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© Thorsten Jansen

SPEECH


THE FUTURE PATH OF INFLATION

Inflation is likely to fall at a slower pace this year than in 2023, says
Vice-President Luis de Guindos. High wage pressures, geopolitical tensions and
upcoming wage negotiations are adding to uncertainty around the future path of
inflation.

The future path of inflation
In focus

© ralfgosch / iStock
ECONOMIC BULLETIN 11 January 2024


ECB PUBLISHES ECONOMIC BULLETIN


This publication presents the economic and monetary information which forms the
basis for the Governing Council’s policy decisions. It is released eight times a
year, two weeks after each monetary policy meeting.

Read the new Economic Bulletin

© Adrian Petty/ECB
#AskECB 10 January 2024


LIVE Q&A ON X WITH ISABEL SCHNABEL


Executive Board member Isabel Schnabel answered questions on X on a wide range
of topics, such as inflation, interest rates, the economic outlook and our work
on a digital euro.

Full Q&A
THE ECB BLOG 10 January 2024


INFLATION IN THE EASTERN EURO AREA


Within the euro area, countries in central and eastern Europe have recently
experienced the highest inflation rates. Our latest blog post explores the
reasons behind this phenomenon and highlights the resulting risks and
vulnerabilities.

Read The ECB Blog
Press releases2
11 January 2024
EURO AREA ECONOMIC AND FINANCIAL DEVELOPMENTS BY INSTITUTIONAL SECTOR (EARLY)
Households and non-financial corporations in the euro area: third quarter of
2023
English
Annexes
11 January 2024
EURO AREA ECONOMIC AND FINANCIAL DEVELOPMENTS BY INSTITUTIONAL SECTOR (EARLY)
Tables
English
11 January 2024
EURO AREA ECONOMIC AND FINANCIAL DEVELOPMENTS BY INSTITUTIONAL SECTOR (EARLY)
Charts
English
11 January 2024
BALANCE OF PAYMENTS (QUARTERLY)
Euro area quarterly balance of payments and international investment position:
third quarter of 2023
English
9 January 2024
WEEKLY FINANCIAL STATEMENT
Consolidated financial statement of the Eurosystem as at 5 January 2024
English
OTHER LANGUAGES (22) +
Select your language
БългарскиBG ČeštinaCS DanskDA DeutschDE EλληνικάEL EspañolES Eesti keelET
SuomiFI FrançaisFR HrvatskiHR MagyarHU ItalianoIT LietuviųLT LatviešuLV MaltiMT
NederlandsNL PolskiPL PortuguêsPT RomânăRO SlovenčinaSK SlovenščinaSL SvenskaSV
Annexes
9 January 2024
WEEKLY FINANCIAL STATEMENT - COMMENTARY
Commentary
English
8 January 2024
PRESS RELEASE
ECB publishes new statistics on the distribution of household wealth
English
5 January 2024
MFI INTEREST RATE STATISTICS
Euro area bank interest rate statistics: November 2023
English
ALL PRESS RELEASES
Speeches
10 January 2024
Luis de Guindos: The economic outlook and monetary policy in the euro area
Speech by Luis de Guindos, Vice-President of the ECB, at the 14th edition of
Spain Investors Day
English
20 December 2023
Philip R. Lane: Euro area outlook
Slides by Philip R. Lane, Member of the Executive Board of the ECB, at the
seminar organised by the Economic and Social Research Institute in Dublin
English
14 December 2023
Christine Lagarde, Luis de Guindos: Monetary policy statement (with Q&A)
Christine Lagarde, President of the ECB, Luis de Guindos, Vice-President of the
ECB, Frankfurt am Main, 14 December 2023
English
OTHER LANGUAGES (23) +
Select your language
БългарскиBG ČeštinaCS DanskDA DeutschDE EλληνικάEL EspañolES Eesti keelET
SuomiFI FrançaisFR GaeilgeGA HrvatskiHR MagyarHU ItalianoIT LietuviųLT
LatviešuLV MaltiMT NederlandsNL PolskiPL PortuguêsPT RomânăRO SlovenčinaSK
SlovenščinaSL SvenskaSV
Related
14 December 2023
Combined monetary policy decisions and statement
English
14 December 2023
Monetary policy decisions
English
OTHER LANGUAGES (23) +
Select your language
БългарскиBG ČeštinaCS DanskDA DeutschDE EλληνικάEL EspañolES Eesti keelET
SuomiFI FrançaisFR GaeilgeGA HrvatskiHR MagyarHU ItalianoIT LietuviųLT
LatviešuLV MaltiMT NederlandsNL PolskiPL PortuguêsPT RomânăRO SlovenčinaSK
SlovenščinaSL SvenskaSV
14 December 2023
President Lagarde presents the latest monetary policy decisions – 14 December
2023
English
7 December 2023
Frank Elderson: Powers, ability and willingness to act – the mainstay of
effective banking supervision
Speech by Frank Elderson, Member of the Executive Board of the ECB and
Vice-Chair of the Supervisory Board of the ECB
English
4 December 2023
Christine Lagarde: Governance at a turning point
Speech by Christine Lagarde, President of the ECB, à l’Académie des sciences
morales et politiques, Paris
English
OTHER LANGUAGES (1) +
Select your language
FrançaisFR
ALL SPEECHES
Interviews
10 January 2024
Isabel Schnabel: Q&A on X
Interview with Isabel Schnabel, Member of the Executive Board of the ECB,
conducted and published on 10 January 2024
English
3 January 2024
Christine Lagarde: Tribute article on Wolfgang Schäuble for Die Zeit
Tribute article on Wolfgang Schäuble for Die Zeit by Christine Lagarde,
President of the ECB
English
OTHER LANGUAGES (1) +
Select your language
DeutschDE
22 December 2023
Isabel Schnabel: Interview with Süddeutsche Zeitung
Interview with Isabel Schnabel, Member of the Executive Board of the ECB,
conducted by Meike Schreiber und Markus Zydra on 18 December 2023
English
OTHER LANGUAGES (1) +
Select your language
DeutschDE
21 December 2023
Luis de Guindos: Interview with 20 Minutos
Interview with Luis de Guindos, Vice-President of the ECB, conducted by Emilio
Ordiz and Jorge Millán
English
OTHER LANGUAGES (1) +
Select your language
EspañolES
5 December 2023
Isabel Schnabel: Interview with Reuters
Interview with Isabel Schnabel, Member of the Executive Board of the ECB,
conducted by Balázs Korányi on 1 December 2023
English
ALL INTERVIEWS
The ECB Blog
10 January 2024
Inflation in the eastern euro area: reasons and risks
Within 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.
 * Matteo Falagiarda

