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ANNIVERSARY

Our 25th anniversary

Together with distinguished guests from across Europe, we celebrated our 25th anniversary in Frankfurt. Visit our hub page to find out more.

Commemorating 25 years of the ECB

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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

PUBLICATION 30 May 2023

The interplay of market and funding liquidity

Market liquidity and funding liquidity are inherently connected, and related liquidity spirals can entail systemic risk. A special feature in our Financial Stability Review explores how the two types of liquidity interact in the euro area.

Article
PUBLICATION 30 May 2023

Banks and non-bank financial institutions

Euro area banks are exposed to liquidity, market and credit risk through linkages to non-bank financial institutions. These links are concentrated in a small group of systemically important banks, whose strong capital and liquidity buffers can help ease spillover risks.

Article
THE ECB BLOG 25 May 2023

Carbon pricing: what effect will it have?

Putting a price on carbon emissions is central to the EU reaching its climate goals. But how will this affect the euro area economy? The latest ECB Blog post looks at how macroeconomic models can predict what higher prices for carbon emissions will mean for growth and inflation.

Read the post
30 May 2023
WEEKLY FINANCIAL STATEMENT
Annexes
30 May 2023
WEEKLY FINANCIAL STATEMENT - COMMENTARY
30 May 2023
MONETARY DEVELOPMENTS IN THE EURO AREA
Annexes
26 May 2023
OTHER GOVERNING COUNCIL DECISION
26 May 2023
PRESS RELEASE
24 May 2023
EURO AREA INVESTMENT FUNDS
26 May 2023
Panel discussion by Philip R. Lane, Member of the Executive Board of the ECB, at the 29th Dubrovnik Economic Conference
25 May 2023
Introductory remarks by Luis de Guindos, Vice-President of the ECB, at the ECON Committee of the European Parliament
24 May 2023
Opening remarks by Christine Lagarde, President of the ECB, at the celebration to mark the 25th anniversary of the ECB
23 May 2023
Speech by Luis de Guindos, Vice-President of the ECB, at the Association for Financial Markets in Europe (AFME) and Official Monetary and Financial Institutions Forum (OMFIF) 3rd Annual European Financial Integration Conference
19 May 2023
Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Conference on Financial Stability and Monetary Policy in the honour of Charles Goodhart
Annexes
19 May 2023
24 May 2023
Interview with Fabio Panetta, Member of the Executive Board of the ECB, conducted by Karl de Meyer
English
OTHER LANGUAGES (2) +
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14 May 2023
Interview with Luis de Guindos, Vice-President of the ECB, conducted by Isabella Bufacchi
English
OTHER LANGUAGES (1) +
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10 May 2023
Interview with Christine Lagarde, President of the ECB, conducted by Shogo Akagawa on 8 May 2023
25 April 2023
Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Eric Albert on 18 April 2023
English
OTHER LANGUAGES (1) +
Select your language
24 April 2023
Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Johanna Treeck on 20 April 2023
25 May 2023
Carbon pricing is a central instrument in the EU’s fight against climate change, but it will also affect our economies. In this post on The ECB Blog, we use macroeconomic models to look at what higher prices for carbon emissions will do to growth and inflation.
Details
JEL Code
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
24 May 2023
The euro is more than a currency, says President Christine Lagarde. It is the strongest form of European integration and stands for a united Europe that works together, protecting and benefiting all its citizens. The ECB, with its commitment to price stability, will always be a cornerstone of that effort.
19 May 2023
At times, media reports on ECB monetary policy refer to information from unidentified Eurosystem sources. This ECB Blog post takes a closer look at such leaks. They tend to go against prevailing trends in short-term rates and can trigger major market reactions even though they are not generally informative about upcoming decisions.
Details
JEL Code
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
9 May 2023
Diversity is a matter of sound governance for banks and leads to better decision-making. That is why Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, and Elizabeth McCaul, Member of the Supervisory Board of the ECB, are encouraging banks to improve the diversity of their boards.
Details
JEL Code
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
O16 : Economic Development, Technological Change, and Growth→Economic Development→Financial Markets, Saving and Capital Investment, Corporate Finance and Governance
24 April 2023
The EU has a problem with climate catastrophe insurance: only a quarter of the losses from climate-related disasters are covered. Greater coverage could reduce the economic damage that results from them. This joint ECB-EIOPA post for The ECB Blog looks at ways to make this happen.
Details
JEL Code
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
30 May 2023
FINANCIAL STABILITY REVIEW - ARTICLE
Financial Stability Review Issue 1, 2023
Details
