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SPEECH

Monetary policy and the way out of the pandemic

We will need to provide economic stimulus until we see inflation sustainably reach our aim, says Executive Board member Fabio Panetta. Policy support will have to remain in place well beyond the end of the pandemic.

Speech
SPEECH 3 March 2021

From green neglect to green dominance?

Climate change requires urgent policy action, says Executive Board member Isabel Schnabel. The ECB has an obligation to explore how it can contribute to this collective effort within its mandate. However, this must not cast doubt on our commitment to price stability.

Speech
SPEECH 3 March 2021

Key challenges surrounding central clearing

Central clearing is critical for managing risks effectively and for supporting economic growth, says Executive Board member Fabio Panetta. Euro-denominated central clearing must not be a source of instability in the euro area or hamper the transmission of monetary policy.

Speech
ACCOUNT 18 February 2021

Account of January monetary policy meeting

Governing Council members agreed that monetary stimulus remained essential to preserve favourable financing conditions during the pandemic, according to the account. The ECB’s policy stance helped to counter the downward impact of the pandemic on the projected path of inflation.

Account of January meeting
3 March 2021
STATISTICS ON EURO AREA INSURANCE CORPORATIONS
Annexes
3 March 2021
STATISTICS ON EURO AREA INSURANCE CORPORATIONS
3 March 2021
PRESS RELEASES
3 March 2021
MFI INTEREST RATE STATISTICS
2 March 2021
WEEKLY FINANCIAL STATEMENT
Annexes
2 March 2021
WEEKLY FINANCIAL STATEMENT COMMENTARY
25 February 2021
MONETARY DEVELOPMENTS IN THE EURO AREA
Annexes
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
Annexes
3 March 2021
3 March 2021
Welcome address by Fabio Panetta, Member of the Executive Board of the ECB, at the Third Annual Joint Conference of the Deutsche Bundesbank, European Central Bank and Federal Reserve Bank of Chicago on CCP Risk Management
2 March 2021
Speech by Fabio Panetta, Member of the Executive Board of the ECB, at an online event organised by Bocconi University
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1 March 2021
Speech by Christine Lagarde, President of the ECB, at the “Jahresimpuls Mittelstand 2021” of Bundesverband Mittelständische Wirtschaft
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1 March 2021
Panel contribution by Luis de Guindos, Vice-President of the ECB, at the Banque de France / Sciences Po Financial Stability Review Conference 2021 “Is macroprudential policy resilient to the pandemic?”
2 March 2021
Interview with Luis de Guindos, Vice-President of the European Central Bank (ECB), conducted by Sérgio Aníbal
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26 February 2021
Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Andrés Stumpf on 22 February
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25 February 2021
Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Ingūna Ukenābele on 22 February 2021
English
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9 February 2021
Interview with Fabio Panetta, Member of the Executive Board of the ECB, conducted by Tim Bartz
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7 February 2021
Interview with Christine Lagarde, President of the ECB, conducted by Marie-Pierre Gröndahl and Hervé Gattegno
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13 February 2021
Blog post by Frank Elderson, Member of the Executive Board of the ECB
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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 ECB
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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.
20 October 2020
Blog post by Isabel Schnabel, Member of the Executive Board of the ECB
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Summary
High-quality data and statistics provide indispensable input for sound policy decisions, including at the ECB, writes Executive Board member Isabel Schnabel. Today’s World Statistics Day reminds us of the importance of data we can trust.
2 October 2020
Blog post by Fabio Panetta, Member of the Executive Board of the ECB
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Summary
We should be ready to issue a digital euro if and when it is necessary, writes Executive Board member Fabio Panetta. The euro is a currency that Europeans trust. We need to make sure that it is fit for the future.
11 September 2020
Blog post by Philip R. Lane, Member of the Executive Board of the ECB
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Summary
Our current measures are providing crucial support to the economic recovery in the euro area, writes Chief Economist Philip R. Lane. But there is no room for complacency as inflation remains far below the aim and risks continue to be tilted to the downside.
3 March 2021
WORKING PAPER SERIES - No. 2530
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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 PUBLICATIONS
26 February 2021
WORKING PAPER SERIES - No. 2529
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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
25 February 2021
RESEARCH BULLETIN - No. 81
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Abstract
