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SPEECH

Public money in the digital age

Central bank digital currencies are necessary to preserve the role of public money in a digital world, safeguarding stability and sovereignty, says Executive Board member Fabio Panetta. They must add value for users, protect privacy, and support competition and innovation.

Speech
SPEECH 17 February 2022

Inflation in the near- and medium-term

If inflation stabilises around our 2% target in the medium term, this will allow for a gradual normalisation of monetary policy, says Chief Economist Philip R. Lane. We will respond proportionately and tolerate neither under nor overreactions to emerging inflation risks.

Speech
PUBLICATION 17 February 2022

Annual accounts 2021

The ECB’s balance sheet grew to €680 billion last year. We recorded a profit of €192 million, which is distributed to the euro area national central banks. Find out more about our financial position in the annual accounts 2021.

Annual accounts
EXPLAINER

Who owns the ECB?

All the countries in the EU own the ECB between them. This means they all contribute a certain amount to the ECB’s capital. But how do we calculate this amount?

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22 February 2022
WEEKLY FINANCIAL STATEMENT
Annexes
22 February 2022
WEEKLY FINANCIAL STATEMENT - COMMENTARY
21 February 2022
PRESS RELEASE
18 February 2022
OTHER GOVERNING COUNCIL DECISION
18 February 2022
EURO AREA INVESTMENT FUNDS
18 February 2022
EURO AREA FINANCIAL VEHICLE CORPORATION STATISTICS
Annexes
18 February 2022
EURO AREA FINANCIAL VEHICLE CORPORATION STATISTICS
18 February 2022
Contribution by Fabio Panetta, Member of the Executive Board of the ECB, to a panel discussion on central bank digital currencies at the US Monetary Policy Forum
18 February 2022
Keynote speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, Industry outreach on the thematic review on climate-related and environmental risks
17 February 2022
Opening remarks by Philip R. Lane, Member of the Executive Board of the ECB, at MNI Market News Webcast
17 February 2022
Presentation by Isabel Schnabel, Member of the Executive Board of the ECB, at a meeting organised by the Arbeitsgruppe Finanzen of the SPD-Bundestagsfraktion
English
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14 February 2022
Introductory statement by Christine Lagarde, President of the ECB, at the plenary session of the European Parliament
15 February 2022
Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Martin Arnold on 14 February and published on 15 February
11 February 2022
Interview with Christine Lagarde, President of the European Central Bank, conducted by Andreas Niesmann and Tim Szent-Ivany
English
OTHER LANGUAGES (1) +
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9 February 2022
Interview on Twitter with Isabel Schnabel, Member of the Executive Board of the ECB, conducted and published on 9 February 2022
25 January 2022
Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Emilis Linge and Dalius Simenas
English
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14 January 2022
Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Markus Zydra, Bastian Brinkmann and Meike Schreiber on 10 January 2022
English
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10 February 2022
Blog post by Philip R. Lane, Member of the Executive Board of the ECB[1]
Details
Summary
Looking at inflation dynamics, the relative price dislocations associated with bottlenecks are intrinsically short-term, Chief Economist Philip R. Lane writes in The ECB Blog. An increase in the relative price for a scarce item will stimulate new supply, while cooling demand.
31 December 2021
Blog post by Christine Lagarde, President of the ECB
Details
Summary
Europe and the euro have become inseparable, President Christine Lagarde writes in The ECB Blog to mark the 20th anniversary of euro banknotes and coins. She recalls her first encounter with a euro banknote, and reflects on how far the euro has come and what lies ahead.
19 November 2021
Blog post by Fabio Panetta, Member of the Executive Board of the ECB
Details
Summary
To continue playing its role as the anchor of the monetary system, central bank money will need to respond to evolving needs, says Executive Board member Fabio Panetta. This means that we must intensify the work on central bank digital currencies.
4 November 2021
Blog post by Christine Lagarde, President of the ECB
Details
Summary
The COP26 summit is a vital opportunity to set out a clear path towards a zero-carbon world, President Lagarde writes in a blog post. While the road ahead may seem daunting, she argues that a credible transition path will need clear signposts to break it up into more manageable stages.
14 September 2021
Blog post by Isabel Schnabel, Member of the Executive Board of the ECB
English
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Details
Summary
While rising inflation understandably worries people, current inflation rates should be interpreted with caution, writes Executive Board member Isabel Schnabel.
21 February 2022
SURVEY OF MONETARY ANALYSTS
21 February 2022
OTHER PUBLICATION
21 February 2022
OTHER PUBLICATION
21 February 2022
