THE ECB BLOG
27 June 2024
A roadmap for strategic investment in Europe
Europe needs trillions of euros to manage climate change, become digital and defend itself. How can we support these projects? The ECB Blog discusses the options in times of low growth and high public debt levels.
Read The ECB Blog
PRESS RELEASE
26 June 2024
June 2024 Convergence Report
The non-euro area EU member states assessed have made limited progress towards meeting the convergence criteria since 2022, our latest report shows. Inflation is seen as a key economic obstacle in the central and eastern European countries under review.
Read the press release
PODCAST
27 June 2024
The road ahead: is there room for optimism?
We just lowered our interest rates, as inflation is falling. But what was behind this decision and what comes next? Our new co-host Paul Gordon and Chief Economist Philip R. Lane discuss these questions ahead of the ECB Forum on Central Banking.
Listen to The ECB Podcast- 27 June 2024
- MONETARY DEVELOPMENTS IN THE EURO AREAAnnexes
- 27 June 2024
- MONETARY DEVELOPMENTS IN THE EURO AREA
- 26 June 2024
- PRESS RELEASEEnglishOTHER LANGUAGES (21) +Related
- 26 June 2024
- CONVERGENCE REPORT
- 25 June 2024
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 25 June 2024
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 25 June 2024
- PRESS RELEASE
- 24 June 2024
- PRESS RELEASERelated
- 24 June 2024
- DIGITAL EURO PREPARATION PHASE - PROGRESS REPORT
- 26 June 2024
- Speech by Philip R. Lane, Member of the Executive Board of the ECB, at the Bank of Finland’s International Monetary Policy Conference
- 23 June 2024
- Slides by Isabel Schnabel, Member of the Executive Board of the ECB, on the occasion of the conferral of the Weltwirtschaftlicher Preis 2024 to her by the Kiel Institut für Weltwirtschaft
- 18 June 2024
- Keynote speech by Luis de Guindos, Vice-President of the ECB, at the Joint Conference of the European Commission and the ECB on European Financial Integration
- 14 June 2024
- Speech by Christine Lagarde, President of the ECB, at the 30th Dubrovnik Economic Conference
- 12 June 2024
- Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Finance Committee of the German Bundestag in Berlin
- 11 June 2024
- Interview with Christine Lagarde, President of the ECB, conducted by Andrés Stumpf, Stefan Reccius, Isabella Bufacchi, Guillaume Benoit and Alexandre Counis in Paris on 7 June 2024
- 27 May 2024
- Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Martin Arnold on 24 May 2024
- 24 May 2024
- Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Steffen Clement on 16 May 2024
- 23 May 2024
- Interview with Luis de Guindos, Vice-President of the ECB, conducted by Dietmar Mascher and Alexander Zens
- 17 May 2024
- Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Shogo Akagawa and Takerou Minami on 13 May 2024
- 27 June 2024
- Europe 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.Details
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
H50 : Public Economics→National Government Expenditures and Related Policies→General
H63 : Public Economics→National Budget, Deficit, and Debt→Debt, Debt Management, Sovereign Debt
- 25 June 2024
- A 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.EnglishOTHER LANGUAGES (15) +
- 18 June 2024
- 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.Details
- JEL Code
- E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
- 13 June 2024
- Many 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.Details
- JEL Code
- E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
E49 : Macroeconomics and Monetary Economics→Money and Interest Rates→Other
E59 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Other
G29 : Financial Economics→Financial Institutions and Services→Other
- 12 June 2024
- More 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.Details
- JEL Code
- E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
F02 : International Economics→General→International Economic Order
F01 : International Economics→General→Global Outlook
F31 : International Economics→International Finance→Foreign Exchange
F33 : International Economics→International Finance→International Monetary Arrangements and Institutions
- 27 June 2024
- OCCASIONAL PAPER SERIES - No. 352Details
- Abstract
- The 2019 revision to the Capital Requirements Directive allowed the systemic risk buffer to be applied on a sectoral basis in the European Union. Since then an increasing number of countries have implemented the new tool, primarily to address vulnerabilities in the residential real estate sector. To inform and foster a consistent understanding and application of the buffer, this paper proposes two specific methodologies. First, an indicator-based approach which provides an aggregate measure of cyclical vulnerabilities in the residential real estate sector and can signal a potential need to activate a sectoral buffer to address them. Second, a model-based approach following a stress test rationale simulating mortgage loan losses under adverse conditions, which can be used as a starting point for calibrating a sectoral buffer. Besides these methodological contributions, the paper conceptually discusses the interaction between the sectoral buffer and other prudential requirements and instruments, ex ante and ex post policy impact assessment, and factors guiding the possible release of the buffer. Finally, the paper considers possible future applications of sectoral buffer requirements for other types of sectoral vulnerabilities, for example in relation to commercial real estate, exposures to non-financial corporations or climate-related risks.
