European Central Bank – Publications

11 February 2025By Marinela-Daniela Filip, Daphne Momferatou and Susana Parraga-Rodriguez At the heart of the euro area’s competitiveness challenges lies weak productivity growth. The ECB Blog looks at how this makes it more difficult to carry out monetary policy. While companies in the euro area are getting more productive, they are doing so at a much slower pace than their competitors. Weak productivity growth is putting monetary policy in a…

5 March 2025By Stefan Gebauer, Georgios Georgiadis, Fédéric Holm-Hadulla and Thomas KostkaThe monetary policies of the ECB and the US Federal Reserve are not always in sync. But how does the Fed’s policy affect the euro area economy? This ECB Blog looks at how monetary policy in the United States travels across the Atlantic and what this means for the ECB.The global economy is interconnected. Central banks’ monetary policies therefore…

1 February 2025Christine Lagarde, President of the European Central Bank, and Ursula von der Leyen, President of the European CommissionRemaining competitive is fundamental for Europe’s future. We need faster economic growth and higher productivity to protect the quality of life for Europeans – from their jobs and incomes to their security and welfare.Europe must act. Our competitiveness is at risk. While a global revolution in artificial intelligence unfolds, the EU…

20 January 2025By Luis de Guindos, Vice-President of the ECB, and Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECBStress tests are of crucial importance to assess banks’ resilience under adverse economic conditions. In previous stress tests, however, some banks submitted overly optimistic projections. Despite thorough quality assurance by supervisors, this behaviour makes it more likely that the risks some…

15 January 2025By Matteo Ciccarelli, Matthieu Darracq Pariès, Bettina Landau and João SousaCentral banks project future developments based on past data patterns and a set of assumptions. Crises can change economic structures, complicating this forecasting. The ECB Blog explains how scenario, risk and sensitivity analyses address the new uncertainty.We use economic models and data patterns from the past to project the future. In normal times, assessing what conditions will be…

10 January 2025By Arnaud DyèvreThis is the third post in our series featuring work submitted to the ECB’s 2024 Young Economist Prize. Arnaud Dyèvre was selected as one of the finalists with the research highlighted in this post. Applications for the 2025 Prize will be open from 13 January to 12 February 2025. For more details, go to the dedicated webpage.Investments in R&D typically foster productivity growth. But the funding…

8 January 2025By Morgane RichardThis is the second post in our series featuring work submitted to the ECB’s 2024 Young Economist Prize. Morgane Richard was selected as one of the finalists with the research highlighted in this post. Applications for the 2025 Prize will be open from 13 January to 12 February 2025. For more details, go to the dedicated webpage.The rise of working-from-home during the pandemic dramatically changed the…

6 January 2025By Tsvetelina NenovaThis is the first post in our series featuring the work of the ECB’s 2024 Young Economist Prize finalists. Tsvetelina Nenova won with the research highlighted in this post.When returns on safe assets fall, investors move some of their money to riskier assets. This ECB Blog shows: US Treasuries are replaced by global bonds, while substitutes for Bunds are mostly from Europe. This effect is smaller…

18 December 2024By Colm Bates, Vasco Botelho, Sarah Holton, Marc Roca I Llevadot and Mirko StanislaoThe growth of negotiated wages is expected to ease in 2025. This is the information emerging from the ECB wage tracker, which we will publish on a regular basis from now on. The ECB Blog explains the tool and how it can help monitor wage pressures in the euro area.Wages are an important driver of…

16 December 2024By Stefan Gebauer, Thomas McGregor and Sebastiaan PoolThough overall inflation has come down a lot, domestic inflation remains stubbornly high. This is typical for monetary policy tightening cycles. To understand why, The ECB Blog looks at how monetary policy is transmitted to wages, profits and productivity.In response to surging inflation, the ECB decisively raised interest rates and tightened its policy stance. Inflation in the euro area has since…

