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INTERVIEW

Gender diversity in economics and finance

Diversity of views enriches decision making. In the worlds of economics and finance, there are not enough women at the table for this to happen, President Christine Lagarde explains on Politico’s EU Confidential podcast. She also spoke about equal opportunities and how best to achieve them.

Podcast

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Civil war declaration: On April 14th and 15th, 2012 Federal Republic of Germany "_urkenstaats"s parliament, Deutscher Bundestag, received a antifiscal written civil war declaration by Federal Republic of Germany "Rechtsstaat"s electronic resistance for human rights even though the "Widerstandsfall" according to article 20 paragraph 4 of the constitution, the "Grundgesetz", had been already declared in the years 2001-03. more

INTERVIEW 17 June 2021

Our focus remains on medium-term inflation

Monetary policy does not turn on a dime, Chief Economist Philip R. Lane tells Bloomberg TV. He also discusses why it is unnecessary and premature to talk about the end of the PEPP and why not to compare monetary policy in the US and Europe.

Interview
PODCAST 16 June 2021

Financial stability in the wake of the third wave

What does financial stability have to do with cycling and zombies? How has the third wave of the pandemic affected the financial system? What risks lie ahead? Our host Katie Ranger discusses these questions with our financial stability experts Tamarah Shakir and John Fell.

The ECB Podcast
YOUTH INITIATIVES 18 June 2021

#EuropeDay quiz competition winners

Congratulations to the ten winners of our ECB-QuizDuel competition, who proved they are true euro experts! Missed the competition? Learn more about the correct answers to some of the quiz questions.

