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Since 1 January 1999 the European Central Bank (ECB) has been responsible for conducting monetary policy for the euro area - the world’s largest economy after the United States.

Articles by European Central Bank

Isabel Schnabel: Interview with Perspektiven der Wirtschaftspolitik

6 days ago

INTERVIEWInterview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Karen Horn27 May 2020In its ruling on the ECB’s public sector purchase programme (PSPP)[1] pronounced on 5 May, the German Federal Constitutional Court in Karlsruhe found that these asset purchases were partly unconstitutional and that the European Court of Justice (ECJ), in assessing the programme’s proportionality, had failed to satisfy the requirements of a comprehensible review of the ECB’s observance of its monetary policy mandate. What is your view on that and what are its consequences for the ECB? The ruling is solely addressed to the German Federal Government and the Bundestag, which are now required to use their influence to bring about a proportionality assessment by the ECB of its

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Isabel Schnabel: Interview with Financial Times

6 days ago

INTERVIEWInterview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Martin Arnold on 25 May and published on 27 May 202027 May 2020Thank you for making time to talk to us. I know you have been incredibly busy recently. It has been an extraordinary few weeks. I’d like to start by asking you about the recent German constitutional court ruling against the ECB’s public sector purchase programme (PSPP). How is the ECB going to respond to this?The ECB is under the exclusive jurisdiction of the European Court of Justice and therefore this court ruling does not directly affect us. It is directed at the German government and at the German parliament, who now have to respond. The ECJ ruled in December 2018 that the PSPP is legal. Therefore, it is clear for us that we can

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Pandemic increases risks to financial stability

7 days ago

PRESS RELEASE26 May 2020Pandemic greatly amplified existing vulnerabilities of the financial sector, corporates and sovereignsPolicy responses to pandemic essential to preserve financial stability Euro area banks, although now better capitalised, likely to face significant losses and further pressure on profitability Despite the immense social and economic disruption in the wake of the coronavirus (COVID-19) pandemic, decisive policy responses have helped to prevent a seizing-up of the financial system. However, even as infection rates fall in many countries, the impact on the economy and markets has unearthed and increased existing vulnerabilities for euro area financial stability, according to the May 2020 Financial Stability Review (FSR) of the European Central Bank (ECB). Financial

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Meeting of 29-30 April 2020

11 days ago

Account of the monetary policy meeting of the Governing Council of the European Central Bank held in Frankfurt am Main on Wednesday and Thursday, 29-30 April 20201. Review of financial, economic and monetary developments and policy optionsFinancial market developmentsMs Schnabel reviewed the financial market developments since the Governing Council’s previous regular monetary policy meeting on 11-12 March 2020. Although the general risk-off mood had subsided and market liquidity was progressively improving, financial markets continued to show signs of fragility, mainly along four key dimensions. First, most euro area sovereign bond spreads had widened relative to German benchmark bonds, irrespective of their credit rating. In some jurisdictions, bond spreads had temporarily returned to, or

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Philip R. Lane: International inflation co-movements

11 days ago

SPEECHSpeech by Philip R. Lane, Member of the Executive Board of the ECB, at the Inflation: Drivers and Dynamics 2020 Online Conference, Federal Reserve Bank of Cleveland/European Central Bank, 22 May 202022 May 2020In my remarks today, I will discuss some analytical issues in understanding the drivers of international inflation co-movements. In particular, I will examine the individual contributions of common shocks, structural change and the evolution of monetary policy regimes to the observed high correlation of inflation across countries. At the same time, I will caution that correlated inflation paths are not inevitable. Some underlying forces may contribute to divergent inflation outcomes in the years to come.International inflation patternsAs illustrated in Chart 1, average rates of

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Decisions taken by the Governing Council of the ECB (in addition to decisions setting interest rates)

