THE ECB BLOG
30 December 2023
The value of unity in a changing world
As the euro turns 25, it is an indispensable part of our daily life. It offers us simplicity, stability and sovereignty. In a joint blog post, Presidents of five European institutions reflect on the value of unity in a changing world.
Read the ECB Blog
INTERVIEW
22 December 2023
Resolute action has reduced inflation
Monetary policy has been a key factor in reducing inflation, as it has dampened demand and kept inflation expectations anchored, says Executive Board member Isabel Schnabel. Our mission is only accomplished if inflation falls sustainably to 2%.
Read the interview
RESEARCH
12 December 2023
Young economists wanted!
Are you studying for a PhD in economics or finance? Do you want the chance to win €10,000 and share your research at the 2024 ECB Forum on Central Banking taking place from 1 to 3 July in Sintra, Portugal? Submit your paper by 12 February 2024.
Enter to the Young Economist Prize- 2 January 2024
- MONETARY DEVELOPMENTS IN THE EURO AREAAnnexes
- 2 January 2024
- MONETARY DEVELOPMENTS IN THE EURO AREA
- 28 December 2023
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 28 December 2023
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 21 December 2023
- PRESS RELEASEEnglishOTHER LANGUAGES (23) +
- 20 December 2023
- BALANCE OF PAYMENTS (MONTHLY)
- 19 December 2023
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 19 December 2023
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 20 December 2023
- Slides by Philip R. Lane, Member of the Executive Board of the ECB, at the seminar organised by the Economic and Social Research Institute in Dublin
- 14 December 2023
- Christine Lagarde, President of the ECB, Luis de Guindos, Vice-President of the ECB, Frankfurt am Main, 14 December 2023EnglishOTHER LANGUAGES (23) +Related
- 14 December 2023
- 14 December 2023
- EnglishOTHER LANGUAGES (23) +
- 14 December 2023
- 7 December 2023
- Speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB
- 4 December 2023
- Speech by Christine Lagarde, President of the ECB, à l’Académie des sciences morales et politiques, Paris
- 30 November 2023
- Speech by Christine Lagarde, President of the ECB, at 5th ECB Forum on Banking Supervision "Europe: banking on resilience" in Frankfurt, Germany
- 22 December 2023
- Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Meike Schreiber und Markus Zydra on 18 December 2023
- 21 December 2023
- Interview with Luis de Guindos, Vice-President of the ECB, conducted by Emilio Ordiz and Jorge Millán
- 5 December 2023
- Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Balázs Korányi on 1 December 2023
- 29 November 2023
- Interview with Luis de Guindos, Vice-President of the ECB, conducted by Ruben Mooijman and Ariane van Caloen, on 23 November 2023
- 9 November 2023
- Interview with Luis de Guindos, Vice-President of the ECB, conducted by Albina Kenda
- 30 December 2023
- 25 years ago, on 1 January 1999, the euro came into force as the single currency for 11 EU Member States. It now serves the economy and eases life for 350 million people in 20 countries.EnglishOTHER LANGUAGES (23) +Details
- JEL Code
- E00 : Macroeconomics and Monetary Economics→General→General
E02 : Macroeconomics and Monetary Economics→General→Institutions and the Macroeconomy
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
- 18 December 2023
- The ECB’s primary mandate is to maintain price stability. So why do we talk so much about climate change? In this post on The ECB Blog, we show how a hotter climate affects prices and the economy and discuss how this impacts the task of central banks.Details
- JEL Code
- 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
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
Q50 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→General
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
Q51 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Valuation of Environmental Effects
Q58 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Government Policy
- 12 December 2023
- Climate change can endanger financial stability. The ECB Blog looks at how a common macroprudential policy framework could complement microprudential initiatives to make the financial system more resilient.Details
- JEL Code
- E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
G01 : Financial Economics→General→Financial Crises
- 6 December 2023
- Banks are talking more about the environment. But does such talk go hand in hand with greener lending? The ECB Blog finds a disconnect: banks talking more about their environmental policies and goals tend to lend more to brown industries.Details
- JEL Code
- G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
G15 : Financial Economics→General Financial Markets→International Financial Markets
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
- 4 December 2023
- Policy makers around the world need to move faster to reach net zero emissions by 2050. Latest scenarios are alarming as the foreseeable impact of climate change is worse than previously projected. This ECB Blog post discusses the risks of further delaying the green transition.Details
- JEL Code
- 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
H12 : Public Economics→Structure and Scope of Government→Crisis Management
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
- 3 January 2024
- LETTERS TO MEPS
- 19 December 2023
- RESEARCH BULLETIN - No. 114Details
- Abstract
- This column presents evidence on the role that US monetary policy plays in how fiscal spending affects the economy. A dovish Federal Open Market Committee (FOMC) delays policy rate increases, while a hawkish FOMC tightens monetary policy more promptly, following increased fiscal spending. We show that the dovish response supports fiscal expansions. In contrast, the hawkish response results in a GDP decline but effectively controls inflation expectations.