- 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
- 27 June 2024
- RESEARCH BULLETIN - No. 120Details
- Abstract
- Large-scale asset purchases can impact the price of securities either directly, when securities are targeted by the central bank, or indirectly through portfolio rebalancing by private investors. We quantify both the direct impact and that of portfolio rebalancing, emphasising the role of investor heterogeneity. We use proprietary security-level data on asset holdings of different investors. We measure the direct impact at security level, finding that it is smaller for securities predominantly held by more price-elastic investors, i.e. funds and banks. Comparing securities at the 90th and 10th percentile of the investor elasticity distribution, the price impact of central bank purchases on the securities held by more price-elastic investors is only two-thirds as large. To assess the portfolio rebalancing effects, we construct a novel shift-share instrument. With this, we measure investors’ quasi-exogenous exposure to central bank purchases, based on their holdings of eligible securities before the quantitative easing (QE) programme was announced. We show that funds and banks sell eligible securities to the central bank and rebalance their portfolios towards ineligible securities, with those investors more exposed to central bank purchases ex ante engaging in more rebalancing. Using detailed holdings data for mutual funds, we estimate that for each euro of proceeds from selling securities to the central bank, the average fund allocates 88 cents to ineligible assets and 12 cents to other eligible assets that the central bank did not buy in that time period. The price of ineligible securities held by more exposed funds increases compared with those held by less exposed funds, underscoring the fact that the portfolio rebalancing channel is at work.
- 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
G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
- 26 June 2024
- CONVERGENCE REPORTRelated
- 26 June 2024
- PRESS RELEASEEnglishOTHER LANGUAGES (21) +
- 25 June 2024
- LEGAL ACT
- 25 June 2024
- CLIMATE-RELATED FINANCIAL DISCLOSURES
- 25 June 2024
- CLIMATE-RELATED FINANCIAL DISCLOSURES
- 25 June 2024
- STATISTICS PAPER SERIES - No. 49Details
- Abstract
- The nominal effective exchange rate (EER) of a currency is an index of the trade-weighted average of its bilateral exchange rates vis-à-vis the currencies of selected trading partners, while the real EER is derived by adjusting the nominal index for relative prices or costs. The nominal EER provides a summary measure of a currency’s external value, while the real EER is the most commonly used indicator of the international price and cost competitiveness of an economy. Additionally, for all individual euro area countries, harmonised competitiveness indicators (HCIs) are published by the European Central Bank (ECB) based on the same methodology as the euro EERs. This paper describes how the calculation of the ECB’s EERs and HCIs has been enhanced to take into account in the underlying trade weights the evolution of international trade linkages and, in particular, the growing importance of trade in services. The paper includes an in-depth description of the methodology used to calculate these enhanced EERs and HCIs. In particular, it presents how to overcome the challenges arising from the inclusion of services trade, foremost in terms of data availability, with imputation and estimation techniques. Importantly, the ECB’s well-established methodology – which in particular accounts for competition faced by euro area exporters in third markets – did not have to be changed with the inclusion of services trade. Finally, the paper provides some evidence on the usefulness of the enhanced indicators for policymakers, economic analysts and the public at large.
- JEL Code
- C82 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs→Methodology for Collecting, Estimating, and Organizing Macroeconomic Data, Data Access
F10 : International Economics→Trade→General
F17 : International Economics→Trade→Trade Forecasting and Simulation
F30 : International Economics→International Finance→General
F31 : International Economics→International Finance→Foreign Exchange
F40 : International Economics→Macroeconomic Aspects of International Trade and Finance→General
- 24 June 2024
- WORKING PAPER SERIES - No. 2949Details
- Abstract
- This paper provides new survey evidence on firms’ inflation expectations in the euro area. Building on the ECB’s Survey on the Access to Finance of Enterprises (SAFE), we introduce consistent measurement of inflation expectations across countries and shed new light on the properties and causal effects of these expectations. We find considerable heterogeneity in firms’ inflation expectations and show that firms disagree about future inflation more than professional forecasters but less than households. We document that differences in firms’ demographics, firms’ choices and constraints, and cross-country macroeconomic environments account for most of the variation in inflation expectations by roughly equal shares. Using an RCT approach, we show that firms update their inflation expectations in a Bayesian manner. Moreover, they revise their plans regarding prices, wages, costs and employment in response to information treatments about current or future inflation.
