European Central Bank – Publications

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…

3 April 2024By Jacopo Cimadomo and Demosthenes Ioannou Governments and central banks can shield the economy from shocks with their decisions. The ECB Blog looks at a recent high-level conference that analysed the interaction of fiscal and monetary policy and questioned some long-held beliefs. Governments and central banks reacted boldly to mitigate the economic damage of the pandemic and recent geopolitical conflicts. Euro area governments and the EU as a…

22 March 2024Federico Maria Ferrara, Tom Hudepohl, Pamina Karl, Tobias Linzert, Benoit Nguyen, Lia Vaz Cruz[1]The Eurosystem is shrinking its balance sheet, which makes more government bonds available for purchase. The ECB Blog looks at how markets are adjusting to this new situation with regard to bond price volatility, liquidity and the impact on repo markets. Since mid-2022 the Eurosystem’s balance sheet declined by around €2,000 billion, or more than…

14 March 2024By Carolin Benack and Stefan RuhkampCentral banks have been collecting art for a long time. While the works were previously only accessible at their physical locations, more and more central banks now make their collections available online. The ECB Blog showcases four collections you can enjoy from wherever you are.Central bankers sometimes speak of their profession as an art – perhaps to make it seem more vivid and…

11 March 2024By Philip R. Lane[1]In 2021-22 inflation surged due to the direct and indirect effects of the energy shock, together with a set of pandemic-related factors and the Russian invasion of Ukraine. In this post on The ECB Blog, Chief Economist Philip R. Lane looks at the monetary policy actions taken by the ECB in response to these extraordinary inflation shocks.IntroductionIn this blog post, I review the monetary policy…

22 February 2024By Ulrich Bindseil and Jürgen SchaafBitcoin has failed on the promise to be a global decentralised digital currency. Instead it is used for illicit transactions. The latest approval of an ETF doesn’t change the fact that Bitcoin is not suitable as means of payment or as an investment. On 10 January, the US Securities and Exchange Commission (SEC) approved spot exchange-traded funds (ETFs) for Bitcoin. For disciples, the formal…

19 February 2024By Ulrich Bindseil, Piero Cipollone and Jürgen Schaaf Many banks worry their customers might withdraw deposits to hold digital euro instead. These fears are misplaced: a digital euro will be designed as a means of payment and not for investment, argue ECB Executive Board member Piero Cipollone, Ulrich Bindseil and Jürgen Schaaf. On 18 October 2023 the ECB’s Governing Council outlined the scope and key features of a…

13 February 2024By Imène Rahmouni-Rousseau and Isabel Schnabel[1]When reading data on reinvestments under the pandemic emergency purchase programme (PEPP) one needs to understand how we implement purchases. Director General Market Operations Imène Rahmouni-Rousseau and Executive Board member Isabel Schnabel explain how to avoid pitfalls.In March 2020, the ECB launched the PEPP “to counter the serious risks to the monetary policy transmission mechanism and the outlook for the euro area” posed…

29 January 2024By Piero Cipollone, Philip Lane and Isabel SchnabelThe ECB can lend euro to non-euro area central banks to reduce the risk of financial stress spilling over to the euro area. Piero Cipollone, Philip Lane and Isabel Schnabel explain how we have made such liquidity lines more effective and agile. The financial disruptions during the coronavirus pandemic and Russia’s invasion of Ukraine have once again underscored the importance of…

10 January 2024By Matteo FalagiardaWithin the euro area, countries in central and eastern Europe have recently experienced the highest inflation rates. But why, exactly? The ECB Blog looks at the reasons for these higher prices and highlights the resulting risks and vulnerabilities.Since 2021 inflation in euro area countries in central and eastern Europe (EACEE) has significantly outpaced that of the euro area as a whole.[1] The differentials have narrowed in…

30 December 2023By Paschal Donohoe (President of the Eurogroup), Christine Lagarde (President of the European Central Bank), Roberta Metsola (President of the European Parliament), Charles Michel (President of the European Council) and Ursula von der Leyen (President of the European Commission)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…

18 December 2023By Friderike Kuik, Wolfgang Modery, Christiane Nickel and Miles ParkerThis is the sixth post in our series accompanying COP28.The ECB’s primary mandate is to maintain price stability. So why do we talk 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. A hotter climate leads to…

12 December 2023By Ludivine Berret, Jean Boissinot, Marianna Caccavaio, Michael Grill, Paul Hiebert and Fabio TamburriniThis is the fifth post in our series accompanying COP28.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. Catastrophes caused by climate change, such as rising sea levels or more frequent extreme weather events, will harm…

29 November 2023By Olimpia Carradori, Margherita Giuzio, Sujit Kapadia, Dilyara Salakhova and Katia VozianThis post is the second in our series accompanying COP28.European firms need to invest in new technologies to reach carbon neutrality by 2050. This often requires them to take on debt. But what if a company is already highly leveraged? The ECB Blog looks at the relationship between firms’ indebtedness and their success in reducing emissions.With the…

One notable recent development in the euro area labour market has been a strong rebound in the labour force. In particular, over the last year and a half, the main source of employment growth has been the strong inflow of people joining the labour force rather than a sharp decline in the number of unemployed. This box provides an overview of recent euro area labour force developments using data from…

The widespread lockdowns which began in March 2020, implemented to contain the spread of the coronavirus (COVID-19) pandemic, caused global supply disruptions and suppressed demand. As a result, euro area output dropped and international trade plummeted. The euro area economy recovered solidly after the first strict lockdowns were lifted in 2020, despite the adverse shocks in 2021 and 2022 associated with global supply bottlenecks, the energy crisis and the uncertainty…