- JEL Code
- E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
E63 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Comparative or Joint Analysis of Fiscal and Monetary Policy, Stabilization, Treasury Policy
H56 : Public Economics→National Government Expenditures and Related Policies→National Security and War
- 18 December 2023
- WORKING PAPER SERIES - No. 2883Details
- Abstract
- The analysis of contagion in financial networks has primarily focused on transmission channels operating through direct linkages. This paper develops a model of financial contagion in the interbank market featuring both direct and indirect transmission mechanisms. The model is used to analyse how shocks originating from outside sectors impact the functioning of the interbank market and investigates the emergence of instability in this setting. We conduct simulations on actual interbank bilateral exposures, constructed manually from a supervisory dataset reported by the largest euro area banks. We find that while the impact of direct contagion increases gradually with the shock intensity, the effect of indirect contagion is subject to threshold effects and can increase abruptly when the threshold is exceeded. In addition, the risk posed by indirect contagion has a higher upper bound compared to direct contagion. Finally, we find that in terms of overall impact, the shocks to the value of sovereign debt and non-bank financial institutions represent the most significant risk to the functioning of the interbank market.
- JEL Code
- G01 : Financial Economics→General→Financial Crises
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
D85 : Microeconomics→Information, Knowledge, and Uncertainty→Network Formation and Analysis: Theory
- 18 December 2023
- WORKING PAPER SERIES - No. 2882Details
- Abstract
- Using confidential information on banks’ portfolios, inaccessible to market participants, we show that banks that emphasize the environment in their disclosures extend a higher volume of credit to brown borrowers, without charging higher interest rates or shortening debt maturity. These results cannot be attributed to the financing of borrowers’ transition towards greener technologies and are robust to controlling for banks’ climate risk discussions. Examining the mechanisms behind the strategic disclosure choices, we highlight that banks are hesitant to sever ties with existing brown borrowers, especially if they exhibit financial underperformance.
- JEL Code
- G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
G15 : Financial Economics→General Financial Markets→International Financial Markets
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
- 18 December 2023
- EURO AREA MONETARY AND FINANCIAL STATISTICS - QUALITY REPORT
- 18 December 2023
- SURVEY OF MONETARY ANALYSTS - AGGREGATE RESULTS
- 15 December 2023
- LETTERS TO MEPS
- 15 December 2023
- OCCASIONAL PAPER SERIES - No. 336Details
- Abstract
- In this paper we analyse the sensitivity of the macroeconomic outcomes under the Network for Greening the Financial System’s (NGFS’s) Phase III net-zero and delayed transition scenarios to different monetary and fiscal policy settings. In doing so, we provide a rare application of the NGFS climate scenarios to economic assessment through the lens of the macroeconomic modelling frameworks underlying the scenario construction (e.g. NiGEM). Using the model to disentangle the main drivers of the scenarios, we show that gross domestic product (GDP) growth is shaped by physical and transition shocks jointly, whereas transition shocks account for most of the inflationary pressure. As regards alternative policy settings within the model, it turns out that Fiscal recycling options become more discriminant in terms of GDP impact in the medium term. Full recycling through government investment yields the strongest output multiplier, whereas recycling through household transfers or reduced income taxes yields the lowest multiplier. During the transition, euro area macroeconomic variables respond very similarly if two-pillar or price level-targeting monetary policy rules are followed. The Taylor- rule, reacting to inflation and output gap, yields higher and more persistent inflation as well as stronger short-term interest rate increases. These findings are certainly model-specific but do reflect the policy sensitivity embedded of the NGFS scenarios, within the confines of the very model used to build them up.
- JEL Code
- Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
E3 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles
E6 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
D6 : Microeconomics→Welfare Economics
- 14 December 2023
- MACROECONOMIC PROJECTIONS FOR THE EURO AREAEnglishOTHER LANGUAGES (21) +Annexes
- 14 December 2023
- ANNEX
- 28 December 2023
- OTHER PUBLICATION
- 11 December 2023
- OTHER PUBLICATIONEnglishOTHER LANGUAGES (17) +Related
- 11 December 2023
- PRESS RELEASEEnglishOTHER LANGUAGES (17) +
- 6 December 2023
- MACROPRUDENTIAL BULLETIN - FOCUS - No. 23Details
- Abstract
- This box aims at contributing to the discussion on creating more macroprudential space via a higher amount of releasable capital buffers by proposing a simple and broad quantitative indicator to measure effective macroprudential space which takes into account that releasable buffers might be constrained by overlapping parallel capital requirements. The indicator is defined as a measure of effective releasability of capital buffers, expressed as a percentage of banks’ risk weighted assets. The box further highlights both conceptual and practical implication of considering capital overlaps when assessing macroprudential space for macroprudential authorities.
