SPEECH
27 March 2023
Back to normal?
Excess reserves affect the way we implement monetary policy, says Executive Board member Isabel Schnabel. In the steady state, our balance sheet should only be as large as is necessary to ensure sufficient liquidity and steer short-term interest rates.
Speech
ECONOMIC BULLETIN
27 March 2023
The uneven impact of energy price shocks
Our latest Economic Bulletin examines how the recent energy price shock has disproportionately affected lower-income households and companies in non-energy sectors, despite support from governments, as they were more exposed to fluctuations in energy costs.
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MONETARY POLICY
16 March 2023
Our monetary policy statement at a glance
What are the main points in our new monetary policy statement and what mattered to us in our decision? And how do we see the economy developing? Our visual statement explains this in short and easy-to-understand language.
More- 27 March 2023
- MONETARY DEVELOPMENTS IN THE EURO AREAAnnexes
- 23 March 2023
- PRESS RELEASE
- 22 March 2023
- BALANCE OF PAYMENTS (MONTHLY)
- 21 March 2023
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 21 March 2023
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 21 March 2023
- PRESS RELEASE
- 27 March 2023
- Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at an event organised by Columbia University and SGH Macro Advisor
- 27 March 2023
- Keynote speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, at the Foreign Bankers’ Association (FBA) 30th anniversary
- 26 March 2023
- Slides by Isabel Schnabel, Member of the Executive Board of the ECB, at the Chicago Booth Conference on the Global Economy and Financial Stability
- 23 March 2023
- Presentation by Philip R. Lane, Member of the Executive Board of the ECB, at PIIE conference "Floating Exchange Rates at Fifty", Washington DC
- 22 March 2023
- Speech by Fabio Panetta, Member of the Executive Board of the ECB, at a panel on “Global shocks, policy spillovers and geo-strategic risks: how to coordinate policies” at The ECB and its Watchers XXIII ConferenceAnnexes
- 26 March 2023
- Interview with Luis de Guindos, Vice-President of the ECB, conducted by Daniel Murray
- 5 March 2023
- Interview with Christine Lagarde, President of the ECB, conducted by Adolfo Lorente, from El Correo
- 1 March 2023
- Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Nicholas Owen
- 28 February 2023
- Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted on Friday, 24 February 2023 by Balázs Korányi and Frank Siebelt
- 27 February 2023
- Interview with Christine Lagarde, President of the ECB, conducted M.C. Govardhana Rangan on 24 February 2023
- 24 March 2023
- The ECB is for the first time disclosing the carbon footprint of its own investment portfolios and the Eurosystem’s corporate sector holdings. Executive Board members Frank Elderson and Isabel Schnabel explain the progress made and the next steps needed to decarbonise the portfolios of the ECB and the Eurosystem.Details
- JEL Code
- Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
- 9 March 2023
- Europe must speed up its green and digital transition. For that, we need to complete the Capital Markets Union to provide effective financing. This is the plea made by the five Presidents of the ECB, EIB, European Council, European Commission and Eurogroup in a joint post.EnglishOTHER LANGUAGES (23) +
- 7 March 2023
- Croatian consumers have expressed concerns about price increases related to the euro changeover. Preliminary evidence presented in this ECB blog post shows that the changeover from kuna to euro has so far had relatively little impact on Croatian consumer prices and price perceptions.Details
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
- 1 March 2023
- Millions of Ukrainians were displaced by Russia’s unjustified war and have found refuge in the euro area. Many refugees want to work and thus increase the euro area labour force. This ECB Blog post updates previous calculations by considering novel information on the whereabouts and demographics of Ukrainian refugees.Details
- JEL Code
- J21 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Force and Employment, Size, and Structure
J61 : Labor and Demographic Economics→Mobility, Unemployment, Vacancies, and Immigrant Workers→Geographic Labor Mobility, Immigrant Workers
J82 : Labor and Demographic Economics→Labor Standards: National and International→Labor Force Composition
Related - 24 February 2023
- Russia’s unjustified war against Ukraine and its people is first and foremost a human tragedy. It is also having an economic impact on Ukraine and beyond. This ECB Blog post – the first in a series about the economic effects of the war – focuses on inflation in the euro area.Details
- JEL Code
- E30 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→General
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
Related
- 27 March 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 2, 2023Details
- Abstract
- This box assesses the uneven economic effects of the recent surge in energy prices across households and firms in the euro area. The box first uses disaggregated data to disentangle the effects of the deterioration in the energy terms of trade on final expenditures and aggregate income, allocating the implied purchasing power losses across the household income distribution. The box then uses structural economic models to identify the energy price shock underlying the recent terms-of-trade deterioration and to gauge its direct, indirect and second-round effects on the overall economy. As regards the results, the different exposures of households to higher energy costs and lower income indicate a relatively larger impact of the energy terms-of-trade deterioration on lower-income households. The direct and indirect effects of the energy price shock mainly impacted private consumption on the expenditure side and non-energy sectors on the income side. The second-round effects spread the impact more evenly across private consumption and investment, with the government partially shielding private sector disposable income.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
- 27 March 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 2, 2023Details
- Abstract
- This box provides initial evidence of the impact on global oil markets and Russian oil flows of the EU embargo and the G7 price cap on Russian oil imposed in response to Russia’s war of aggression in Ukraine. Overall, international oil prices have declined amid resilient supply from Russia and lower global demand, despite the expected rebound of the Chinese economy. After some initial bottlenecks, Russia managed to redirect most of its crude oil exports from Europe to Asia, but only by continuing to offer significant price discounts relative to global prices. However, a stronger impact on global oil markets could still materialise, particularly as, since February, Russia has officially prohibited sales of crude oil to countries that adhere to the price cap mechanism. In addition, the sanctions on refined oil products are only in the early phase of implementation, with initial evidence showing that Russia is partly redirecting those flows towards Africa and unknown destinations while, in the absence of Russian imports, the European diesel market remains tight.