- JEL Code
- E20 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→General
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
- 24 June 2024
- STATISTICS PAPER SERIES - No. 47Details
- Abstract
- The Harmonised Index of Consumer Prices (HICP) currently only includes rentals for housing (paid by tenants) and auxiliary housing expenditures (paid by both tenants and owners). The inclusion of an item for owner-occupied housing (OOH) would be desirable for both representativeness and cross-country comparability. This paper reviews the potential options for including OOH in the HICP to derive a new inflation index. We discuss the conceptual and measurement issues involved. Additionally, we present our analytical calculations on the impact and economic properties of this index as compared to the HICP. We show that since 2011 the estimated impact of including OOH in HICP annual inflation, based on either the “net acquisition” approach or the “rental equivalence” approach, would have been within a band of between -1.2 and +0.4 percentage points. The net acquisition approach could result in bigger differences in future, should the fluctuations in the housing market cycles in the euro area be more pronounced and synchronised. The results should be interpreted keeping in mind that the period of observation is relatively short in relation to housing market cycles. In general, the empirical evidence suggests that including OOH based on the rental equivalence approach decreases the cyclicality of the new inflation index, while the net acquisition approach implies a small amplification of its cyclical properties compared to the HICP.
- JEL Code
- C43 : Mathematical and Quantitative Methods→Econometric and Statistical Methods: Special Topics→Index Numbers and Aggregation
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers
- 24 June 2024
- LETTERS TO MEPSRelated
- 24 June 2024
- DIGITAL EURO PREPARATION PHASE - PROGRESS REPORT
- 24 June 2024
- DIGITAL EURO PREPARATION PHASE - PROGRESS REPORTRelated
- 24 June 2024
- PRESS RELEASE
- 24 June 2024
- LETTERS TO MEPS
- 20 June 2024
- ECONOMIC BULLETIN
- 20 June 2024
- MACROPRUDENTIAL BULLETIN - ARTICLEDetails
- Abstract
- This article explores the benefits of a positive neutral rate for the countercyclical capital buffer (CCyB) and the conditions shaping the economic costs of its activation in a general equilibrium framework. The analysis shows that a gradual build-up of the buffer and favourable banking sector conditions (e.g. high profitability) limit these economic costs. Furthermore, a positive neutral CCyB rate ensures banking sector resilience in all phases of the financial cycle and improves macroprudential authorities’ ability to provide relief to the banking sector in the event of (potentially large) shocks, including those unrelated to the materialisation of domestic credit imbalances.
- JEL Code
- C68 : Mathematical and Quantitative Methods→Mathematical Methods, Programming Models, Mathematical and Simulation Modeling→Computable General Equilibrium Models
E61 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Policy Objectives, Policy Designs and Consistency, Policy Coordination
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
- 20 June 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2024Details
- Abstract
- This box investigates the factors underlying the growing, but still moderate, deterioration in bank credit quality against the backdrop of weak economic activity, rising interest rates and increases in the number of corporate bankruptcies. First, drawing on granular credit register data, we show that banks have actively rebalanced their loan portfolios towards safer assets, potentially curbing a build-up of credit risk on their balance sheets. Second, we explore the possibility that banks exercised greater caution in credit allocation as a result of regulatory considerations, and we assess the impact of bank balance sheet strength and resilience before the start of the recent monetary policy tightening cycle on their credit allocation strategies. Our findings suggest that regulatory pressures are relevant in the reallocation of credit from riskier to safer borrowers, while balance sheet strength and resilience prior to the tightening cycle did not significantly influence credit allocation patterns.
- JEL Code
- 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
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G35 : Financial Economics→Corporate Finance and Governance→Payout Policy
- 20 June 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2024Details
- Abstract
- This box describes liquidity conditions and the Eurosystem monetary policy operations during the first and second maintenance periods of 2024, from 31 January to 16 April 2024.