- 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
- 6 December 2023
- MACROPRUDENTIAL BULLETIN - FOCUS - No. 23Details
- Abstract
- This box reviews the objectives and design of the liquidity coverage ratio (LCR) in the Basel Framework. It explains why liquidity regulation was introduced and how it is calibrated to enable banks to withstand a predefined hypothetical stress scenario combining both market-wide and idiosyncratic stress elements. The box also highlights the fact that the LCR is not designed to cover all tail events involving liquidity risk. Based on data for significant euro area (EA) institutions, the box finds that around 92% of all observed net outflow rates for retail deposits were lower than the outflow rates assumed in the LCR between 2016 and 2023. It also shows that ample liquidity buffers helped significant banks in the euro area to withstand the banking stress seen in March 2023 in other jurisdictions. Nevertheless, further analysis, including on the driving factors for some of the outliers observed during stress episodes, could facilitate a better understanding of whether the LCR calibration is working as intended. To anticipate and address extreme tail events (as well as risks) not covered by the LCR, liquidity regulation needs to be complemented by frequent and granular reporting as well as rigorous supervision.
- 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
- 6 December 2023
- MACROPRUDENTIAL BULLETIN - FOCUS - No. 23Details
- Abstract
- This box reviews the final 2017 Basel III reforms, explaining the main elements and their objectives. It provides updates on how the reforms will be transferred into EU legislation via amendments to the Capital Requirements Regulation and the Capital Requirements Directive (CRR3/CRD6), as well as on the state of play of the implementation of the 2017 Basel III reforms in the United States and the United Kingdom. It also serves as a reminder that the reforms will make banks more resilient and will lead to higher GDP in the long run.
- JEL Code
- G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
K20 : Law and Economics→Regulation and Business Law→General
- 6 December 2023
- MACROPRUDENTIAL BULLETIN - ARTICLE - No. 23Details
- Abstract
- This article analyses the European crisis management framework for banks. It concludes that key areas for improvement are the crisis management options for small and medium-sized banks as well as preparedness for systemic crises. The European Commission’s reform proposal represents an opportunity to implement the lessons learned over the last decade.
- JEL Code
- G01, G21, G28 : Financial Economics→General→Financial Crises
- 6 December 2023
- MACROPRUDENTIAL BULLETIN - ARTICLE - No. 23Details
- Abstract
- This article summarises the existing evidence of window dressing and seasonality of data at year-end reporting time for global systemically important banks (G-SIBs). Window dressing and seasonality of data distort the outcome of a point-in-time reporting framework, resulting in misleading bank disclosures, mismeasurement of bank risk, inappropriate capital requirements and misallocation of capital. Reduced activity at certain points in time can also be detrimental to market functioning and has the potential to amplify shocks that coincide with period-ends. These negative consequences are amplified by the global nature of the activities and the systemic risk of the banks concerned. Possible policy options for addressing this phenomenon include different reporting requirements, such as averaging over higher frequency data, to ensure that the measurement of a bank’s contribution to systemic risk and capital allocation is commensurate with its actual risk to the financial system and the real economy throughout the year.
- JEL Code
- G20 : Financial Economics→Financial Institutions and Services→General
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
- 5 December 2023
- WORKING PAPER SERIES - No. 2881Details
- Abstract
- We estimate spillovers from US monetary policy for different measures in the Federal Reserve’s toolkit. We make use of novel measures of exogenous variation in conventional rate policy, forward guidance and large-scale asset purchases (LSAPs) based on high-frequency asset-price surprises around Federal Open Market Committee meetings. The identification relies on relatively weak assumptions and accounts for the possible presence of residual endogenous components—such as central bank information effects—in these monetary policy surprises. We find that: (i) forward guidance and LSAPs trigger much larger spillovers than conventional rate policy; (ii) spillovers transmit predominantly through financial channels centering on global investors’ risk appetite and manifest in changes in equity prices, bond spreads, capital flows and the dollar exchange rate; (iii) LSAPs trigger immediate international portfolio re-balancing between US and advanced-economy bonds, but generally entail only rather limited term premium spillovers;(iv) both forward guidance and LSAPs entail trade-offs for emerging-market-economy central banks, either between stabilizing output and prices or between additionally ensuring financial stability in terms of capital inflows.