English
Details
JEL CodeE31 : Macroeconomics and Monetary Economics→Prices, Business
Fluctuations, and Cycles→Price Level, Inflation, Deflation
F62 : International Economics→Economic Impacts of Globalization→Macroeconomic
Impacts
O52 : Economic Development, Technological Change, and Growth→Economywide Country
Studies→Europe
O51 : Economic Development, Technological Change, and Growth→Economywide Country
Studies→U.S., Canada
O11 : Economic Development, Technological Change, and Growth→Economic
Development→Macroeconomic Analyses of Economic Development
N24 : Economic History→Financial Markets and Institutions→Europe: 1913?

30 December 2023
Christine Lagarde: Euro at 25: the value of unity in a changing world
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 350
million people in 20 countries.
 * Paschal Donohoe
 * Roberta Metsola
 * Charles Michel
 * Ursula von der Leyen

English
OTHER LANGUAGES (23) +
Select your language
БългарскиBG ČeštinaCS DanskDA DeutschDE EλληνικάEL EspañolES Eesti keelET
SuomiFI FrançaisFR GaeilgeGA HrvatskiHR MagyarHU ItalianoIT LietuviųLT
LatviešuLV MaltiMT NederlandsNL PolskiPL PortuguêsPT RomânăRO SlovenčinaSK
SlovenščinaSL SvenskaSV
Details
JEL CodeE00 : Macroeconomics and Monetary Economics→General→General
E02 : Macroeconomics and Monetary Economics→General→Institutions and the
Macroeconomy
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary
Systems, Standards, Regimes, Government and the Monetary System, Payment Systems