- JEL Code
- E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
- 23 March 2023
- WORKING PAPER SERIES - No. 2800Details
- Abstract
- During the March 2020 market turmoil, euro area money-market funds (MMFs) expe-rienced significant outflows, reaching almost 8% of assets under management. This paper investigates whether the volatility in MMF flows was driven by investors’ liquidity needs re-lated to derivative margin payments. We combine three highly granular unique data sources (EMIR data for derivatives, SHSS data for investor holdings of MMFs and Refinitiv Lip-per data for daily MMF flows) to construct a daily fund-level panel dataset spanning from February to April 2020. We estimate the effects of variation margin paid and received by the largest holders of EUR-denominated MMFs on flows of these MMFs. The main findings suggest that variation margin payments faced by some investors holding MMFs were an im-portant driver of the flows of EUR-denominated MMFs domiciled in euro area.
- JEL Code
- G13 : Financial Economics→General Financial Markets→Contingent Pricing, Futures Pricing
G15 : Financial Economics→General Financial Markets→International Financial Markets
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
- 23 March 2023
- OTHER PUBLICATION
- 23 March 2023
- OTHER PUBLICATION
- 22 March 2023
- WORKING PAPER SERIES - No. 2799Details
- Abstract
- Flows of funds run by banks or by firms that belong to the same financial group as a bank are less volatile and less sensitive to bad past performance. This enables bank-affiliated funds to better weather distress and to hold lower precautionary cash buffers in comparison with their unaffiliated peers. Banks provide liquidity support to distressed affiliated funds by buying shares of those funds that are experiencing large outflows. This, in turn, diminishes the severity of strategic complementarities in investors’ redemptions. Liquidity support and other benefits of bank affiliation are conditional on the financial health of the parent company. Distress in the banking system spills over to the mutual fund sector via ownership links. Our research high-lights substantial dependencies between the banking system and the asset management industry, and identifies an important channel via which financial stability risks depend on the organisational structure of the financial sector.
- JEL Code
- G2 : Financial Economics→Financial Institutions and Services
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
G3 : Financial Economics→Corporate Finance and Governance
- 22 March 2023
- WORKING PAPER SERIES - No. 2798Details
- Abstract
- This paper assesses the impact of weather shocks on inflation components in the four largest euro area economies. We combine high-frequency weather data with monthly data on inflation and output growth within a set of Bayesian Vector Autore-gressions which explicitly considers the seasonal dependence of the shock. Results suggest the presence of significant country asymmetries and seasonal responses of inflation to temperature shocks, mainly via food, energy, and service prices. An increase in monthly mean temperatures has inflationary effects in summer and au-tumn, with a stronger response in warmer euro area countries. An increase in temperature variability has significant upward impacts on inflation rates over and above the impacts of changes in means.
- JEL Code
- Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
C32 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Time-Series Models, Dynamic Quantile Regressions, Dynamic Treatment Effect Models, Diffusion Processes
- 22 March 2023
- RESEARCH BULLETIN - No. 105Details
- Abstract
- We assess the impact of the pandemic and the ensuing disruptions to global value chains (GVCs) on exporting firms. We find that firms’ participation in GVCs increased their vulnerability to the pandemic shock, in terms of export sales and probability of survival. Firms further downstream in GVCs were more severely affected by supply disruptions. At the same time, our results suggest that exporting firms benefited from sourcing their core inputs from different countries, supporting the hypothesis that diversification in global value chains fosters supply chain resilience.