Loan renegotiations are expected to surge following the coronavirus (COVID-19) outbreak and the subsequent crisis, as more loans default during recessions. At such times, managing lending relationships effectively becomes even more important for bank governance, risk, and credit supply. My study presents evidence that continuous lending relationships between bank loan officers and corporate borrowers improve the outcomes of loan renegotiations. The analysis draws on a novel dataset on corporate loans during a bank reorganisation in Greece in the mid-2010s. This dataset allows us to empirically identify the causal effect of interrupted relationships. My main findings are that firms that experience an exogenous interruption in their loan officer relationship are faced with three consequences. First, the firms are less likely to renegotiate a loan compared to firms with continuous relationships. Second, when loans are renegotiated, firms with interrupted loan officer relationships receive tougher loan terms. Third, these firms raise more equity, reduce their overall borrowing, and partially substitute borrowing from other banks. These results point to the importance of lending relationships in mitigating the cost of distress for borrowers renegotiating loans. It therefore suggests that bank managers, supervisors, and resolution authorities need to be mindful of the potential costs of changing loan officers.
JEL Code
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
L14 : Industrial Organization→Market Structure, Firm Strategy, and Market Performance→Transactional Relationships, Contracts and Reputation, Networks
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
O16 : Economic Development, Technological Change, and Growth→Economic Development→Financial Markets, Saving and Capital Investment, Corporate Finance and Governance
22 February 2021
OTHER PUBLICATIONS
22 February 2021
WORKING PAPER SERIES - No. 2528
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Abstract
The paper provides an ex-post analysis of the determinants of within-country regional heterogeneity of the labour market impact of COVID-19. By focussing on the first wave of the pandemic in the four largest euro area economies, it finds that the propagation of the economic impact across regions cannot be explained by the spread of infections only. Instead, a region’s economic structure is a significant driver of the observed heterogeneity. Moreover, our results suggest that a region's trade relations, both within and across countries, represent a relevant indirect channel through which COVID-19 related disruptions affect regional economic activity. In this regard, the analysis depicts vulnerabilities arising from potential disruptions of the highly integrated EU supply chains.
JEL Code
R11 : Urban, Rural, Regional, Real Estate, and Transportation Economics→General Regional Economics→Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
F14 : International Economics→Trade→Empirical Studies of Trade
J40 : Labor and Demographic Economics→Particular Labor Markets→General
R15 : Urban, Rural, Regional, Real Estate, and Transportation Economics→General Regional Economics→Econometric and Input?Output Models, Other Models
22 February 2021
OTHER PUBLICATIONS
22 February 2021
SURVEY OF MONETARY ANALYSTS
19 February 2021
WORKING PAPER SERIES - No. 2527
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Abstract
The Global Financial Crisis fostered the design and adoption of macroprudential policies throughout the world. This raises important questions for monetary policy. What, if any, is the relationship between monetary and macroprudential policies? In particular, how does the effectiveness of macroprudential policies (or lack thereof) influence the conduct of monetary policy? This discussion paper builds on the insights of recent theoretical and empirical research to address these questions.
JEL Code
E3 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
G01 : Financial Economics→General→Financial Crises
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
Network
Discussion papers
19 February 2021
WORKING PAPER SERIES - No. 2526
Details
Abstract
We study the impact of the COVID-19 shock on the portfolio exposures of euro area investors. The analysis “looks-through” holdings of investment fund shares to first gauge euro area investors' full exposures to global debt securities and listed shares by sector at end-2019 and to subsequently analyse the portfolio shifts in the first and second quarters of 2020. We show important heterogeneous patterns across asset classes and sectors, but also across euro area less and more vulnerable countries. In particular, we find a broad-based rebalancing towards domestic sovereign debt at the expense of extra-euro area sovereigns, consistent with heightened home bias. These patterns were strongly driven by indirect holdings – via investment funds – especially for insurance companies and pension funds, but levelled off in the second quarter. On the contrary, for listed shares we find that euro area investors rebalanced away from domestic towards extra-euro area securities in both the first and the second quarter, which may be associated with better relative foreign stock market performance. Many of these shifts were only due to indirect holdings, corroborating the importance of investment funds in assessing investors' exposures via securities, in particular in times of large shocks. We also confirm the important intermediation role played by investment funds in an analysis focusing on the large-scale portfolio rebalancing observed between 2015 and 2017 during the ECB's Asset Purchase Programme.
JEL Code
F30 : International Economics→International Finance→General
F41 : International Economics→Macroeconomic Aspects of International Trade and Finance→Open Economy Macroeconomics
G15 : Financial Economics→General Financial Markets→International Financial Markets

Interest rates

Marginal lending facility 0.25 %
Main refinancing operations (fixed rate) 0.00 %
Deposit facility − 0.50 %
18 September 2019 Past key ECB interest rates

Inflation rate

Inflation dashboard

Reference rates

USD US dollar 1.1938
JPY Japanese yen 129.30
GBP Pound sterling 0.86300
CHF Swiss franc 1.1066
Last update: Friday, 05 March 2021 Euro foreign exchange rates