18 December 2023
The price of inaction: what a hotter climate means for monetary policy
The ECB’s primary mandate is to maintain price stability. So why do we talk so
much 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.
 * Friderike Kuik
 * Wolfgang Modery
 * Christiane Nickel
 * Miles Parker

English
Details
JEL CodeE50 : Macroeconomics and Monetary Economics→Monetary Policy, Central
Banking, and the Supply of Money and Credit→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
Q50 : Agricultural and Natural Resource Economics, Environmental and Ecological
Economics→Environmental Economics→General
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological
Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
Q51 : Agricultural and Natural Resource Economics, Environmental and Ecological
Economics→Environmental Economics→Valuation of Environmental Effects
Q58 : Agricultural and Natural Resource Economics, Environmental and Ecological
Economics→Environmental Economics→Government Policy

12 December 2023
Climate risks, the macroprudential view
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.
 * Ludivine Berret
 * Jean Boissinot
 * Marianna Caccavaio
 * Michael Grill
 * Paul Hiebert
 * Fabio Tamburrini

English
Details
JEL CodeE44 : Macroeconomics and Monetary Economics→Money and Interest
Rates→Financial Markets and the Macroeconomy
G01 : Financial Economics→General→Financial Crises

6 December 2023
Green lending: do banks walk the talk?
Banks are talking more about the environment. But does such talk go hand in hand
with greener lending? The ECB Blog finds a disconnect: banks talking more about
their environmental policies and goals tend to lend more to brown industries.
 * Mariassunta Giannetti
 * Martina Jasova
 * Maria Loumioti
 * Caterina Mendicino

English
Details
JEL CodeG11 : Financial Economics→General Financial Markets→Portfolio Choice,
Investment Decisions
G15 : Financial Economics→General Financial Markets→International Financial
Markets
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository
Institutions, Micro Finance Institutions, Mortgages

ALL BLOG POSTS
Publications6
11 January 2024
ECONOMIC BULLETIN
Economic Bulletin Issue 8, 2023
English
English
11 January 2024
ECONOMIC BULLETIN - BOX
Net interest income of households and firms
 * Gabe de Bondt
 * Georgi Krustev
 * Michal Slavík
 * Mika Tujula

Economic Bulletin Issue 8, 2023
English
Details
AbstractThis box analyses recent developments in the net interest income of
households and firms in the euro area as a whole and in the largest euro area
countries, against the backdrop of rising interest rates. Net interest income is
a direct channel through which the ECB transmits policy rate changes to savers
and borrowers. Over the last decade net interest income has been negative for
households and firms at the aggregate sectoral level. Interest-bearing assets,
which affect the interest received by households and firms, and liabilities,
which affect interest paid, are important drivers of developments in net
interest income. Individual countries demonstrate striking differences in net
interest income and interest-bearing assets and liabilities, largely due to
specific structural factors.JEL CodeE01 : Macroeconomics and Monetary
Economics→General→Measurement and Data on National Income and Product Accounts
and Wealth, Environmental Accounts
E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest
Rates: Determination, Term Structure, and Effects
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking,
and the Supply of Money and Credit→Monetary Policy

11 January 2024
ECONOMIC BULLETIN - BOX
Liquidity conditions and monetary policy operations from 2 August to 31 October
2023
 * Denis Lungu
 * Kristian Tötterman

Economic Bulletin Issue 8, 2023
English
Details
AbstractThis box describes liquidity conditions and the Eurosystem’s monetary
policy operations during the fifth and sixth maintenance periods of 2023, from
2 August to 31 October 2023.JEL CodeE40 : 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

11 January 2024
ECONOMIC BULLETIN - BOX
A primer on measuring household income
 * Johannes Gareis
 * Omiros Kouvavas
 * Pedro Neves