Abstract
Banks are connected to non-bank financial intermediation (NBFI) sector entities via loans, securities and derivatives exposures, as well as funding dependencies. Linkages with the NBFI sector expose banks to liquidity, market and credit risks. Funding from NBFI entities would appear to be the most likely and strongest spillover channel, considering that NBFI entities maintain their liquidity buffers primarily as deposits and very short-term repo transactions with banks. At the same time, direct credit exposures are smaller and are often related to NBFI entities associated with banking groups. Links with NBFI entities are highly concentrated in a small group of systemically important banks, whose sizeable capital and liquidity buffers are essential to mitigate spillover risks.
JEL Code
G21, G22, G23 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
30 May 2023
SURVEY OF MONETARY ANALYSTS
30 May 2023
FINANCIAL STABILITY REVIEW - ARTICLE
Financial Stability Review Issue 1, 2023
Details
Abstract
The ability of market participants to access funding and conduct transactions in an efficient way is a prerequisite for financial stability, providing shock-absorption capacity and, in turn, limiting the scope for shock amplification. Market liquidity and funding liquidity are inherently connected. When market liquidity evaporates, financial market pricing becomes less reliable and tends to overreact, leading to increased market volatility and higher funding costs. Funding liquidity enables market participants to take exposures onto their balance sheets, thus absorbing fluctuations in demand and supply in the name of efficient market functioning. Under extreme conditions, markets can stop functioning altogether. While liquidity has many dimensions, from a systemic perspective the interplay between market liquidity and funding liquidity is key, as these two dimensions can reinforce each other in ways that generate liquidity spirals. Cyclical factors such as the business cycle, systemic leverage and monetary and fiscal policy affect the probability of liquidity stress arising. In the light of the current challenges of high financial market volatility, increased risk of recession, bouts of heightened risk aversion and monetary policy normalisation, this special feature constructs composite indicators for market liquidity and funding liquidity. It attempts also to identify the causes of poor market and funding liquidity conditions and to show how the two dimensions interact in the euro area.
JEL Code
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
G15 : Financial Economics→General Financial Markets→International Financial Markets
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
26 May 2023
MEP LETTER
26 May 2023
OTHER PUBLICATION
Annexes
26 May 2023
PRESS RELEASE
26 May 2023
CARD FRAUD REPORT
26 May 2023
RESEARCH BULLETIN - No. 107
Details
Abstract
At the onset of the outbreak of the coronavirus (COVID-19) pandemic, 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 recommendationon 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 pandemic-related 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 greater for small and medium-sized enterprises and for firms operating in sectors more vulnerable to the effects of the pandemic. 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
25 May 2023
OTHER PUBLICATION
25 May 2023
OTHER PUBLICATION
25 May 2023
ANNUAL REPORT
24 May 2023
WORKING PAPER SERIES - No. 2822
Details
Abstract
This paper empirically investigates the effect of the EU-South Korea free trade agreement (FTA) on manufacturing trade flows. By applying a state-of-the-art structural gravity model with intranational (i.e., domestic) trade and using disaggregated data, we quantify both the trade impact and the observed heterogeneity in the FTA estimates. In line with literature, we find that the FTA exerted asymmetric effects in bilateral exports across directions of trade. Compared to previous studies, our findings suggest a different explanation for the poor performances of Korean exports to the EU in the post-FTA period, namely offshoring patterns in electronics and a broad-based decline in the shipbuilding industry. When we drop these two export categories from the analysis, we show that the FTA exerted a large effect on trade in both directions, increasing bilateral exports by about 30 percent. We then investigate heterogeneity in pair-industry-specific estimates of the FTA. The main source of variation is represented by asymmetries in ex ante trade barriers across sectors, with a prominent role for non-tariff instruments. Stronger pre-FTA regulatory intensity is associated to a high liberalization potential, favouring larger FTA estimates.
JEL Code
F10 : International Economics→Trade→General
F13 : International Economics→Trade→Trade Policy, International Trade Organizations
F14 : International Economics→Trade→Empirical Studies of Trade
23 May 2023
WORKING PAPER SERIES - No. 2821
Details
Abstract