OTHER PUBLICATION
17 February 2022
WORKING PAPER SERIES - No. 2646
Details
Abstract
We propose a new methodology to identify aggregate demand and supply shocks in the bank loan market. We present a model of sticky bank-firm relationships, estimate its structural parameters in euro area credit register data, and infer aggregate shocks based on those estimates. To achieve credible identification, we leverage banks’ exposure to various sectors’ heterogeneous liquidity needs during the COVID-19 Pandemic. We find that developments in lending volumes following the pandemic were largely explained by demand shocks. Fluctuations in lending rates were instead mostly determined by bank-driven supply shocks and borrower risk. A by-product of our analysis is a structural interpretation of two-way fixed effects regressions in loan-level data: according to our framework, firm- and bank-time fixed effects only separate demand from supply under certain parametric assumptions. In the data, the conditions are satisfied for supply but not for demand: bank-time fixed effects identify true supply shocks up to a time constant, while firm-time fixed effects are contaminated by supply forces. Our methodology overcomes this limitation: we identify supply and demand shocks at the aggregate and individual levels.
JEL Code
E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G32 : Financial Economics→Corporate Finance and Governance→Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms, Goodwill
17 February 2022
WORKING PAPER SERIES - No. 2645
Details
Abstract
We show that the liquidation value of collateral depends on who is pledging it. We employ transaction-level data on overnight repurchase agreements (repo) and loan-level credit registry data on corporate loans. We find that borrowers on the repo market pay a 2.6 basis points rate premium when their default risk is positively correlated with the risk of the collateral that they pledge. The premium in corporate loan markets amounts to 25 basis points. Our results imply that liquidation value contains a component at the borrower-collateral level, and that lenders monitor and price-in the interdependency between borrower and collateral risk.
JEL Code
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
D53 : Microeconomics→General Equilibrium and Disequilibrium→Financial Markets
D47 : Microeconomics→Market Structure and Pricing→Market Design
E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest Rates: Determination, Term Structure, and Effects
17 February 2022
ANNUAL CONSOLIDATED BALANCE SHEET OF THE EUROSYSTEM
17 February 2022
ANNUAL ACCOUNTS
17 February 2022
ECONOMIC BULLETIN
17 February 2022
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 1, 2022
Details
Abstract
This box reviews indexation schemes and other mechanisms for setting public wages and pensions across euro area countries. It concludes that price indexation of public wages is relatively limited, while public pensions are overwhelmingly automatically indexed, fully or partially, to prices and wages.
JEL Code
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
J3 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs
H55 : Public Economics→National Government Expenditures and Related Policies→Social Security and Public Pensions
17 February 2022
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 1, 2022
Details
Abstract
This box summarises the main findings from contacts between ECB staff and representatives of 74 leading non-financial companies operating in the euro area. The exchanges mainly took place between 10 and 19 January 2022. According to these contacts, overall activity was strong or growing across a range of sectors. However, supply constraints were still limiting firms’ ability to meet demand and generating pipeline price pressures, on top of which businesses faced surging energy costs. Most contacts expected wage growth to pick up somewhat this year. Given the cost pressures and continued strong customer demand, most contacts reported increasing prices and a more dynamic pricing environment, especially in the industrial sector.
JEL Code
E2 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy
E3 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles
L2 : Industrial Organization→Firm Objectives, Organization, and Behavior
17 February 2022
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 1, 2022
Details
Abstract
This box assesses the role of migration in weak labour force developments during the COVID-19 pandemic. The labour force in the euro area remains well below the dynamics expected before the outbreak of the pandemic. This gap reflects both a weaker than expected growth in the working age population and a lower than expected labour force participation rate. Subdued net immigration may have contributed to these developments, with some foreign workers resettling in their home countries. It is likely that several factors have weighed on inward migration flows, including weaker employment prospects, travel restrictions and pervasive uncertainty induced by the pandemic. The share of foreign workers in the euro area may gradually converge towards the levels expected pre-pandemic, but risks are overall tilted to the downside.