11 days ago

May 202022 May 2020External communicationCommunication in relation to the German Federal Constitutional Court ruling of 5 May 2020 On 5 May 2020 the ECB issued a press release indicating that the Governing Council had taken note of the judgement issued by the German Federal Constitutional Court earlier that day regarding the public sector purchase programme (PSPP), on which it had received a preliminary briefing by the President of the Deutsche Bundesbank and by the legal department of the ECB, and remained fully committed to doing everything necessary within its mandate to meet the ECB’s statutory objective of maintaining price stability. Market operationsGuideline amending Guideline ECB/2014/31 on additional temporary measures relating to Eurosystem refinancing operations and eligibility

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Philip R. Lane: Pandemic central banking: the monetary stance, market stabilisation and liquidity

14 days ago

SPEECHRemarks by Philip R. Lane, Member of the Executive Board of the ECB, at the Institute for Monetary and Financial Stability Policy Webinar, 19 May 202019 May 2020 In my recent blog post, I described the range of scenarios that have been developed by ECB staff to support the analysis of the near-term and medium-term macroeconomic dynamics in the context of the coronavirus (COVID-19) crisis.[1],[2] I also explained the current monetary policy of the ECB and outlined our approach to setting the future course of monetary policy. My remarks today aim to reinforce these points by presenting some additional empirical evidence.Macroeconomic outlookChart 1 shows the three scenarios developed by ECB staff that were published on 1 May. Since then, the Eurosystem staff have continued to track the

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Results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter derivatives markets (SESFOD)

14 days ago

PRESS RELEASE19 May 2020Credit terms remained broadly unchanged for almost all counterparties but are expected to tighten significantly the next reference periodFinancing collateralised by euro-denominated securities continued to declineValuation disputes saw a strong increaseTerms and conditions in secured financing and OTC derivatives markets were, on balance, broadly unchanged compared with one year agoAgainst the background of the emerging coronavirus (COVID-19) crisis during the latter part of the review period December 2019 to February 2020, price and non-price credit terms offered to non-financial corporations, insurance companies and hedge funds tightened somewhat in both the securities financing market and the OTC derivatives market. Terms and conditions for banks and sovereign

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Philip R. Lane: Interview with El País

15 days ago

INTERVIEWInterview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Luis Doncel on 11 May 2020 and published on 18 May 202018 May 2020Since the coronavirus (COVID-19) outbreak spread throughout Europe, the ECB has flooded the market with massive debt purchases and liquidity for the banking sector, but it doesn’t seem to have been enough. What tools do you have left?What we observed in response to the spread of the virus and the containment measures that have been implemented across Europe and the globe is that financing conditions tightened significantly. For policymakers it is crucial to both counter forces that could amplify the shock and to avoid the temporary shock hurting economic performance in the long run. Our monetary policy is making an important

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Christine Lagarde: Interview with Les Echos, Corriere della Sera, Handelsblatt and El Mundo

15 days ago

INTERVIEWInterview with Christine Lagarde, President of the ECB, conducted by Dominique Seux, Federico Fubini, Thomas Hanke and Carlos Segovia, published on 18 May 202018 May 2020Emmanuel Macron and Angela Merkel are proposing a European recovery fund worth €500 billion. It will be made up of direct transfers rather than loans. What do you think of that? Do you think this European fiscal effort will be sufficient to prevent the ECB from having to do all the work on its own? The Franco-German proposals are ambitious, targeted and, of course, welcome. They pave the way for the European Commission to borrow funds over the long term and, above all, they allow a substantial amount of direct support to be provided to the countries most affected by the crisis. This is testament to the spirit of

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ECB announces new measures to increase share of female staff members

19 days ago

PRESS RELEASE14 May 2020ECB launches new model for gender targetsNew targets to cover both hiring and promotion decisions and overall share of female staff ECB missed 2019 gender target for all managers but exceeded target for senior management levelThe European Central Bank (ECB) today announced a new programme to further improve the gender balance of its staff at all levels. The strategy defines target percentages focusing on the annual share of women being appointed to new and open positions as well as targets for the overall share of female staff at various salary levels. The strategy covers the period until 2026, so as to fall within the mandate of President Christine Lagarde. “We want gender balance to be the norm now rather than a revolution to fight later,” said President Lagarde.