3 December 2024By Daniela Filip, Klaus Masuch, Ralph Setzer and Vilém Valenta At the height of the financial crisis Greece, Ireland, Portugal and Cyprus needed help. The international assistance came under the condition of economic adjustment aiming to restore financial stability, debt sustainability and growth. How did the four countries recover from their crises?Many euro area countries experienced fiscal troubles and financial stress during the crisis years, especially during the…

28 November 2024By François Haas, Cornelia Holthausen and Vasileios Madouros[1]The European Commission is seeking the views of stakeholders on policies to guard against the build-up of systemic risk in the financial sector beyond banks. This ECB Blog post describes the pillars of a macroprudential approach for the so-called non-bank financial sector and explains the need to further develop the policy framework.Since the global financial crisis, a key development in the…

19 November 2024By Luis de GuindosMeeting the EU’s climate neutrality targets calls for deep structural changes and significant private funding, requiring a healthy financial system. That’s why we’ve tested how resilient banks, investment funds and insurers are to stresses arising during the green transition. ECB Vice-President Luis de Guindos explains the findings.Achieving a carbon-neutral European Union by 2050 will require a resilient financial sector to provide the funding for the…

14 November 2024 By Yıldız Akkaya, John Hutchinson, Kasper Jørgensen and Emanuel SkeppåsThe Eurosystem has started to reduce its bond holdings. This ECB Blog post investigates how strongly the shrinking balance sheet affects long-term interest rates. Estimates based on the Survey of Monetary Analysts suggest: an expected €1 trillion reduction in bond holdings may raise long-term risk-free interest rates by about 35 bps.The ECB reacted forcefully in response to the…

12 November 2024Christine LagardeComplacency in fighting climate change and preserving biodiversity is endangering our economic survival. The longer we wait, the higher the costs will be. Christine Lagarde, President of the European Central Bank, warns of the growing gap between the commitments made and the investment needed.We’ve all heard it time and again: either we tackle climate change and safeguard nature, or we face the steep price of our inaction.…

1 November 2024By Piero CipolloneAs they juggle various cards, apps and devices, most Europeans find that digital payments have fallen short of their promise to provide a convenient euro area-wide solution. The ECB’s Piero Cipollone explains how a digital euro would blend the simplicity of cash with digital convenience. Twenty-five years ago, the introduction of the euro transformed Europe. For the first time, people in different countries were using the…

24 October 2024By Matthias RumpfPeople have tended to be quite hesitant to trust banks abroad. That seems to be changing. In a post featuring interactive charts for you to explore, The ECB Blog shows that cross-border bank deposits of private households have picked up recently. To what extent are euro area households making use of cross-border deposits? Are households in smaller countries more likely to open accounts abroad and, if…

9 October 2024By Dennis Essers, Laura Lebastard, Michele Mancini, Ludovic Panon and Jacopo TiminiChina has been an important and reliable supplier of critical inputs for European industries for decades. But how vulnerable would our companies be if that suddenly stopped? The ECB Blog estimates the potential losses in value added for manufacturers in five countries. China is the top provider of Foreign Critical Inputs (FCIs) to the EU’s industries. So…

3 October 2024By Lorenzo Baldassarri, Dimitris Georgarakos, Geoff Kenny and Justus MeyerMonetary policy decisions have direct financial consequences for many consumers, especially as they influence mortgage conditions. The ECB Blog looks at how these effects differ based on consumers’ mortgage situations and why that matters for the transmission of monetary policy.Consumers’ expectations about real interest rates influence their decisions about saving, borrowing and investment. What really matters to people, according…

25 September 2024By Ema Ivanova[1], Thomas McGregor, Stefano Nardelli[2] and Annukka RistiniemiThe views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.The job of central banks is to help the economy navigate shocks and steer inflation back to target. This ECB Blog post asks what we can learn from past monetary policy cycles about…

