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OPINION PIECE
4 December 2024
Contribution to The Economist
Europe is not short of ideas, innovators or savings, writes President Christine Lagarde. But it often struggles to turn ideas into new technologies that can drive growth. To better achieve this, it must refocus efforts on the capital markets union.
Read President Lagarde’s contribution
QUIZ
8 December 2024
Quiz: euro banknote security and design
Have you ever taken a closer look at the euro banknotes you carry? Would you be able to spot a fake one? And do you know what the current design elements represent? Put your knowledge to the test and try our latest Kahoot! quiz on banknote security features and design!
Play now!- 10 December 2024
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 10 December 2024
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 4 December 2024
- PRESS RELEASERelated
- 23 July 2024
- PAGE
- 4 December 2024
- MFI INTEREST RATE STATISTICS
- 3 December 2024
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 3 December 2024
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 2 December 2024
- PRESS RELEASERelated
- 2 December 2024
- DIGITAL EURO PREPARATION PHASE - PROGRESS REPORT
- 4 December 2024
- Speech by Christine Lagarde, President of the ECB, at the Hearing of the Committee on Economic and Monetary Affairs of the European ParliamentAnnexes
- 4 December 2024
- 4 December 2024
- Presentation by Piero Cipollone, Member of the Executive Board of the ECB, at the VII Conference on behavioural financial regulations and policies organised by the Herbert Simon Society
- 28 November 2024
- Remarks by Philip R. Lane, Member of the Executive Board of the ECB, at the 25th Anniversary of the Euro50 Group event at the Banque de France
- 25 November 2024
- Keynote speech by Philip R. Lane, Member of the Executive Board of the ECB, at the Bank of England Watchers’ Conference 2024, King’s College London
- 22 November 2024
- Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the BIS Colloquium in honour of Claudio Borio, Head of the Monetary and Economic Department, in Basel, SwitzerlandRelated
- 4 December 2024
- Contribution by Christine Lagarde, President of the ECB to The Economist
- 28 November 2024
- Interview with Christine Lagarde, President of the ECB, conducted by Roula Khalaf, Patrick Jenkins and Olaf Storbeck on 25 November 2024
- 27 November 2024
- Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Mark Schrörs and Alexander Weber on 25 November 2024
- 26 November 2024
- Interview with Luis de Guindos, Vice-President of the ECB, conducted by Petri Sajari
- 25 November 2024
- Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Guillaume Benoit on 19 November 2024
- 3 December 2024
- At the height of the financial crisis Greece, Ireland, Portugal and Cyprus needed help. The international assistance came under the condition of economic adjustment aiming to restore financial stability, debt sustainability and growth. How did the four countries recover from their crises?
- 28 November 2024
- The European Commission is seeking the views of stakeholders on policies to guard against the build-up of systemic risk in the financial sector beyond banks. This ECB Blog post describes the pillars of a macroprudential approach for the so-called non-bank financial sector and explains the need to further develop the policy framework.Details
- JEL Code
- G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
- 19 November 2024
- Meeting the EU’s climate neutrality targets calls for deep structural changes and significant private funding, requiring a healthy financial system. That’s why we’ve tested how resilient banks, investment funds and insurers are to stresses arising during the green transition. ECB Vice-President Luis de Guindos explains the findings.Related
- 19 November 2024
- 19 November 2024
- 14 November 2024
- The Eurosystem has started to reduce its bond holdings. This ECB Blog post investigates how strongly the shrinking balance sheet affects long-term interest rates. Estimates based on the Survey of Monetary Analysts suggest: an expected €1 trillion reduction in bond holdings may raise long-term risk-free interest rates by about 35 bps.Details
- JEL Code
- 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
- 12 November 2024
- Complacency in fighting climate change and preserving biodiversity is endangering our economic survival. The longer we wait, the higher the costs will be. Christine Lagarde, President of the European Central Bank, warns of the growing gap between the commitments made and the investment needed.
- 4 December 2024
- INTEGRATED REPORTING FRAMEWORK DOCUMENT
- 3 December 2024
- WORKING PAPER SERIES - No. 3003Details
- Abstract
- We document that about 33% of the core inflation basket in the euro area is sensitive to monetary policy shocks. We assess potential theoretical mechanisms driving the sensitivity. Our results suggest that items of a discretionary nature, as reflected in a higher share in the consumption baskets of richer households, and those with larger role of credit in financing their purchase, tend to be more sensitive.Non-sensitive items are more frequently subject to administered prices and include non-discretionary items such as rents and medical services. Energy intensity does not seem to drive our results and the sensitive items are not dominated by durable goods, but are relatively evenly split between goods and services. Estimations over different samples show that the impact of monetary policy shocks on sensitive core inflation has become larger recently.