Economic Bulletin Issue 8, 2023
English
Details
AbstractThe disposable income of households, as measured in the national
accounts, benefited from rising labour income and continued strong growth in
non-labour income in the first half of 2023. But not all components of income
generate a positive cash flow for households. This mainly concerns non-labour
income (excluding net fiscal income), which benefited from the exceptionally
strong growth in gross operating surplus and the strong increase in financial
intermediation services indirectly measured (FISIM). These two components do not
generate positive cash flow for households and may therefore not be reflected in
households’ income perceptions, which recently lagged behind the positive income
developments as measured in the national accounts. One indicator of growth in
household income that comes closer to household perceptions is compensation of
employees. Looking ahead, the negative assessment by households of recent real
income growth appears to be consistent with the muted outlook for private
consumption.JEL CodeE22 : Macroeconomics and Monetary Economics→Consumption,
Saving, Production, Investment, Labor Markets, and Informal Economy→Capital,
Investment, Capacity
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and
Cycles→Business Fluctuations, Cycles

11 January 2024
ECONOMIC BULLETIN - BOX
Potential output in times of temporary supply shocks
 * Guzmán González-Torres
 * José Emilio Gumiel
 * Béla Szörfi

Economic Bulletin Issue 8, 2023
English
Details
AbstractAccording to the estimates of major international institutions, the euro
area output gap remained negative or very close to zero in the aftermath of the
pandemic and at the onset of the war in Ukraine, despite the rise in euro area
core inflation. This contrasts with most available historical data, which show a
positive association of a rise in inflation above its medium-run average with an
increase in the output gap. This may reflect the fact that demand shocks have
historically had a larger effect on the business cycle relative to supply
shocks. However, the shocks that hit the euro area after 2020 – disruptions in
supply chains and significant increases in input prices – predominantly came
from the supply side of the economy. This box explores how accounting for the
role of temporary supply shocks in determining potential output can restore the
positive association of the output gap with high inflation after 2020. First,
the box discusses the concept of potential output as used by most international
organisations. It then looks at indicators that could capture recent exceptional
demand and supply conditions. Lastly, using information on these indicators, the
box proposes complementary slack measures that better reflect inflationary
pressures in times of temporary supply shocks.JEL CodeE31 : Macroeconomics and
Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level,
Inflation, Deflation
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and
Cycles→Business Fluctuations, Cycles
E37 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and
Cycles→Forecasting and Simulation: Models and Applications
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking,
and the Supply of Money and Credit→Central Banks and Their Policies

11 January 2024
ECONOMIC BULLETIN - BOX
US Treasury market conditions and global market reactions to US monetary policy
 * Magdalena Grothe
 * Ana-Simona Manu
 * Peter McQuade

Economic Bulletin Issue 8, 2023
English
Details
AbstractThe US Treasury securities market is the largest and most liquid in the
world. Recently, however, its liquidity has declined owing to a combination of
factors, including monetary policy tightening and elevated uncertainty about
inflation and growth. At the same time, leveraged funds have built up unusually
large net short positions in the US Treasury futures market. This box provides
empirical evidence that the impact of a US monetary policy shock on domestic and
global bond markets may vary depending on conditions in the US Treasury market.
Specifically, the results suggest that the effect of a US monetary policy shock
might be stronger when market liquidity is low or when net short positions of
leveraged funds are large.JEL CodeE5 : Macroeconomics and Monetary
Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit
F3 : International Economics→International Finance
G1 : Financial Economics→General Financial Markets

10 January 2024
WORKING PAPER SERIES - No. 2886
Market power in banking
 * Elena Carletti
 * Agnese Leonello
 * Robert Marquez

English
Details
AbstractBank market power, both in the loan and deposit market, has important
implications for credit provision and for financial stability. This article
discusses these issues through the lens of a simple theoretical framework. On
the asset side, banks choose the quality and quantity of loans. On the liability
side, they may be subject to depositor runs whenever they offer demandable
contracts. This structure allows us to review the literature on the role of
market power for credit provision and stability and also highlight the
interactions between the two sides of banks’ balance sheets. Our approach
identifies relevant channels that deserve further analysis, especially given the
rising importance of bank market power for monetay policy transmission and the
the rise of the digital economy.JEL CodeG01 : Financial
Economics→General→Financial Crises
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

