Lagarde. In response we must choose to challenge women’s roles at home, at work and in our society.
- 13 February 2021
- Blog post by Frank Elderson, Member of the Executive Board of the ECBDetails
- Summary
- Climate change requires urgent action and we at the ECB must be committed to doing our part, says Executive Board member Frank Elderson. The EU Treaties define clear obligations and limits. They provide substantial scope for the ECB to take action on climate change.
- 2 December 2020
- Blog post by Fabio Panetta, Member of the Executive Board of the ECBEnglishOTHER LANGUAGES (15) +Details
- Summary
- The results of the ECB’s latest study on payment behaviours suggest that no single means of payment currently available meets all consumer needs, Executive Board member Fabio Panetta writes in The ECB Blog. This underlines the importance of continuing to give people a choice on how to pay.
- 22 March 2021
- ECONOMIC BULLETIN BOXEconomic Bulletin Issue 2, 2021Details
- Abstract
- This box examines developments in the euro area stock of capital, discusses how investment and depreciation rates have affected the capital stock in different directions, and reviews the varying impacts of the crisis across assets. The sharp decline in activity stemming from the pandemic and the associated containment measures has so far not translated into a sharp decline in the euro area capital stock.
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
E23 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Production
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
O11 : Economic Development, Technological Change, and Growth→Economic Development→Macroeconomic Analyses of Economic Development
O40 : Economic Development, Technological Change, and Growth→Economic Growth and Aggregate Productivity→General
- 22 March 2021
- ECONOMIC BULLETIN ARTICLEEconomic Bulletin Issue 2, 2021Details
- Abstract
- What explains the strong growth of euro banknote demand, given that the transactional use of banknotes seems to have decreased? Key to explaining this phenomenon – referred to as the “paradox of banknotes” – is acknowledgement of the importance of all three components of banknote demand: euro area transactional demand, euro area store-of-value demand and foreign demand. This article explains these components and estimates their relative size. It also addresses COVID-19-related banknote developments during 2020, highlighting the importance of cash during crises.
- JEL Code
- E41 : Macroeconomics and Monetary Economics→Money and Interest Rates→Demand for Money
E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
- 19 March 2021
- OTHER PUBLICATIONS
- 18 March 2021
- WORKING PAPER SERIES - No. 2532Details
- Abstract
- We introduce a flexible, time-varying network model to trace the propagation of interest rate surprises across different maturities. First, we develop a novel econometric framework that allows for unknown, potentially asymmetric contemporaneous spillovers across panel units, and establish the finite sample properties of the model via simulations. Second, we employ this innovative framework to jointly model the dynamics of interest rate surprises and to assess how various monetary policy actions, for example, short-term, long-term interest rate targeting and forward guidance, propagate across the yield curve. We find that the network of interest rate surprises is indeed asymmetric, and defined by spillovers between adjacent maturities. Spillover intensity is high, on average, but shows strong time variation. Forward guidance is an important driver of the spillover intensity. Pass-through from short-term interest rate surprises to longer maturities is muted, yet there are stronger spillovers associated with surprises at medium- and long-term maturities. We illustrate how our proposed framework helps our understanding of the ways various dimensions of monetary policy propagate through the yield curve and interact with each other.
- JEL Code
- C21 : Mathematical and Quantitative Methods→Single Equation Models, Single Variables→Cross-Sectional Models, Spatial Models, Treatment Effect Models, Quantile Regressions
C53 : Mathematical and Quantitative Methods→Econometric Modeling→Forecasting and Prediction Methods, Simulation Methods
E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest Rates: Determination, Term Structure, and Effects
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy - Network
- ECB Lamfalussy Fellowship Programme
- 18 March 2021
- WORKING PAPER SERIES - No. 2531Details
- Abstract
- We build a business cycle model characterized by endogenous firms dynamics, where banks may prefer debt renegotiation, i.e. non-performing exposures, to outright borrowers default. We find that debt renegotiations only do not have adverse effects in the event of financial crisis episodes, but a large share of non-performing firms is associated with a sharp deterioration of economic activity in two cases. First, if there are congestion effects in banks ability to monitor non-performing loans. Second, if such loans adversely affect the commercial banks’ moral hazard problem due to their opacity. Aggressive interest rate reductions and quantitative easing limit defaults and the output contraction caused by a financial crisis, without ad- verse effects on the entry of new, more productive firms. The model shows that the observed long-run trend in the share of non-performing loans might be caused by the persistent reduction in technological advancements which drive firm entry rates and firms turnover.