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Fabio Panetta: Interview with Der Standard

19 days ago

INTERVIEWInterview with Fabio Panetta, Member of the Executive Board of the ECB, conducted by Andras Szigetvari on 6 May and published on 14 May 202014 May 2020The European Central Bank has responded to the crisis by launching a new emergency programme, under which it will buy €750 billion of securities, mainly government bonds, by the end of the year. At the same time, European rules have been loosened and the usual limits on government deficits no longer apply. Can governments now take on as much debt as they like? We are currently going through a severe economic shock. The first and most important thing we have to do is to maintain the euro area’s productive capacity. This crisis is affecting weak and strong companies alike, because their revenues disappeared from one day to the next.

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Philip R. Lane: Interview with the Telegraaf

21 days ago

INTERVIEWInterview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Dorinde Meuzelaar and Martin Visser on 8 May 2020 and published on 12 May 202012 May 2020How serious are the consequences of the coronavirus (COVID-19) for the economy? Uncertainty is the key word. Our scenarios factor in a contraction of between 5 and 12 percent. We are now in the trough, but I expect the data to improve over the summer, even though people have now accepted that the virus will continue for some time: restaurants are reopening, but with fewer tables; factories are starting up again, but with lower production. We also need to ask what consumers will do: those who have, say, just lost their jobs will consume less for the time-being. So whether we return to the situation before the

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Yves Mersch: An ECB digital currency – a flight of fancy?

22 days ago

SPEECHSpeech by Yves Mersch, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, at the Consensus 2020 virtual conference, 11 May 202011 May 2020A recent survey among 66 central banks by the Bank for International Settlements shows that more than 80% are working on central bank digital currencies (CBDCs).[1]The European Central Bank is one of them.Not because we want to keep up with fashionable trends, but because we have to be ready. Ready to embrace financial technological innovation which has the potential to transform payments and money faster, and in more disruptive ways, than ever before.We are technology neutral. But if our customers, the people of Europe signalled a change in payments behaviour, we would want to preserve their direct link to

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Isabel Schnabel: Interview with La Repubblica

22 days ago

INTERVIEWInterview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Tonia Mastrobuoni and published on 11 May 202011 May 2020The German Constitutional Court said that the ECB’s public sector purchase programme (PSPP) is partly unconstitutional. Do you think this verdict could hamper the ECB’s actions? Some commentators are suggesting the “whatever it takes” effect could be gone now?The ECB is a European institution, meaning that the European Court of Justice has exclusive jurisdiction over the ECB and its actions. It ruled in 2018 that the PSPP is legal. As stressed by the ECB’s President, we are undeterred in our willingness and ability to act. We will continue to conduct the PSPP and the pandemic emergency purchase programme (PEPP), as well as our other

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Christine Lagarde: Opening remarks at the EUI’s State of the Union event

25 days ago

SPEECHOpening remarks by Christine Lagarde, President of the ECB, at the Online Edition of The State of the Union conference organised by the European University Institute8 May 2020Today marks the 75th anniversary of the end of the Second World War in Europe, while tomorrow marks the 70th anniversary of Europe’s response to that cataclysm: the Schuman declaration that set us on the path towards deeper European union.The declaration famously maintained that “Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity.”Schuman’s idea was that Europe needed to become so deeply integrated – and so interdependent – that solidarity would become self-interest. And, thereafter, it would become natural

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Survey on the Access to Finance of Enterprises: Small businesses report challenging outlook for their access to external financing due to COVID-19

25 days ago

PRESS RELEASE8 May 2020Small and medium-sized enterprises (SMEs) reporting rapid deterioration in economic environment in context of COVID-19 Deterioration in economic outlook and SMEs’ financial situations having strong negative impact on availability of financeSME expectations about access to external finance deteriorating sharply, reflecting expected impact of coronavirus pandemic Euro area small and medium-sized enterprises (SMEs) reported a decline in turnover (in net terms -2%, from 20% in the previous six months) in the latest European Central Bank (ECB) Survey on the Access to Finance of Enterprises (SAFE). This was the first such decline reported in the twice-yearly survey since early 2014. They also reported a sharp deterioration in profits (in net terms -15%, down from -1% in