10 January 2024
WORKING PAPER SERIES - No. 2885
Dynamic carbon emission management
 * Maria Cecilia Bustamante
 * Francesca Zucchi

English
Details
AbstractThe control of carbon emissions by policymakers poses the corporate
challenge of developing an optimal carbon management policy. We provide a
unified model that characterizes how firms should optimally manage emissions
through production, green investment, and the trading of carbon credits. We show
that carbon pricing reduces firms’ emissions but also induces firms to tilt
towards more immediate yet transient types of green investment—such as abatement
as opposed to innovation—as it becomes costlier to comply. Green innovation
subsidies mitigate this effect and complement carbon pricing in ensuring
innovation-driven sustainability. Perhaps surprisingly, we show that carbon
regulation need not reduce firm value.JEL CodeG30 : Financial
Economics→Corporate Finance and Governance→General
G31 : Financial Economics→Corporate Finance and Governance→Capital Budgeting,
Fixed Investment and Inventory Studies, Capacity
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading
Volume, Bond Interest Rates
D62 : Microeconomics→Welfare Economics→Externalities
O33 : Economic Development, Technological Change, and Growth→Technological
Change, Research and Development, Intellectual Property Rights→Technological
Change: Choices and Consequences, Diffusion Processes

10 January 2024
ECONOMIC BULLETIN - BOX
Monetary dynamics during the tightening cycle
 * Ramón Adalid
 * Max Lampe
 * Silvia Scopel

Economic Bulletin Issue 8, 2023
Last updated on 11 January 2024
English
Details
AbstractThe current monetary policy tightening cycle has led to increases in
bank deposit rates, albeit to a lesser extent than in the past. In part this
reflects the transition from negative interest rates to rates well into positive
territory. When interest rates were very low, spreads between deposit and policy
rates became compressed or even negative, as banks were reluctant to charge
negative rates to their retail depositors. Consequently, some time was needed in
the initial phase of the current tightening cycle for spreads to normalise.
During that period, policy rate hikes were matched by only minor increases in
deposit rates. The current round of monetary policy tightening has had an impact
on portfolio allocation by incentivising shifts from overnight deposits to time
deposits and bonds. It has also weakened money creation by (i) bringing credit
expansion to a halt, (ii) reabsorbing money in circulation as the Eurosystem’s
monetary policy portfolio contracts, and (iii) leading banks to repay central
bank funding and replace it with long-term bonds. Both portfolio shifts and the
contractionary monetary dynamics have resulted in negative growth rates of
unprecedented size for M1 and M3.JEL CodeE41 : Macroeconomics and Monetary
Economics→Money and Interest Rates→Demand for Money
E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest
Rates: Determination, Term Structure, and Effects
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial
Markets and the Macroeconomy
E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking,
and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers
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

9 January 2024
WORKING PAPER SERIES - No. 2884
Supply chain disruption and energy supply shocks: impact on euro area output and
prices
 * Roberto A. De Santis

English
Details
AbstractWe identify jointly supply chain disruptions shocks and energy supply
shocks together with demand shocks using a structural BVAR with narrative
restrictions. The impact of adverse supply chain disruption shocks on inflation
expectations and core HICP is strong and rather persistent, while the impact is
small and transitory after energy supply shocks. Supply chain disruption shocks
and favourable demand shocks explain the large faction of output fluctuations in
the 2020-2022 period. The dynamics of core prices and inflation expectations are
instead mostly explained by supply chain disruption shocks and to a lesser
extent by adverse energy supply shocks.JEL CodeC32 : Mathematical and
Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple
Variables→Time-Series Models, Dynamic Quantile Regressions, Dynamic Treatment
Effect Models, Diffusion Processes
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and
Cycles→Business Fluctuations, Cycles