- JEL Code
- F42 : International Economics→Macroeconomic Aspects of International Trade and Finance→International Policy Coordination and Transmission
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
C50 : Mathematical and Quantitative Methods→Econometric Modeling→General
- 5 December 2023
- WORKING PAPER SERIES - No. 2880Details
- Abstract
- This paper estimates a fiscal reaction function (FRF) framework for euro area countries to test for the impact of changes in inflation on fiscal policy. We find evidence of non-linear short-term effects of HICP inflation on the primary balance after controlling for other relevant factors. Over the period 1999-2022, we unveil an inverse U-turn relationship and an inflation turning point - beyond which its short-term (contemporaneous) impact on the primary balance starts being negative - at somewhat above 4% for the sample of mature euro area economies (EA-12, first twelve EA members) and around 6% for the whole sample of euro area countries in 2022 (EA-19). Using an alternative measure of “inflation surprise” (available for the period 2003-2022) yields robust results in the larger EA-19 sample and lowers the threshold to just below 5%. In terms of channels, the non-linear effects are found to propagate through both the primary expenditure and the revenue ratio (more robustly through the former) in the EA-12 sample, while only the combined effect on the primary balance seems to prevail for EA-19. These results reflect primarily the most recent high inflation episode and indicate that in such conditions inflation can be costly for public finance flows even in the shorter run.
- JEL Code
- H60 : Public Economics→National Budget, Deficit, and Debt→General
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
C33 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Panel Data Models, Spatio-temporal Models
- 4 December 2023
- OTHER PUBLICATION
- 1 December 2023
- OCCASIONAL PAPER SERIES - No. 335Details
- Abstract
- Biodiversity – the variety of life on Earth – is essential for sustaining the healthy ecosystems that our economy and banks depend on. Despite the clear benefits of a healthy natural world for people and the economy, humanity is putting immense pressure on nature and biodiversity. Economic activities that rely on healthy nature are often responsible for generating environmental pressures. It is important to assess the impact that firms and financial institutions have on nature degradation, in order to reveal their exposure to transition risk and highlight the need to move towards an economic system that values nature, rather than putting it at risk. This study analyses the contribution of euro area economic activities – and the bank loans provided to enable them – to biodiversity loss by estimating biodiversity footprints. The datasets we use account for approximately €4.3 trillion in corporate loans to around 4.2 million companies located in the euro area, issued by more than 2,500 unique consolidated euro area banks. Considering two primary drivers of biodiversity loss (land-use change and climate change), the results show that the economy has had a significant impact on biodiversity, equivalent to the loss of 582 million hectares of “pristine” natural areas worldwide. Even though the impact on biodiversity is highest in Europe, the supply chains of companies are important determinants of their indirect biodiversity footprint worldwide. Asia and Africa have the largest areas impacted by activities that take place in company supply chains. Additionally, financing of economic activities with a high global impact on nature is concentrated: the ten banks with the highest financing share are responsible for financing around 40% of the total global impact of euro area firms. [...]
- JEL Code
- C55 : Mathematical and Quantitative Methods→Econometric Modeling→Modeling with Large Data Sets?
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G38 : Financial Economics→Corporate Finance and Governance→Government Policy and Regulation
Q5 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics
- 28 November 2023
- OCCASIONAL PAPER SERIES - No. 334Details
- Abstract
- We examined the net-zero commitments made by Global Systemically Important Banks (G-SIBs). In recent years, large banks have significantly increased their ambition and now disclose more details regarding their net-zero targets. There is also growing convergence, with the vast majority of G-SIBs now being part of net-zero alliances. Despite this progress, some practices should be further improved. We assessed climate-related risks disclosures publicly available for G-SIBs in 2022. The paper gives an overview about potentially problematic disclosure practices with regards to their net-zero commitments. It identifies and discusses a number of observations, such as the significant differences in sectoral targets used despite many banks sharing the same goal, the widespread use of caveats, the missing clarity regarding exposures to carbon-intensive sectors, the lack of clarity of “green financing” goals, and the reliance on carbon offsets by some institutions. The identified issues may impact banks’ reputation and litigation risk and risk management. The paper explains how the introduction of comparable international rules on climate disclosure and the introduction of transition plans, as envisaged and partly already in place in the European Union, could help mitigate these risks.
- JEL Code
- G2 : Financial Economics→Financial Institutions and Services
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
Q5 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
Interest rates
| Marginal lending facility | 4.75 % |
| Main refinancing operations (fixed rate) | 4.50 % |
| Deposit facility | 4.00 % |
Inflation rate
Inflation dashboardExchange rates
| USD | US dollar | 1.0956 | |
| JPY | Japanese yen | 155.68 | |
| GBP | Pound sterling | 0.86645 | |
| CHF | Swiss franc | 0.9305 |
Financial stability
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