- JEL Code
- 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
C32 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Time-Series Models, Dynamic Quantile Regressions, Dynamic Treatment Effect Models, Diffusion Processes
- 3 December 2024
- CONSULTATION RESPONSE
- 2 December 2024
- LETTERS TO MEPSRelated
- 2 December 2024
- DIGITAL EURO PREPARATION PHASE - PROGRESS REPORT
- 2 December 2024
- DIGITAL EURO PREPARATION PHASE - PROGRESS REPORTRelated
- 2 December 2024
- LETTERS TO MEPS
- 2 December 2024
- PRESS RELEASE
- 2 December 2024
- OCCASIONAL PAPER SERIES - No. 362Details
- Abstract
- This paper takes stock of the implementation of the NextGenerationEU (NGEU) programme in the euro area four years after its inception, focusing on its principal instrument, the Recovery and Resilience Facility (RRF). The paper provides an updated quantitative assessment of its past and future impact on the euro area economy, using a set of models and scenarios to account for the uncertainty that still surrounds the implementation of this programme. The public expenditures and structural reforms linked to the RRF have the potential to increase the level of euro area gross domestic product (GDP) by around 0.4-0.9% by 2026 and 0.8-1.2% by 2031, depending on capital productivity and the degree of absorption of RRF funds. The contribution of structural reforms to these output effects is expected to increase over time, while the initially prevailing impact of RRF-funded public expenditures fades away. We provide tentative empirical evidence that reforms have started to modestly improve the growth outlook of some euro area Member States by increasing their institutional quality. The expected long-run increase in output is in turn a key factor behind the decline in the government debt ratios we project for the main NGEU beneficiary euro area Member States. At the same time, we estimate that NGEU will have a limited impact on euro area inflation. Compared with previous ECB staff analysis published in 2022, the macroeconomic impact of NGEU, particularly on GDP and government debt ratios, is expected to shift over time due to widespread delays in the implementation of NGEU-linked expenditures and reforms. It is crucial that euro area Member States address implementation challenges over the remaining lifetime of this programme to fully reap its benefits.
- JEL Code
- C54 : Mathematical and Quantitative Methods→Econometric Modeling→Quantitative Policy Modeling
E02 : Macroeconomics and Monetary Economics→General→Institutions and the Macroeconomy
E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
F45 : International Economics→Macroeconomic Aspects of International Trade and Finance
H87 : Public Economics→Miscellaneous Issues→International Fiscal Issues, International Public Goods
O52 : Economic Development, Technological Change, and Growth→Economywide Country Studies→Europe
- 28 November 2024
- RESEARCH BULLETIN - No. 125Details
- Abstract
- Negative economic shocks can cause waves of investor pessimism about the resilience of banks, which, in turn, generate additional adverse macroeconomic effects. This is commonly cited as an explanation for the economic havoc wrought by the global financial crisis of 2007-08. We introduce the notion of pessimism in a real business cycle model, which is a standard framework for business cycle analysis. The possibility of waves of pessimism generates countercyclical demand from banks for liquid assets (e.g., bank reserves). With the model, we study the macroeconomic effects of the government supplying liquid assets and find that a policy of accommodating banks’ demand is effective in stabilising the economy. Finally, we support this finding with empirical evidence.
- JEL Code
- E40 : Macroeconomics and Monetary Economics→Money and Interest Rates→General
E41 : Macroeconomics and Monetary Economics→Money and Interest Rates→Demand for Money
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
E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers
G01 : Financial Economics→General→Financial Crises
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
- 27 November 2024
- WORKING PAPER SERIES - No. 3002Details
- Abstract
- The projected increase in extreme climate events in the coming decades is likely to exacerbate the existing productivity and demographic challenges facing Europe. We study the dynamic, medium-run macroeconomic effects of heatwaves, droughts and floods in 1160 EU regions through the lens of a local projections, difference in difference framework. Summer heatwaves and droughts lower medium-term output, but the impact from floods depends on regional income levels. High-income regions witness reconstruction activity, less wealthy regions do not. We find evidence of population decline in affected regions as well as adaptation spending post-event, which lowers regional productivity.