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Luis de Guindos: Presentation of the ECB Annual Report 2019 to the Committee on Economic and Monetary Affairs of the European Parliament (by videoconference)

26 days ago

SPEECHIntroductory remarks by Luis de Guindos, Vice-President of the ECBFrankfurt am Main, 7 May 2020Madam Chair,Honourable Members of the Committee on Economic and Monetary Affairs,Ladies and gentlemen,I welcome the opportunity to appear before this Committee today despite the difficult circumstances. A strong relationship between the ECB and the European Parliament is more important than ever, as Europe is confronted with an extraordinary crisis. In addition to the health emergency, the coronavirus, or COVID-19, pandemic poses severe economic challenges to the euro area. Through exchanges such as this we can demonstrate and explain how EU institutions are acting, within their mandate, to serve the European people in these difficult times.Today we are publishing the ECB’s Annual Report

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ECB takes note of German Federal Constitutional Court ruling and remains fully committed to its mandate

28 days ago

PRESS RELEASE5 May 2020The Governing Council received a preliminary briefing by the governor of the Bundesbank and by the legal department of the European Central Bank (ECB). The ECB takes note of today’s judgment by the German Federal Constitutional Court regarding the Public Sector Purchase Programme (PSPP). The Governing Council remains fully committed to doing everything necessary within its mandate to ensure that inflation rises to levels consistent with its medium-term aim and that the monetary policy action taken in pursuit of the objective of maintaining price stability is transmitted to all parts of the economy and to all jurisdictions of the euro area. The Court of Justice of the European Union ruled in December 2018 that the ECB is acting within its price stability mandate.For

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Results of the Q2 2020 ECB Survey of Professional Forecasters

29 days ago

PRESS RELEASE4 May 2020Expected effects of the coronavirus (COVID-19) pandemic and subsequent mitigation measures have a significant impact on inflation, growth and unemployment rate forecastsHICP inflation expectations for shorter horizons revised sharply down, while average longer-term inflation expectations unchangedReal GDP growth expectations for current and next year revised significantly – down and up respectivelyUnemployment rate expectations revised up sharply for 2020 with only a gradual unwinding thereafterRespondents to the ECB Survey of Professional Forecasters (SPF) for the second quarter of 2020 reported point forecasts for annual HICP inflation averaging 0.4%, 1.2% and 1.4% for 2020, 2021 and 2022, respectively. These results represent downward revisions of 0.8, 0.2 and 0.1

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Decisions taken by the Governing Council of the ECB (in addition to decisions setting interest rates)

29 days ago

April 20204 May 2020Monetary policyExtended timeline for the monetary policy strategy reviewOn 2 April 2020 the ECB communicated the decision taken by the Governing Council to extend the timeline for the review of its monetary policy strategy given the need for the Eurosystem as a whole to prioritise all its efforts on addressing the challenges posed by the coronavirus (COVID-19) pandemic. The conclusion of the strategy review will accordingly be postponed from the end of 2020 to mid-2021. A related press release is available on the ECB’s website. Central bank compliance with prohibitions on monetary financing and privileged accessOn 9 April 2020, in accordance with the Treaty on the Functioning of the European Union (TFEU), which assigns to the ECB the task of monitoring the compliance of

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Christine Lagarde, Luis de Guindos: Introductory statement to the press conference (with Q&A)

April 30, 2020

INTRODUCTORY STATEMENTChristine Lagarde, President of the ECB,Luis de Guindos, Vice-President of the ECB,Frankfurt am Main, 30 April 2020Jump to the transcript of the questions and answersLadies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council, which was also attended by the Commission Executive Vice-President, Mr Dombrovskis.The euro area is facing an economic contraction of a magnitude and speed that are unprecedented in peacetime. Measures to contain the spread of the coronavirus (COVID-19) have largely halted economic activity in all the countries of the euro area and across the globe. Survey indicators for consumer and business sentiment have plunged,