More on the quiz
18 June 2021
PRESS RELEASE
18 June 2021
BALANCE OF PAYMENTS (MONTHLY)
11 June 2021
EURO AREA SECURITIES ISSUES STATISTICS
10 June 2021
MONETARY POLICY DECISION
8 June 2021
WEEKLY FINANCIAL STATEMENT
Annexes
8 June 2021
WEEKLY FINANCIAL STATEMENT - COMMENTARY
16 June 2021
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 ECB-EBRD joint conference on “Emerging climate-related risk supervision and implications for financial institutions”
15 June 2021
Keynote speech by Fabio Panetta, Member of the Executive Board of the ECB, at the Deutsche Bundesbank’s 5th International Cash Conference – “Cash in times of turmoil”
English
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14 June 2021
Welcome address by Isabel Schnabel, Member of the Executive Board of the ECB, at the ECB DG-Research Symposium “Climate change, financial markets and green growth”
10 June 2021
Christine Lagarde, President of the ECB, Luis de Guindos, Vice-President of the ECB, Frankfurt am Main, 10 June 2021
3 June 2021
Speech by Frank Elderson, Chair of the Central Banks and Supervisors Network for Greening the Financial System, Member of the Executive Board and Vice-Chair of the Supervisory Board of the ECB, at The Green Swan Conference – Coordinating finance on climate
17 June 2021
Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Paul Gordon on 17 June 2021
14 June 2021
Interview with Christine Lagarde, President of the ECB, conducted by Johanna Treeck and Florian Eder on 11 June 2021 in Frankfurt
28 May 2021
Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Balazs Koranyi, Frank Siebelt and Francesco Canepa
26 May 2021
Interview with Fabio Panetta, Member of the Executive Board of the ECB, conducted by Jun Ishikawa
English
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10 May 2021
Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Eric Albert and Marie Charrel
English
OTHER LANGUAGES (1) +
Select your language
11 May 2021
Blog post by Fabio Panetta, Member of the Executive Board of the ECB
Details
Summary
Climate change and sustainability are global challenges that require global solutions, especially in the financial sector, writes Executive Board member Fabio Panetta. We need international disclosure standards and principles to categorise sustainable activities.
1 April 2021
Blog post by Philip R. Lane, Member of the Executive Board of the ECB
Details
Summary
The recent volatility of inflation can largely be attributed to the nature of the pandemic shock, writes Chief Economist Philip R. Lane. The increase in inflation during early 2021 does not constitute the basis for a sustained shift in inflation dynamics.
25 March 2021
Blog post by Fabio Panetta, Member of the Executive Board of the ECB, and Ulrich Bindseil, ECB Director General Market Infrastructure and Payments
English
OTHER LANGUAGES (3) +
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Summary
At the ECB we are committed to understanding people’s needs and ensuring the digital euro would be widely accepted, writes Executive Board member Fabio Panetta with Ulrich Bindseil in The ECB Blog.
22 March 2021
Blog post by Christine Lagarde, President of the ECB
Details
Summary
Our pandemic emergency purchase programme (PEPP) has provided crucial support to euro area citizens since its launch a year ago, writes President Christine Lagarde in The ECB Blog. The PEPP has been, and remains, at the core of our pandemic policy response.
18 March 2021
Blog post by Luis de Guindos, Vice-President of the ECB
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Summary
The damage caused by more frequent and severe natural disasters far exceeds the costs of transitioning to a greener economy, writes Vice-President Luis de Guindos in his ECB Blog post on our first climate stress test for banks and companies.
18 June 2021
SURVEY OF MONETARY ANALYSTS AGGREGATE RESULTS
18 June 2021
WORKING PAPER SERIES - No. 2568
Details
Abstract
In this paper we explore the cross-country implications of climate-related mitigation policies. Specifically, we set up a two-country, two-sector (brown vs green) DSGE model with negative production externalities stemming from carbon-dioxide emissions. We estimate the model using US and euro area data and we characterize welfare-enhancing equilibria under alternative containment policies. Three main policy implications emerge: i) fiscal policy should focus on reducing emissions by levying taxes on polluting production activities; ii) monetary policy should look through environmental objectives while standing ready to support the economy when the costs of the environmental transition materialize; iii) international cooperation is crucial to obtain a Pareto improvement under the proposed policies. We finally find that the objective of reducing emissions by 50%, which is compatible with the Paris agreement's goal of limiting global warming to below 2 degrees Celsius with respect to pre-industrial levels, would not be attainable in absence of international cooperation even with the support of monetary policy.
JEL Code
F42 : International Economics→Macroeconomic Aspects of International Trade and Finance→International Policy Coordination and Transmission
E50 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→General
E60 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→General
F30 : International Economics→International Finance→General
18 June 2021
WORKING PAPER SERIES - No. 2567
Details
Abstract
Borrower-based macroprudential (MP) policies - such as caps on loan-to-value (LTV) ratios and debt-service-to-income (DSTI) limits - contain the build-up of systemic risk by reducing the probability and conditional impact of a crisis. While LTV/DSTI limits can increase inequality at introduction, they can dampen the increase in inequality under adverse macroeconomic conditions. The relative size of these opposing effects is an empirical question. We conduct counterfactual simulations under different macroeconomic and macroprudential policy scenarios using granular income and wealth data from the Households Finance and Consumption Survey (HFCS) for Ireland, Italy, Netherlands and Portugal. Simulation results show that borrower-based measures have a moderate negative welfare impact in terms of wealth inequality and a negligible impact on income inequality.
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
G51 : Financial Economics
14 June 2021
WORKING PAPER SERIES - No. 2566
Details
Abstract
We use microdata to estimate the strength of price selection { a key metric for the effect of monetary policy on the real economy. We propose a product-level proxy for mispricing and assess whether products with larger mispricing respond with a higher probability to identified monetary and credit shocks. We find that they do not, suggesting selection is absent. Instead, we detect state-dependent adjustment on the gross extensive margin. Our results are broadly consistent with second-generation state-dependent pricing models and sizable effects of monetary policy on the real economy.
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
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
10 June 2021
MACROECONOMIC PROJECTIONS FOR THE EURO AREA
Annexes
4 June 2021
OTHER PUBLICATION
2 June 2021
THE INTERNATIONAL ROLE OF THE EURO
Annexes
2 June 2021
THE INTERNATIONAL ROLE OF THE EURO
2 June 2021
WORKING PAPER SERIES - No. 2565
Details
Abstract
Macro-prudential authorities need to assess medium-term downside risks to the real economy, caused by severe financial shocks. Before activating policy measures, they also need to consider their short-term negative impact. This gives rise to a risk management problem, an inter-temporal trade-off between expected growth and downside risk. Predictive distributions are estimated with structural quantile vector autoregressive models that relate economic growth to measures of financial stress and the financial cycle. An empirical study with euro area and U.S. data shows how to construct indicators of macro-prudential policy stance and to assess when interventions may be beneficial.
JEL Code
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
C33 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Panel Data Models, Spatio-temporal Models
1 June 2021
WORKING PAPER SERIES - No. 2564
Details
Abstract
This paper provides new empirical evidence that bears on the efficacy of unconventional monetary policies when the main policy rate is negative. When a negative interest rate policy (NIRP) is deployed in concert with rate forward guidance (FG) and quantitative easing (QE), the identification of the impacts of these unconventional instruments of monetary policy is challenging. We propose a novel identification approach that seeks to overcome this challenge by combining a dense, controlled event study with forward curve counterfactuals that we construct using predictive rate densities derived from rate options. We find that NIRP has exerted a sizeable influence on the term structure of interest rates throughout maturities while, on net, the impact of rate FG has been more muted. QE explains the lion’s share of yield effects, particularly over the back end of the yield curve. We then feed these rate counterfactuals into a large-scale Bayesian VAR and generate alternative histories for the euro area macro-economy that one would likely have observed between 2013 and 2020 in no-NIRP (with or without FG) and in no-QE regimes. According to this conditional forecasting exercise, in 2019 GDP growth and annual inflation would have been 1.1 p.p. and 0.75 p.p. lower, respectively, and the unemployment rate 1.1 p.p. higher than they actually were, had the ECB abstained from using NIRP, FG and QE over the previous six years or so.
JEL Code
C32 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Time-Series Models, Dynamic Quantile Regressions, Dynamic Treatment Effect Models, Diffusion Processes
C54 : Mathematical and Quantitative Methods→Econometric Modeling→Quantitative Policy Modeling
C58 : Mathematical and Quantitative Methods→Econometric Modeling→Financial Econometrics
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
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
1 June 2021
WORKING PAPER SERIES - No. 2563
Details
Abstract
By focusing on the cost conditions at issuance, I find that not only the Covid-19 pandemic effects were different across bonds and firms at different stages, but also that the market composition was significantly affected, collapsing on investment-grade bonds, a segment in which the share of bonds eligible to the ECB corporate programmes strikingly increased from 15% to 40%. Contemporaneously, the high-yield segment shrunk to almost disappear at 4%. Another source of risk detected in the pricing mechanism is the weak resilience to pandemic: the premium requested is around 30 bp and started to be priced only after the early containment actions taken by the national authorities. On the contrary, I do not find evidence supporting an increased risk for corporations headquartered in countries with a reduced fiscal space, nor the existence of a premium in favour of green bonds, which should be the backbone of a possible “green recovery”.
JEL Code
G15 : Financial Economics→General Financial Markets→International Financial Markets
G32 : Financial Economics→Corporate Finance and Governance→Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms, Goodwill
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy

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

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Last update: Friday, 18 June 2021 Euro foreign exchange rates