- JEL Code
- E40 : Macroeconomics and Monetary Economics→Money and Interest Rates→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
- 20 June 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2024Details
- Abstract
- Standard indicators of profits in the economy derived from national accounts are based on GDP rather than on output and therefore do not consider the role of intermediate consumption. Differences between GDP-based and output-based profit indicators can be pronounced when there are exceptional developments in the cost of intermediate consumption, as recently observed. This box therefore proposes a new profit indicator based on total supply, which is a measure that corresponds more closely to output than GDP. Taken together, the GDP-based and total supply-based profit margin indicators suggest that in 2023 profits started to buffer the impact of labour cost developments on price pressures, but benefited from the decline in other costs.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
- 20 June 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2024Details
- Abstract
- This box evaluates perceived risks and sentiment in the euro area using evidence from corporate earnings calls. The results are particularly informative when assessing how firms perceive the repercussions of severe global shocks. Risk perceptions in the euro area remain higher than in other economies and than before the COVID-19 pandemic. Meanwhile, demand sentiment and supply sentiment have broadly normalised in recent quarters.
- JEL Code
- D22 : Microeconomics→Production and Organizations→Firm Behavior: Empirical Analysis
D81 : Microeconomics→Information, Knowledge, and Uncertainty→Criteria for Decision-Making under Risk and Uncertainty
E66 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→General Outlook and Conditions
- 19 June 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2024Details
- Abstract
- Growth has been notably weaker in the euro area than in the United States for decades. This box considers several factors that have contributed to the difference observed since the start of the pandemic, reflecting the fact that the euro area has seen less of a stimulus from private consumption, coupled with weaker labour productivity growth. The euro area has also felt a greater impact from the pandemic and Russia’s war against Ukraine. There is mixed evidence of the monetary policy impacts on activity in these two regions, albeit spillovers from the United States to the euro area appear larger than in the other direction. With regard to differences in fiscal policy, while accurate comparisons are difficult to draw, the fiscal policy impulse over 2020-23 was relatively similar in the two regions, whereas the overall level of the budget deficit was much larger in the United States.
- JEL Code
- E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
O47 : Economic Development, Technological Change, and Growth→Economic Growth and Aggregate Productivity→Measurement of Economic Growth, Aggregate Productivity, Cross-Country Output Convergence
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
- 19 June 2024
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 4, 2024Details
- Abstract
- This article discusses the challenges for public finances arising from (i) demographic ageing, (ii) increases in defence expenditure, (iii) digitalisation and (iv) climate change. While these changes are likely to occur, the associated fiscal costs are difficult to estimate with precision. Nonetheless, as far as possible prudent fiscal policy should already be taking these into account.
- JEL Code
- H68 : Public Economics→National Budget, Deficit, and Debt→Forecasts of Budgets, Deficits, and Debt
J11 : Labor and Demographic Economics→Demographic Economics→Demographic Trends, Macroeconomic Effects, and Forecasts
H56 : Public Economics→National Government Expenditures and Related Policies→National Security and War
- 18 June 2024
- WORKING PAPER SERIES - No. 2948Details
- Abstract
- This paper studies the pass-through from wages to producer prices using sectoral disaggregated data for the euro area. We find a positive and statistically significant wage-price pass-through that reaches 50% after three years, which differs across sectors. The wage-price pass-through in private servicesis significantly higher than in industry and takes longer before reaching its peak. While a higher labour intensity is a key component of the pass-through, our estimates indicate that differences in sectoral labour shares alone cannot explain the larger wage-price pass-through in private services compared to industry. Instead, the estimates hint at an important role for international competition in the domestic market for the tradeable sector. They also suggest that the sales destination matters: wage growth contributes to domestic inflation for goods but not to export inflation. Finally, we also provide evidence of an increase in the wage-price pass-through after 2020, particularly in private services.
- JEL Code
- E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
Interest rates
| Marginal lending facility | 4.50 % |
| Main refinancing operations (fixed rate) | 4.25 % |
| Deposit facility | 3.75 % |
Inflation rate
Inflation dashboardExchange rates
| USD | US dollar | 1.0696 | |
| JPY | Japanese yen | 171.66 | |
| GBP | Pound sterling | 0.84590 | |
| CHF | Swiss franc | 0.9604 |
Financial stability
Our tasks Institutional framework Financial Stability Review Macroprudential policy measuresMarket operations
Open market operations Asset purchase programmes Lendings of holdings under PSPPBREIS EOLAIS UAIT? FÉACH AR ÁR MÍNITHE
FOGHLAIM TUILLEADH
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