JEL Code
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
J11 : Labor and Demographic Economics→Demographic Economics→Demographic Trends, Macroeconomic Effects, and Forecasts
J21 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Force and Employment, Size, and Structure
17 February 2022
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 1, 2022
Details
Abstract
This box shows that movements of firms along the productivity distribution over time have played a key role in explaining productivity developments in the euro area. The movement of firms along the productivity distribution is mainly driven by the capacity of firms to react to shocks and by incentives to innovate. This applies to both low-productivity firms that want to survive in the market and high-productivity firms that face the risk of falling behind the times. Interestingly, firm productivity has become less dynamic over time, which may reflect an increase in the average age of frontier firms and declining entry rates in the wake of higher market concentration. This decline in firm dynamism highlights the important role of structural policies in incentivising technological innovation and fostering the market entry of highly productive firms and the exit of less-productive firms.
JEL Code
D22 : Microeconomics→Production and Organizations→Firm Behavior: Empirical Analysis
D24 : Microeconomics→Production and Organizations→Production, Cost, Capital, Capital, Total Factor, and Multifactor Productivity, Capacity
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
D61 : Microeconomics→Welfare Economics→Allocative Efficiency, Cost?Benefit Analysis
16 February 2022
WORKING PAPER SERIES - No. 2644
Details
Abstract
While regulatory capital buffers are expected to be drawn to absorb losses and meet credit demand during crises, this paper shows that banks were unwilling to do so during the pandemic. To the contrary, banks engaged in forms of pro-cyclical behaviour to preserve capital ratios. By employing granular data from the credit register of the European System of Central Banks, we isolate credit supply effects and find that banks with little headroom above regulatory buffers reduced their lending relative to other banks, also when controlling for a broad range of pandemic support measures. Firms’ inability to reallocate their credit needs to less constrained banks had real economic effects, as their headcount went down, although state guarantee schemes acted as partial mitigants. These findings point to some unintended effects of the capital framework which may create incentives for pro-cyclical behaviour by banks during downturns. They also shed light on the interactions between fiscal and prudential policies which took place during the pandemic.
JEL Code
E61 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Policy Objectives, Policy Designs and Consistency, Policy Coordination
G01 : Financial Economics→General→Financial Crises
G18 : Financial Economics→General Financial Markets→Government Policy and Regulation
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
16 February 2022
WORKING PAPER SERIES - No. 2643
Details
Abstract
This paper introduces the Consumer Expectations Survey (CES), a new online, high frequency panel survey of euro area consumers’ expectations and behaviour. The paper also investigates whether public perceptions about fiscal support measures introduced during the pandemic have influenced spending behaviour. We show that simple and factual information treatments about government support policies that are communicated to random subsets of respondents can help improve consumers’ perceptions about the adequacy of fiscal interventions relative to the perceptions of an untreated control group. We find evidence that this improvement in beliefs has a causal effect on consumer spending, in particular raising spending on large items like holidays and cars. Moreover, we show that such beliefs also influence household expectations about own income prospects, future access to credit and financial sentiment, while they do not affect expectations about future taxes, implying no evidence of Ricardian effects in household behaviour. We find that perceptions affect spending also among households that did not receive any government support, suggesting that fiscal interventions can have broader consequences as they influence the behaviour of groups beyond the targeted ones.
JEL Code
D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
H31 : Public Economics→Fiscal Policies and Behavior of Economic Agents→Household
16 February 2022
ECONOMIC BULLETIN - ARTICLE
Economic Bulletin Issue 1, 2022
Details
Abstract
The ECB’s monetary policy strategy review confirmed that the Harmonised Index of Consumer Prices (HICP) remains the appropriate price measure for assessing the achievement of the medium-term price stability objective. However, the Governing Council recognised that the inclusion of costs related to owner-occupied housing in the HICP would better represent the inflation rate that is relevant for households. This article elaborates on the topic of owner-occupied housing and its proposed inclusion in the HICP. It showcases the two options considered by the Governing Council, focusing on their statistical and conceptual properties. For the net acquisition approach recommended by the Governing Council, the article presents analytical indices based on ECB approximations that serve as a blueprint for the quarterly internal measure to be monitored. Finally, the article looks ahead to the incorporation of the costs of owner-occupied housing into the HICP and the associated challenges, noting that the current HICP will remain the main reference index for monetary policy during the transition period.