23 September 2024By Federico Maria Ferrara, Tobias Linzert, Benoit Nguyen, Imène Rahmouni-Rousseau, Marta Skrzypińska and Lia Vaz Cruz[1]Hedge funds have substantially increased their trading activity in euro area government bond and repo markets. The ECB Blog evaluates how this plays out for market functioning and intermediation. Government bonds are central to the broader landscape of financial markets. As high-quality liquid assets, they are an essential component in investor portfolios, and…

17 September 2024By Gert Bijnens, Cédric Duprez[1] and John Hutchinson Energy-intensive firms continue to suffer from low profits margins even as energy prices have fallen from their peak. The ECB Blog discusses implications for the green transition in the EU. Skyrocketing energy prices during the recent crisis ate into most firms’ profit margins across all industries. Using Belgian data, we find that many firms regained profitability when prices fell again.…

3 September 2024By Alexander Al-Haschimi, Lorenz Emter, Vanessa Gunnella, Iván Ordoñez Martínez, Tobias Schuler and Tajda SpitalEuro area exporters are facing tougher competition from China. But why is that? The ECB Blog looks at the important role played by price competitiveness and the ongoing industrial upgrades being made in China.Euro area manufacturers have long benefited from Chinese exports, such as using cheap parts to produce their own finished products. In…

15 August 2024By Evangelos Charalambakis, Omiros Kouvavas and Pedro NevesHow quickly do consumers react to rate hikes? The answer depends in part on how much they know about financial matters. This ECB Blog post shows that the better informed they are, the quicker their reaction.When central banks raise interest rates they aim to dampen demand in the economy, which ultimately helps keep inflation at bay. Consumers are key for that.…

31 July 2024By Stefan Gebauer, Thomas McGregor and Julian SchumacherCentral banks choose their words very carefully. And rightly so – policy makers’ wording can move markets and, eventually, the economy. This ECB Blog post shows how unexpected changes in communication influence growth and inflation.Central banks need to communicate clearly. This helps the public understand the rationale behind monetary policy decisions and shape market expectations. Their statements sometimes provide explicit forward…

23 July 2024By Svetla Daskalova, Federico Maria Ferrara, Pedro Formoso da Silva, Pamina Karl and Thomas Vlassopoulos[1]Repo markets are vital for banks to source liquidity and securities. They also represent an essential link in the monetary policy transmission chain. While the Eurosystem is in the process of reducing its market footprint, repo markets are going through a phase of change. The ECB Blog looks at dynamics in this market.Monetary policy…

10 July 2024By Jakob Feveile Adolfsen, Danielle Kedan and Marie-Sophie LappeThe green transition will significantly increase demand for key minerals over the coming decades. The impact on energy prices will ultimately depend on how supply adjusts. The ECB Blog looks at the geopolitical risks involved. The green transition relies on certain key minerals, in particular lithium, copper, nickel, cobalt, manganese, and graphite. Assuming that the transition takes place in accordance…

4 July 2024By Ursel Baumann, Annalisa Ferrando, Dimitris Georgarakos, Yuriy Gorodnichenko, Judit Rariga and Timo Reinelt Firms’ inflation expectations are key for monetary policy makers. The ECB Blog presents new survey data on these expectations, evidence on what influences them, how they change when new information becomes available, and if they matter for the plans and choices firms make. Setting prices, negotiating wages, deciding how much to invest or how…

27 June 2024By Othman Bouabdallah, Ettore Dorrucci, Lucia Hoendervangers and Carolin NerlichEurope needs trillions of euros to manage climate change, become digital and defend itself. How can EU and national policymakers support these projects? This Blog post discusses the options in times of low growth and high public debt levels.The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the…

25 June 2024By Piero CipolloneA digital euro would combine the convenience of digital payments with cash-like features. ECB Executive Board member Piero Cipollone explains how a digital euro would enhance Europeans’ freedom of choice when deciding how to pay.Freedom lies at the heart of the European Union’s principles. Every EU citizen is free to live, work, study and do business in any EU Member State. The euro plays a key…