- JEL Code
- D22 : Microeconomics→Production and Organizations→Firm Behavior: Empirical Analysis
F14 : International Economics→Trade→Empirical Studies of Trade
F61 : International Economics→Economic Impacts of Globalization→Microeconomic Impacts
- 22 March 2023
- OCCASIONAL PAPER SERIES - No. 311Details
- Abstract
- Over the past decade, geopolitical developments - and the policy responses to these by major economies around the world - have challenged economic openness and the process of globalisation, with implications for the economic environment in which central banks operate. The return of war to Europe and the energy shock triggered by the Russian invasion of Ukraine in 2022 are the latest in a series of episodes that have led the European Union (EU) to develop its Open Strategic Autonomy (OSA) agenda. This Report is a broad attempt to take stock of these developments from a central banking perspective. It analyses the EU's economic interdependencies and their implications for trade and finance, with a focus on strategically important dimensions such as energy, critical raw materials, food, foreign direct investment and financial market infrastructures. Against this background, the Report discusses relevant aspects of the EU's OSA policy agenda which extend to trade, industrial and state aid measures, as well as EU initiatives to strengthen and protect the internal market and further develop Economic and Monetary Union (EMU). The paper highlights some of the policy choices and trade-offs that emerge in this context and possible implications for the ECB's monetary policy and other policies.
- JEL Code
- F0 : International Economics→General
F10 : International Economics→Trade→General
F30 : International Economics→International Finance→General
F4 : International Economics→Macroeconomic Aspects of International Trade and Finance
F5 : International Economics→International Relations, National Security, and International Political Economy
F45 : International Economics→Macroeconomic Aspects of International Trade and Finance
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
L5 : Industrial Organization→Regulation and Industrial Policy
Q43 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Energy→Energy and the Macroeconomy
- 21 March 2023
- WORKING PAPER SERIES - No. 2797Details
- Abstract
- We study alternative monetary policy strategies in the presence of the lower bound on nominal interest rates and a low equilibrium real rate using an estimated DSGE model for the euro area. We find that simple feedback rules that implement inflation targeting result in a binding lower bound one-fourth of the time as well as inflation and output exhibiting large downward biases and heightened volatility. Rule-based asset purchases that are activated once the policy rate reaches the lower bound are not able to fully offset the destabilizing effects of the lower bound if we assume plausible limits on the size of purchases. Makeup strategies, especially average inflation targeting with a long averaging window, perform better than inflation targeting. However, differences in performance across strategies become small if the response coefficients of the feedback rules are optimized. In addition, we find that the benefits of makeup strategies tend to vanish if agents exhibit a degree of inattention to central bank policies as estimated in the data.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E37 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Forecasting and Simulation: Models and Applications
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
E61 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Policy Objectives, Policy Designs and Consistency, Policy Coordination
E71 : Macroeconomics and Monetary Economics
- 21 March 2023
- WORKING PAPER SERIES - No. 2796Details
- Abstract
- At the onset of the Covid-19 outbreak, central banks and supervisors introduced dividend restrictions as a new policy instrument aimed at supporting lending to the real economy and strengthening banks’ capacity to absorb losses. In this paper we estimate the impact of the ECB’s dividend recommendation on bank lending and risk-taking. To address identification issues, we rely on credit registry data and a direct measure that captures variation in compliance with the recommendation across banks in the euro area. The analysis disentangles the confounding effects stemming from the wide range of monetary and fiscal policies that supported credit during the Covid-19 downturn and investigates their interaction with the dividend recommendation. We find that dividend restrictions have been an effective policy in supporting financially constrained firms, adding capital space to banks, and limiting procyclical behaviour. The effects on lending are larger for small and medium enterprises and for firms operating in Covid-19 vulnerable sectors. At the same time, we do not find evidence of a significant increase in lending to riskier borrowers and ”zombie” firms.
- JEL Code
- E5 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit
E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers
G18 : Financial Economics→General Financial Markets→Government Policy and Regulation
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
- 20 March 2023
- SURVEY OF MONETARY ANALYSTS AGGREGATE RESULTS
- 17 March 2023
- MEP LETTER
- 17 March 2023
- MEP LETTER
- 17 March 2023
- WORKING PAPER SERIES - No. 2795Details
- Abstract
- This paper evaluates the resilience benefits of borrower-based macroprudential policies—such as LTV, DSTI, or DTI caps—for households and banks in the EU. To that end, we employ a further developed variant of the integrated micro-macro simulation model of Gross and Población (2017). Besides various methodological advances, joint policy caps are now also considered, and the resilience benefits are decomposed across income and wealth categories of borrowing households. Our findings suggest that (1) the resilience of households improves notably as a result of implementing individual and joint policy limits, with joint limits being more than additively effective; (2) borrower-based measures can visibly enhance the quality of bank mortgage portfolios over time, supporting bank solvency ratios; and (3) the policies’ resilience benefits are more pronounced for households located at the lower end of the income and wealth distributions.