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
16 February 2022
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 1, 2022
Details
Abstract
A recurring theme in the “ECB Listens” event conducted in the context of the monetary policy strategy review was the affordability of housing and the case for including related costs more adequately in the HICP. Housing costs can be analysed on the basis of different sources of data. This box reviews perceptions of housing costs among tenants and homeowners based on survey microdata, compares them with developments in housing costs based on macro price statistics, and highlights conceptual differences between the various measures that are important in the interpretation of the data.
JEL Code
R21 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Household Analysis→Housing Demand
R31 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→Housing Supply and Markets
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
15 February 2022
WORKING PAPER SERIES - No. 2642
Details
Abstract
Consumers’ inflation expectations play a key role in the monetary transmission mechanism. As such, it is crucial for monetary policymakers to understand what they are and how they are formed. In this paper we introduce the (un)certainty channel as means to shed light on some of the more puzzling aspects of reported quantitative inflation perceptions and expectations. These include the apparent overestimation of inflation by consumers as well as the negative correlation observed between the economic outlook and inflation expectations. We also show that the uncertainty framework fits with some of the stylised facts of consumers’ inflation expectations, such as their correlation with socio-demographic characteristics and economic sentiment.
JEL Code
D11 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Theory
D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
D84 : Microeconomics→Information, Knowledge, and Uncertainty→Expectations, Speculations
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
15 February 2022
WORKING PAPER SERIES - No. 2641
Details
Abstract
The paper quantitatively assesses the importance of supply-side drivers in the transition of the Japanese economy from low-skilled to high-skilled sectors and its implication for growth, labor demand and labor income shares. A sectoral supply-side system, estimated over the 1980-2012 period, reveals different rates of technical progress across production factors and sectors, but also heterogeneity in the sectoral elasticity of substitution between capital and labor. The fact that capital and labor are easily substitutable in low-skilled services but not in high-skilled services, coupled with the dominant role of capital-augmenting technical change in services is a key factor behind the relocation of labor towards high-skilled services, as well as behind the declining trend in the labor income share in low-skilled services.
JEL Code
O47 : Economic Development, Technological Change, and Growth→Economic Growth and Aggregate Productivity→Measurement of Economic Growth, Aggregate Productivity, Cross-Country Output Convergence
O33 : Economic Development, Technological Change, and Growth→Technological Change, Research and Development, Intellectual Property Rights→Technological Change: Choices and Consequences, Diffusion Processes
J23 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Demand
15 February 2022
ECONOMIC BULLETIN - ARTICLE
Economic Bulletin Issue 1, 2022
Details
Abstract
The article takes stock of Next Generation EU (NGEU) from a euro area perspective. NGEU is a temporary crisis instrument that, if implemented successfully, is expected to significantly improve Europe’s economic prospects. In the short term, it should support the recovery of the EU economy. In the medium term, NGEU should help to modernise the EU economies, with positive effects on their growth potential, resilience and convergence. The article provides a synthesis of the fiscal measures and structural reforms embedded in the national recovery and resilience plans of euro area countries. It also looks at the economic impact of the planned investments. Finally, the article examines the novel governance approach that can sustain a successful implementation of NGEU.
JEL Code
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
E61 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Policy Objectives, Policy Designs and Consistency, Policy Coordination
F47 : International Economics→Macroeconomic Aspects of International Trade and Finance→Forecasting and Simulation: Models and Applications

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: 22 February 2022 Euro foreign exchange rates