9 January 2024
ECONOMIC BULLETIN - BOX
Monetary policy and the recent slowdown in manufacturing and services
 * Niccolò Battistini
 * Johannes Gareis

Economic Bulletin Issue 8, 2023
English
Details
AbstractManufacturing activity has been weak since the end of 2021, while market
services activity has started to slow down more recently. This box uses a
lead-lag analysis to examine how developments in manufacturing are correlated
with services activity. It then assesses the implications of the recent monetary
policy tightening for the near-term outlook across sectors through the lens of
an empirical model. The lead-lag analysis shows that current dynamics in
manufacturing contain information for near-term dynamics in services activity.
The model-based assessment shows that monetary policy shocks have a larger and
faster impact on manufacturing than on services and are consistent with a
broadening of the impact of monetary policy tightening across sectors during
2023.JEL CodeC11 : Mathematical and Quantitative Methods→Econometric and
Statistical Methods and Methodology: General→Bayesian Analysis: General
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and
Cycles→Business Fluctuations, Cycles
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking,
and the Supply of Money and Credit→Monetary Policy

9 January 2024
ECONOMIC BULLETIN - BOX
Geopolitical risk and oil prices
 * Massimo Ferrari Minesso
 * Marie-Sophie Lappe
 * Denise Rößler

Economic Bulletin Issue 8, 2023
English
Details
AbstractThe reaction of oil prices to geopolitical shocks depends on the country
of origin. Empirical analysis suggests that instances of rising geopolitical
tensions generally put downward pressure on oil prices, reflecting weaker global
demand on the back of lower economic activity. However, geopolitical events in
some major oil-producing countries may lead to increases in oil prices amid
expectations by market participants of disruptions to future oil supply. Oil
price pressures arising from these adverse shocks are typically short-lived and
disappear after one quarter. However, recent heightened geopolitical uncertainty
stresses the need to identify the nature of these shocks to disentangle their
effects on oil prices and inflation.JEL CodeQ02 : Agricultural and Natural
Resource Economics, Environmental and Ecological Economics→General→Global
Commodity Markets
F01 : International Economics→General→Global Outlook
F51 : International Economics→International Relations, National Security, and
International Political Economy→International Conflicts, Negotiations, Sanctions

8 January 2024
ECONOMIC BULLETIN - ARTICLE
Central bank money settlement of wholesale transactions in the face of
technological innovation
 * Holger Neuhaus
 * Mirjam Plooij

Economic Bulletin Issue 8, 2023
English
Details
AbstractThrough its TARGET Services, the Eurosystem facilitates the settlement
of wholesale financial transactions in central bank money, the safest and most
liquid settlement asset. Settling such transactions in central bank money helps
to reduce risks to the financial system and to support financial stability and
trust in the currency. The Eurosystem is continuously modernising its settlement
infrastructures and adapting to changing user needs. In line with its commitment
to provide settlement in central bank money via infrastructures that are fit for
purpose – that is, to enable safe and efficient settlement services that meet
the needs of their users – the Eurosystem has recently started analysing the
impact of the emergence of new technologies, such as distributed ledger
technology (DLT). This article describes the findings from Eurosystem market
outreach activities regarding the expected future use of DLT for wholesale
financial transactions, discusses possible Eurosystem responses to a significant
industry uptake of these new technologies, and outlines the Eurosystem’s plans
to further explore how wholesale financial transactions recorded on DLT
platforms could be settled in central bank money.JEL CodeE42 : Macroeconomics
and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards,
Regimes, Government and the Monetary System, Payment Systems
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking,
and the Supply of Money and Credit→Central Banks and Their Policies

8 January 2024
SURVEY OF MONETARY ANALYSTS
ECB Survey of Monetary Analysts (SMA), January 2024
English
3 January 2024
LETTERS TO MEPS
Letter from Piero Cipollone to Irene Tinagli, ECON Chair, on update on work of
digital euro Rulebook Development Group and start of selection procedure for
potential digital euro providers
English
19 December 2023
RESEARCH BULLETIN - No. 114
Hawkish or dovish central bankers: do different flocks matter for fiscal shocks?
 * Lukas Hack
 * Klodiana Istrefi
 * Matthias Meier