Understanding of the macroeconomic effects of climate change is developing rapidly, but the implications for past and future inflation remain less well understood. Here we exploit a global dataset of monthly consumer price indices to identify the causal impacts of changes in climate on inflation, and to assess their implications under future warming. Flexibly accounting for heterogenous impacts across seasons and baseline climatic and socio-economic conditions, we find that increased average temperatures cause non-linear upwards inflationary pressures which persist over 12 months in both higher- and lower-income countries. Projections from state-of-the-art climate models show that in the absence of historically un-precedented adaptation, future warming will cause global increases in annual food and headline inflation of 0.92-3.23 and 0.32-1.18 percentage-points per year respectively, under 2035 projected climate (uncertainty range across emission scenarios, climate models and empirical specifications), as well as altering the seasonal dynamics of inflation. Moreover, we estimate that the 2022 summer heat extreme increased food inflation in Europe by 0.67 (0.43-0.93) percentage-points and that future warming projected for 2035 would amplify the impacts of such extremes by 50%. These results suggest that climate change poses risks to price stability by having an upward impact on inflation, altering its seasonality and amplifying the impacts caused by extremes.
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
C33 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Panel Data Models, Spatio-temporal Models
23 May 2023
WORKING PAPER SERIES - No. 2820
Details
Abstract
This paper analyses the impact of changes in environmental regulations on productivity growth at country- and firm-level. We exploit several data sources and the environmen-tal policy stringency index, to evaluate the Porter hypothesis, according to which firms’ productivity can benefit from more stringent environmental policies. By using panel local projections, we estimate the regulatory impact over a five-year horizon. The identification of causal impacts of regulatory changes is achieved by the estimation of firms’ CO2 emissions via a machine learning algorithm. At country- and firm-level, policy tightening affects high-polluters’ productivity negatively and stronger than their less-polluting peers. However, among high-polluting firms, large ones experience positive total factor productivity growth due to easier access to finance and greater innovativeness. Hence, we do not find support for the Porter hypothesis in general. However for technology support policies and firms with the required resources, policy tightening can enhance productivity.
JEL Code
O44 : Economic Development, Technological Change, and Growth→Economic Growth and Aggregate Productivity→Environment and Growth
Q52 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Pollution Control Adoption Costs, Distributional Effects, Employment Effects
Q58 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Government Policy
19 May 2023
ECONOMIC BULLETIN
19 May 2023
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 3, 2023
Details
Abstract
The euro area’s population is projected to continue ageing and to shrink significantly over the coming generations. The coronavirus (COVID-19) pandemic and the influx of migrants are leaving a mark on the short and medium-term demographic outlook for the euro area compared with the 2019 population projections. This box shows that the resulting demographic outlook is expected to have some positive impact on the growth outlook and to ease the cost-of-ageing pressures on public finances. Overall, however, demographic trends continue to pose significant challenges to the euro area economy, and these challenges should be addressed in a timely manner.
JEL Code
R23 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Household Analysis→Regional Migration, Regional Labor Markets, Population, Neighborhood Characteristics
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
H50. : Public Economics→National Government Expenditures and Related Policies→General
19 May 2023
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 3, 2023
Details
Abstract
On 22 February 2023 Eurostat released data on government expenditure for the year 2021 according to the Classification of the Functions of Government (COFOG). These data provide information on the functional composition of government spending in countries across the euro area. The ratio of euro area public expenditure to GDP has increased substantially over recent years, from 46.9% in 2019 to 52.6% in 2021. This increase in spending was primarily in the categories of economic affairs, social protection and health, and reflects the introduction of government measures to mitigate the effects of the COVID-19 pandemic on the economy.
JEL Code
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
H11 : Public Economics→Structure and Scope of Government→Structure, Scope, and Performance of Government
H20 : Public Economics→Taxation, Subsidies, and Revenue→General
H23 : Public Economics→Taxation, Subsidies, and Revenue→Externalities, Redistributive Effects, Environmental Taxes and Subsidies
H50 : Public Economics→National Government Expenditures and Related Policies→General
19 May 2023
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 3, 2023
Details
Abstract