- JEL Code
- D24 : Microeconomics→Production and Organizations→Production, Cost, Capital, Capital, Total Factor, and Multifactor Productivity, Capacity
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
J22 : Labor and Demographic Economics→Demand and Supply of Labor→Time Allocation and Labor Supply
R11 : Urban, Rural, Regional, Real Estate, and Transportation Economics→General Regional Economics→Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
- 25 November 2024
- SURVEY OF MONETARY ANALYSTS
- 22 November 2024
- OTHER PUBLICATION
- 20 November 2024
- FINANCIAL STABILITY REVIEWAnnexes
- 20 November 2024
- FINANCIAL STABILITY REVIEW
- 20 November 2024
- FINANCIAL STABILITY REVIEW - BOXFinancial Stability Review Issue 2, 2024Details
- Abstract
- Structural liquidity mismatches within euro area investment funds are both a source and an amplifier of systemic risk. These funds often offer more favourable redemption terms than the liquidity of their holdings justifies, potentially creating financial stability risks. Negative market shocks can quickly lead to large investor outflows, necessitating substantial asset sales that exert downward pressure on asset prices. This can result in a self-reinforcing cycle of further outflows and increased volatility. Investment funds have a larger footprint in euro area corporate bonds, which tend to be less liquid than other assets. This makes corporate bonds especially susceptible to sharp price declines under forced sale conditions, heightening the likelihood of disorderly market corrections. By contrast, euro area sovereign bonds are relatively resilient due to their higher liquidity and the more diversified investor base, reducing the market impact of sales by specific types of investors. This analysis highlights the need for regulatory adjustments to better safeguard financial stability. Extending redemption notice periods for funds with less liquid assets is a key recommendation, as such measures can help stabilise markets during times of stress by allowing more orderly liquidation and reducing abrupt price impacts.
- JEL Code
- G17 : Financial Economics→General Financial Markets→Financial Forecasting and Simulation
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
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
- 20 November 2024
- FINANCIAL STABILITY REVIEW - BOXFinancial Stability Review Issue 2, 2024Details
- Abstract
- This box examines the role of euro area banks in the intermediation of US dollar liquidity and maps the global structure of funding markets and their evolution. Euro area banks have significantly increased their involvement in US dollar repo and FX swap markets, particularly since the onset of the monetary policy tightening cycle in 2022. This increased intermediation exposes euro area banks and their counterparties to potential liquidity risks, especially during periods of market stress. The short-term nature of these markets, combined with high market concentration and the off-balance-sheet nature of FX swaps, can amplify the transmission of shocks. Central bank swap lines are crucial for providing dollar liquidity and mitigating these financial stability risks during times of stress.
- JEL Code
- G15 : Financial Economics→General Financial Markets→International Financial Markets
F31 : International Economics→International Finance→Foreign Exchange
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
- 20 November 2024
- FINANCIAL STABILITY REVIEW - BOXFinancial Stability Review Issue 2, 2024Details
- Abstract
- Understanding the drivers of the current downturn in commercial real estate (CRE) can provide insights into the outlook for the market and potential spillovers to the financial system and wider economy. This box uses a BVAR model to show that monetary policy and adverse CRE demand shocks have been the main factors pushing CRE prices down since the start of 2022. Alongside falling prices, asset write-downs have been the primary driver of the recent sharp drop in the headline profits of real estate firms. Moreover, in many cases real estate firms’ revenue growth has not kept pace with their financing costs, which has potential implications for their repayment capacity.
- JEL Code
- R30 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→General
R33 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→Nonagricultural and Nonresidential Real Estate Markets
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
- 20 November 2024
- FINANCIAL STABILITY REVIEW - BOXFinancial Stability Review Issue 2, 2024Details
- Abstract
- Recent episodes of widening sovereign bond spreads have led to renewed concerns about financial stability related to sovereign risk in the euro area. Against this backdrop, this box presents an empirical analysis of the shifts in financing conditions for both sovereigns and non-financial corporations, as well as changes in the sovereign bond holdings of domestic and foreign investors following a sovereign stress shock. The analysis finds that financing conditions for sovereigns and firms deteriorate after sovereign stress events, while financial and political uncertainty increase. When sovereign stress events occur, investment funds and global investors withdraw from euro sovereign debt markets, while domestic investors step in.