18 June 2024Tom Hudepohl, Pamina Karl, Tobias Linzert, Benoit Nguyen, Marta Skrzypińska, Lia Vaz Cruz[1] With the reduction of the Eurosystem’s balance sheet, central bank liquidity is declining. As liquidity is unevenly distributed among banks, an effective redistribution and use of market funding are essential. This worked well so far, with limited recourse to Eurosystem’s refinancing operations.During and after the COVID-19 pandemic, the Eurosystem purchased large amounts of bonds and…

13 June 2024By Maarten G.A. DamanMany people appreciate privacy when paying, and want their data protected. Current electronic means of payment are not optimal in this regard. We are designing the digital euro to be the most private electronic payment option. The ECB Blog explains.Paying is a private affair for many people. The idea that tech companies, banks, governments or employers might track payments is not particularly appealing. Cash provides a…

12 June 2024By Piero CipolloneMore reforms are needed if the euro is to maintain and strengthen its role amid geopolitical shifts. Europe needs to further develop the infrastructure for making cross-border payments in euro with key partners. For the last quarter of a century, the euro has been a key global currency, second only to the dollar. It has demonstrated its resilience despite the coronavirus pandemic, Russia’s war in Ukraine…

8 June 2024By Christine LagardeThe ECB has cut interest rates. President Christine Lagarde explains why and sets out what still needs to be done to bring inflation back to 2% over the medium term.Two years ago, we started raising interest rates because inflation was far too high. Today, the situation is improved. Although some prices are still going up markedly, especially in the services sector, inflation overall has come down…

23 May 2024By Sarah Holton and Gerrit Koester[1]Negotiated wage growth in the euro area increased in the first quarter of 2024. This post on The ECB Blog illustrates how the ECB wage tracker can help to put latest developments in negotiated wage growth into perspective.The ECB wage tracker – an important tool used to assess wage developments across the euro area – is signalling that overall wage pressures have moderated…

22 May 2024By Christophe Kamps[1]Why do central banks mostly give their guidance for future monetary policy in qualitative terms rather than providing a numerical formula? The ECB Blog takes a look through the lens of the “ABCs” of the ECB’s qualitative reaction function.For thousands of years scholars have been chasing the idea of a “theory of everything” or “world formula” – or, in the words of Goethe’s Faust: “Dass ich…

15 May 2024By Omiros Kouvavas and Athanasios TsiortasDespite rising interest rates, more consumers are applying for loans. This demand comes mainly from households with lower income. The ECB Blog takes a closer look into credit applications and how they affect banks’ credit standards and credit issuance to households.Recent results from the ECB’s Consumer Expectations Survey (CES) show a substantial increase in the share of consumers who applied for credit. This…

6 May 2024By Óscar Arce and David SondermannSurprisingly strong employment growth in an environment of weak economic activity has recently led to declining labour productivity in the euro area. The ECB Blog discusses causes and prospects for a cyclical recovery in productivity growth. Over the first two decades of the currency union, labour productivity (output per worker) in the euro area has been weak, at least when compared to other…

2 May 2024By Claudio Bassi, Markus Behn, Michael Grill, Massimo Libertucci, Pär Torstensson and Peter WelzSome banks reduce balance sheet items around reporting dates. Such “window dressing” camouflages the true risks of a bank, impairs markets as well as bank resilience and supervision. The ECB Blog looks at how regulators and supervisors are taking action. Banks commonly report and disclose financial information and regulatory metrics at the end of every…

18 April 2024By Andrew Kanutin[1]We updated our data on the impact of climate change on the financial system. How green are green bonds and banks’ loan portfolios? How strongly could they be affected by natural hazards? The ECB Blog discusses these and other new insights from the data.  The ECB has updated its climate-related indicators. These data provide systemic insights, both into how financial markets are tackling the green transition…