- JEL Code
- C33 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Panel Data Models, Spatio-temporal Models
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
G18 : Financial Economics→General Financial Markets→Government Policy and Regulation
- 16 March 2023
- MACROECONOMIC PROJECTIONS FOR THE EURO AREAEnglishOTHER LANGUAGES (21) +Annexes
- 16 March 2023
- ANNEX
- 15 March 2023
- OCCASIONAL PAPER SERIES - No. 310Details
- Abstract
- Macroprudential policies since the global financial crisis have been central to safeguarding financial stability. Despite the increasing use of multiple policy instruments, a detailed understanding of interactions among them is still needed to assess how instrument combinations can enhance the effectiveness of macroprudential action. This paper proposes a conceptual framework for informing the choice of combinations of macroprudential instruments, looking at the role of micro and macroeconomic transmission channels, interactions across policy objectives, the importance of country specificities and linkages with other macroeconomic or supervisory policies. It also reviews considerations related to circumvention, leakages, time of activation and communication of policies, all of which may affect the desirability of different combinations of macroprudential instruments. The paper also discusses a possible operational use of combinations of macroprudential instruments to address selected risks and provides a rich analysis of instrument interactions within the categories of borrower-based and, respectively, capital-based measures. The paper concludes that the combinations of capital and borrower-based instruments ensures a comprehensive coverage of different systemic risks and entail important synergies.
- JEL Code
- 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
- 13 March 2023
- OTHER PUBLICATION
- 8 March 2023
- WORKING PAPER SERIES - No. 2794Details
- Abstract
- Is digitalisation a massive gamechanger which will deliver huge gains in productivity, or is it more of a sideshow with only limited impacts? We use a large balance sheet panel dataset comprising more than 19 million European firm-level observations to empirically investigate the impact of digitalisation on productivity growth via various previously unexplored chan-nels and mechanisms. Our results suggest that for two otherwise identical firms, the firm that exhibits on average a higher share of investment in digital technologies will exhibit a faster rate of TFP growth, but not all firms and sectors experience significant productivity gains from digitalisation. Digitalisation does not seem to have relatively stronger impacts on the productivity of frontier firms compared to laggards, nor does it help to turn laggards into frontier firms. Overall, firms should not regard digital investment as a ‘one-size-fits-all’ strategy to improve their productivity. Digital technologies are a gamechanger for some firms. But they seem more like a sideshow for most firms, who attempt to be increasingly digital but are not able to adequately reap its productivity gains.
- JEL Code
- D22 : Microeconomics→Production and Organizations→Firm Behavior: Empirical Analysis
D24 : Microeconomics→Production and Organizations→Production, Cost, Capital, Capital, Total Factor, and Multifactor Productivity, Capacity
D25 : Microeconomics→Production and Organizations
O33 : Economic Development, Technological Change, and Growth→Technological Change, Research and Development, Intellectual Property Rights→Technological Change: Choices and Consequences, Diffusion Processes
- 7 March 2023
- WORKING PAPER SERIES - No. 2793Details
- Abstract
- Climate change and the public policies to arrest it are and will continue reshaping the global economy. This Discussion Paper draws on economic research to identify some key medium- and long-run economic implications of these developments. It explores implications for growth, innovation, inflation, financial markets, fiscal policy, and several socio-economic outcomes. The main message that emerges is that climate change will cause income divergence across individuals, sectors, and regions, adjustment in energy markets, increased inflation variability, financial markets stress, intensified innovation, increased migration, and rising public debt. These challenges appear manageable for EU member states, especially under an early and orderly transition scenario. At the same time, the direction, scope, and speed of economic transformation is subject to large uncertainty due to two separate factors: the wide range of climate scenarios for a given trajectory of greenhouse gas emissions and the exact policy path governments choose, especially in the context of the ongoing Russian aggression in Ukraine.
- JEL Code
- D6 : Microeconomics→Welfare Economics
E3 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles
F2 : International Economics→International Factor Movements and International Business
G2 : Financial Economics→Financial Institutions and Services
O1 : Economic Development, Technological Change, and Growth→Economic Development
Q5 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics - Network
- Discussion papers
Interest rates
| Marginal lending facility | 3.75 % |
| Main refinancing operations (fixed rate) | 3.50 % |
| Deposit facility | 3.00 % |
Inflation rate
Inflation dashboardExchange rates
| USD | US dollar | 1.0773 | |
| JPY | Japanese yen | 141.64 | |
| GBP | Pound sterling | 0.87818 | |
| CHF | Swiss franc | 0.9875 |
Financial stability
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