The increase in consumer goods price inflation in the euro area over the last two years was preceded by a sharp rise in producer prices. Producer price indices (PPIs) capture the prices of goods at the time when these goods leave factory gates. Simple correlation analysis suggests that the strength of the link between producer and consumer price indices can vary over time. Indicators of producer price pressures on consumer price inflation (IPPIs) are constructed using dynamic impulse responses of consumer prices to changes in producer prices (elasticities), obtained with the local projections (LP) estimation method. The IPPIs based on these elasticities and actual PPI data suggest a significant increase in underlying cost pressures over the course of 2022. The level of these pressures remained high for both non-food consumer goods and food products in early 2023. Overall, IPPIs can help to assess the strength and direction of the underlying pressures on NEIG and food prices, but they remain subject to several caveats.
JEL Code
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E37 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Forecasting and Simulation: Models and Applications
19 May 2023
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 3, 2023
Details
Abstract
This box provides empirical evidence on the role of the recent energy price shock in affecting price competitiveness and euro area export performance. At the aggregate level, an analysis based on a structural vector autoregression (SVAR) shows that the chief drivers of export dynamics in the past two years have been shifts in global demand conditions and the effects of supply bottlenecks. The energy supply shock has played a relatively minor role in dampening overall export growth, lowering it by about one percentage point on average over the past year. However, the energy shock may have played a greater role in more exposed sectors, as euro area exports have decreased strongly in high energy-intensive sectors over the past year. Indicators based on relative prices point to a loss of competitiveness for the euro area during 2022. The medium-term outlook for euro area competitiveness may deteriorate further on account of structural changes in energy costs because of the diversification of gas sources and the energy transition, which may lead to higher input costs for euro area exporters compared with their foreign competitors.
JEL Code
F1 : International Economics→Trade
19 May 2023
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 3, 2023
Details
Abstract
Large-scale transfers of intellectual property products (IPP) conducted by multinational enterprises in Ireland are increasingly affecting euro area output, investment and trade measures. At the time of transfer, the within-quarter impact of these inflows tends to be neutral for euro area real GDP growth, as IPP transfers are often accompanied by services imports of equal size. However, in subsequent quarters these inflows typically have a positive effect on euro area GDP growth, as they boost both the capital stock and future export streams.
JEL Code
E01 : Macroeconomics and Monetary Economics→General→Measurement and Data on National Income and Product Accounts and Wealth, Environmental Accounts
E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
F23 : International Economics→International Factor Movements and International Business→Multinational Firms, International Business
F43 : International Economics→Macroeconomic Aspects of International Trade and Finance→Economic Growth of Open Economies
F62 : International Economics→Economic Impacts of Globalization→Macroeconomic Impacts
17 May 2023
WORKING PAPER SERIES - No. 2819
Details
Abstract
We use scenario analysis to assess the macroeconomic effects of carbon transition policies aimed at mitigating climate change. To this end, we employ a version of the ECB’s New Area-Wide Model (NAWM) augmented with a framework of disaggregated energy production and use, which distinguishes between “dirty” and “clean” energy. Our central transition scenario is that of a permanent increase in carbon taxes, which are levied as a surcharge on the price of dirty energy. Our findings suggest that increasing euro area carbon taxes to an interim target level consistent with the transition to a net-zero economy entails a transitory rise in inflation and a lasting, albeit moderate decline in GDP. We show that the short and medium-term effects depend on the monetary policy reaction, on the path of the carbon tax increase and on its credibility, while expanding clean energy supply is key for containing the decline in GDP. Undesirable distributional effects can be addressed by redistributing the fiscal revenues from the carbon tax increase to low-income households.
JEL Code
C54 : Mathematical and Quantitative Methods→Econometric Modeling→Quantitative Policy Modeling
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
H23 : Public Economics→Taxation, Subsidies, and Revenue→Externalities, Redistributive Effects, Environmental Taxes and Subsidies
Q43 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Energy→Energy and the Macroeconomy

Interest rates

Marginal lending facility 4.00 %
Main refinancing operations (fixed rate) 3.75 %
Deposit facility 3.25 %
10 May 2023 Past key ECB interest rates

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