- JEL Code
- E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E50 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→General
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies - Network
- ECB Lamfalussy Fellowship Programme
- 18 March 2021
- RESEARCH BULLETIN - No. 82Details
- Abstract
- Many central bank measures implemented in past years – most recently the additional longer-term refinancing operations launched by the Eurosystem at the onset of the COVID-19 pandemic – aimed inter alia at safeguarding money market conditions. This is because smoothly functioning money markets are key for the transmission of monetary policy to credit conditions in the economy. In this article we look at money market conditions in the euro area over the past 15 years and discuss the interactions between money markets, central bank policies and new Basel III regulations.
- JEL Code
- E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
G20 : Financial Economics→Financial Institutions and Services→General
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
- 11 March 2021
- MACROECONOMIC PROJECTIONS FOR THE EURO AREAEnglishOTHER LANGUAGES (21) +Annexes
- 11 March 2021
- MACROECONOMIC PROJECTIONS FOR THE EURO AREA
- 3 March 2021
- WORKING PAPER SERIES - No. 2530Details
- Abstract
- In a highly interlinked global economy a key question is how foreign shocks transmit to the domestic economy, how domestic shocks affect the rest of the world, and how policy actions mitigate or amplify spillovers. For policy analysis in such a context global multi-country macroeconomic models that allow a structural interpretation are needed. In this paper we present a revised version of ECB-Global, the European Central Bank's global macroeconomic model. ECB-Global 2.0 is a semi-structural, global multi-country model with rich channels of international shock propagation through trade, oil prices and global financial markets for the euro area, the US, Japan, the UK, China, oil-exporting economies, Emerging Asia, and a rest-of-the-world block. Relative to the original version of model, ECB-Global 2.0 features dominant-currency pricing, tariffs and trade diversion. We illustrate the usefulness of ECB-Global exploring scenarios motivated by recent trade tensions between China and the US.
- JEL Code
- C51 : Mathematical and Quantitative Methods→Econometric Modeling→Model Construction and Estimation
E30 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→General
E50 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→General
- 3 March 2021
- OTHER PUBLICATIONSAnnexes
- 3 March 2021
- OTHER PUBLICATIONS
- 3 March 2021
- OTHER PUBLICATIONS
Related - 26 February 2021
- WORKING PAPER SERIES - No. 2529Details
- Abstract
- We propose a new model of trading in OTC markets. Dealers accumulate inventories by trading with end-investors and trade among each other to reduce their inventory holding costs. Core dealers use a more efficient trading technology than peripheral dealers, who are heterogeneously connected to core dealers and trade with each other bilaterally. Connectedness affects prices and allocations if and only if the peripheral dealers’ aggregate inventory position differs from zero. Price dispersion increases in the size of this position. The model generates new predictions about the effects of dealers' connectedness and dealers' aggregate inventories on prices.
- JEL Code
- G10 : Financial Economics→General Financial Markets→General
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
G19 : Financial Economics→General Financial Markets→Other
Interest rates
| Marginal lending facility | 0.25 % |
| Main refinancing operations (fixed rate) | 0.00 % |
| Deposit facility | − 0.50 % |
Inflation rate
Inflation dashboardReference rates
| USD | US dollar | 1.1926 | |
| JPY | Japanese yen | 129.77 | |
| GBP | Pound sterling | 0.86233 | |
| CHF | Swiss franc | 1.1023 |
Financial stability
Our tasks Institutional framework Financial Stability Review Macroprudential policy measuresMarket operations
Open market operations Asset purchase programmes Lendings of holdings under PSPPNOT AN EXPERT? CHECK EXPLAINER
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