English
English
Details
AbstractThis column presents evidence on the role that US monetary policy plays
in how fiscal spending affects the economy. A dovish Federal Open Market
Committee (FOMC) delays policy rate increases, while a hawkish FOMC tightens
monetary policy more promptly, following increased fiscal spending. We show that
the dovish response supports fiscal expansions. In contrast, the hawkish
response results in a GDP decline but effectively controls inflation
expectations.JEL CodeE32 : Macroeconomics and Monetary Economics→Prices,
Business Fluctuations, and Cycles→Business Fluctuations, Cycles
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
E63 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic
Aspects of Public Finance, and General Outlook→Comparative or Joint Analysis of
Fiscal and Monetary Policy, Stabilization, Treasury Policy
H56 : Public Economics→National Government Expenditures and Related
Policies→National Security and War

18 December 2023
WORKING PAPER SERIES - No. 2883
Financial contagion within the interbank network
 * Christina D. Mikropoulou
 * Angelos T. Vouldis

English
Details
AbstractThe analysis of contagion in financial networks has primarily focused on
transmission channels operating through direct linkages. This paper develops a
model of financial contagion in the interbank market featuring both direct and
indirect transmission mechanisms. The model is used to analyse how shocks
originating from outside sectors impact the functioning of the interbank market
and investigates the emergence of instability in this setting. We conduct
simulations on actual interbank bilateral exposures, constructed manually from a
supervisory dataset reported by the largest euro area banks. We find that while
the impact of direct contagion increases gradually with the shock intensity, the
effect of indirect contagion is subject to threshold effects and can increase
abruptly when the threshold is exceeded. In addition, the risk posed by indirect
contagion has a higher upper bound compared to direct contagion. Finally, we
find that in terms of overall impact, the shocks to the value of sovereign debt
and non-bank financial institutions represent the most significant risk to the
functioning of the interbank market.JEL CodeG01 : Financial
Economics→General→Financial Crises
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository
Institutions, Micro Finance Institutions, Mortgages
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial
Institutions, Financial Instruments, Institutional Investors
D85 : Microeconomics→Information, Knowledge, and Uncertainty→Network Formation
and Analysis: Theory

18 December 2023
WORKING PAPER SERIES - No. 2882
“Glossy green” banks: the disconnect between environmental disclosures and
lending activities
 * Mariassunta Giannetti
 * Martina Jasova
 * Maria Loumioti
 * Caterina Mendicino

English
Details
AbstractUsing confidential information on banks’ portfolios, inaccessible to
market participants, we show that banks that emphasize the environment in their
disclosures extend a higher volume of credit to brown borrowers, without
charging higher interest rates or shortening debt maturity. These results cannot
be attributed to the financing of borrowers’ transition towards greener
technologies and are robust to controlling for banks’ climate risk discussions.
Examining the mechanisms behind the strategic disclosure choices, we highlight
that banks are hesitant to sever ties with existing brown borrowers, especially
if they exhibit financial underperformance.JEL CodeG11 : Financial
Economics→General Financial Markets→Portfolio Choice, Investment Decisions
G15 : Financial Economics→General Financial Markets→International Financial
Markets
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository
Institutions, Micro Finance Institutions, Mortgages

18 December 2023
EURO AREA MONETARY AND FINANCIAL STATISTICS - QUALITY REPORT
Euro area monetary and financial statistics - Quality report 2022
English
English
18 December 2023
SURVEY OF MONETARY ANALYSTS - AGGREGATE RESULTS
The ECB Survey of Monetary Analysts (SMA), December 2023, Aggregated Results
English
English
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INTEREST RATES

Marginal lending facility 4.75 % Main refinancing operations (fixed rate) 4.50 %
Deposit facility 4.00 %

20 September 2023 Past key ECB interest rates


INFLATION RATE

2023JulOct246
2.9%
October '23
2.4%
November '23
2.9%
December '23 (Est.)

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