- JEL Code
- F34 : International Economics→International Finance→International Lending and Debt Problems
F45 : International Economics→Macroeconomic Aspects of International Trade and Finance
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
- 20 November 2024
- FINANCIAL STABILITY REVIEW - ARTICLEFinancial Stability Review Issue 2, 2024Details
- Abstract
- This edition of the ECB’s Financial Stability Review (FSR) marks the 20th anniversary of its inaugural publication. The FSR was originally launched to help in preventing financial crises, and this special feature draws lessons from two decades of experience in identifying, analysing and communicating about systemic risks via this publication. Although risk analysis and risk communication are distinct processes, the special feature emphasises that they are inextricably intertwined in a seamless cycle where each informs and enhances the other. Effective risk identification is founded on the ability to combine structured, data-driven assessments with qualitative insights and expert judgement. Such an approach requires a comprehensive and adaptive framework that continuously integrates broad reviews of indicators with focused analyses on emerging risks. Early identification of vulnerabilities enables timely intervention, but the complex, non-linear way that the financial system functions means that flexibility remains essential. Clear and transparent communication of systemic risks supports this analytical process by shaping expectations and enhancing market discipline, creating a feedback loop that strengthens both policy response and risk awareness. However, central banks face the challenge of balancing communication frequency and depth in order to avoid false alarms while at the same time maintaining credibility. As the ECB’s FSR has evolved, it has sought to become more accessible and data-driven, while utilising diverse media channels to broaden its audience. Experience confirms that targeted, proactive communication reinforces financial stability by aligning policymakers and markets, underscoring the symbiotic relationship between risk analysis and effective communication in maintaining financial system resilience.
- JEL Code
- D81 : Microeconomics→Information, Knowledge, and Uncertainty→Criteria for Decision-Making under Risk and Uncertainty
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
G01 : Financial Economics→General→Financial Crises
- 19 November 2024
- OTHER PUBLICATIONAnnexes
- 19 November 2024
- ANNEX
- 19 November 2024
- FAQRelated
- 19 November 2024
- PRESS RELEASE
- 19 November 2024
- THE ECB BLOG
- 19 November 2024
- FINANCIAL STABILITY REVIEW - BOXFinancial Stability Review Issue 2, 2024Details
- Abstract
- The continuing shift from active to passive investing in equity markets over the past decade raises questions about the implications for financial stability along three dimensions. First, empirical evidence suggests that passive investing may increase co-movement among stock returns, making markets more volatile. Second, passive funds may increase equity market concentration, potentially exposing investors to heightened idiosyncratic risks from the largest companies. And third, the ability of equity markets to absorb shocks may be inhibited by the growing concentration of liquidity at closing auctions impacted by passive investing. In summary, passive investing continues to provide benefits to individual investors but might also adversely affect market functioning, thus highlighting the importance of investor heterogeneity.
- JEL Code
- G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
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
- 18 November 2024
- FINANCIAL STABILITY REVIEW - ARTICLEFinancial Stability Review Issue 2, 2024Details
- Abstract
- Productivity growth in the euro area has been declining for several decades. In light of the importance of bank lending as a source of external funding for euro area firms, this special feature investigates the link between firm productivity and bank credit allocation. Bank credit in the euro area has been skewed towards sectors that have contributed only marginally to aggregate productivity growth, such as real estate. Additionally, bank loans tilted towards less-productive firms within the same sectors during the COVID-19 pandemic, supported by state credit guarantees. Banks with weaker balance sheets lent more to less-productive firms during this period than other banks did. The tilt towards less-productive firms could have an indirect effect on aggregate productivity if the survival of less-productive firms suppresses the profitability of more-productive competitors, discouraging market entry and investment. A more diversified external funding structure could help boost the productivity of euro area firms, to the benefit of financial stability.
- JEL Code
- D24 : Microeconomics→Production and Organizations→Production, Cost, Capital, Capital, Total Factor, and Multifactor Productivity, Capacity
E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
Interest rates
| Marginal lending facility | 3.65 % |
| Main refinancing operations (fixed rate) | 3.40 % |
| Deposit facility | 3.25 % |
Inflation rate
More on inflationExchange rates
| USD | US dollar | 1.0527 | |
| JPY | Japanese yen | 159.74 | |
| GBP | Pound sterling | 0.82555 | |
| CHF | Swiss franc | 0.9267 |
Financial stability
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