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Monetary policy decisions

April 30, 2020

PRESS RELEASE30 April 2020At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:(1) The conditions on the targeted longer-term refinancing operations (TLTRO III) have been further eased. Specifically, the Governing Council decided to reduce the interest rate on TLTRO III operations during the period from June 2020 to June 2021 to 50 basis points below the average interest rate on the Eurosystem’s main refinancing operations prevailing over the same period. Moreover, for counterparties whose eligible net lending reaches the lending performance threshold, the interest rate over the period from June 2020 to June 2021 will now be 50 basis points below the average deposit facility rate prevailing over the same period.(2) A new series of non-targeted

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ECB announces new pandemic emergency longer-term refinancing operations

April 30, 2020

PRESS RELEASE30 April 2020Series of additional longer-term refinancing operations to ensure sufficient liquidity and smooth money market conditions during the pandemic period Operations allotted on a near monthly basis maturing in the third quarter of 2021 The Governing Council of the European Central Bank (ECB) today decided to conduct a new series of seven additional longer-term refinancing operations, called pandemic emergency longer-term refinancing operations (PELTROs). These operations will provide liquidity support to the euro area financial system and contribute to preserving the smooth functioning of money markets by providing an effective backstop after the expiry of the bridge longer-term refinancing operations (LTROs) that have been conducted since March 2020. Counterparties

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ECB recalibrates targeted lending operations to further support real economy

April 30, 2020

PRESS RELEASE30 April 2020Interest rate on all targeted longer-term refinancing operations (TLTRO III) reduced by 25 basis points to -0.5% from June 2020 to June 2021For banks meeting the lending threshold of 0% introduced on 12 March 2020, the interest rate can be as low as -1%Start of the lending assessment period brought forward to 1 March 2020The Governing Council of the European Central Bank (ECB) today decided on a number of modifications to the terms and conditions of its targeted longer-term refinancing operations (TLTRO III) in order to support further the provision of credit to households and firms in the face of the current economic disruption and heightened uncertainty.For the period from 24 June 2020 to 23 June 2021 the interest rate on all TLTRO III operations will now be 50

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April 2020 euro area bank lending survey

April 28, 2020

PRESS RELEASE28 April 2020Tighter credit standards for loans to enterprises and householdsSurge in firms’ demand for loans due to coronavirus pandemic emergency liquidity needsBank lending conditions ease with ECB’s targeted longer-term refinancing operationsECB’s asset purchases support banks’ liquidity positions and market financing conditionsCredit standards – i.e. banks’ internal guidelines or loan approval criteria – tightened for loans to enterprises, loans to households for house purchase and consumer credit and other lending to households in the first quarter of 2020, according to the April 2020 bank lending survey (BLS). The net percentage of banks reporting a tightening of credit standards for loans or credit lines to firms was contained (net percentage of banks at 4%, see Chart

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ECB takes steps to mitigate impact of possible rating downgrades on collateral availability

April 22, 2020

PRESS RELEASE22 April 2020ECB to grandfather until September 2021 eligibility of marketable assets used as collateral in Eurosystem credit operations falling below current minimum credit quality requirements Appropriate haircuts will apply for assets that fall below the Eurosystem minimum credit quality requirements Decision reinforces broader package of collateral easing measures adopted by the Governing Council on 7 April 2020, which will also remain in place until September 2021ECB may decide further measures, if needed, to continue ensuring the smooth transmission of its monetary policy in all jurisdictions of the euro areaThe Governing Council of the European Central Bank (ECB) today adopted temporary measures to mitigate the effect on collateral availability of possible rating

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ECB and Bulgarian National Bank set up swap line to provide euro liquidity

April 22, 2020

PRESS RELEASE22 April 2020ECB and Bulgarian National Bank set up new swap lineSwap line to remain in place until end-2020, or as long as neededSize of swap line set at €2 billionThe European Central Bank (ECB) and the Българска народна банка (Bulgarian National Bank) have agreed to set up a precautionary currency agreement (swap line) to provide euro liquidity.Under the new swap line, the Bulgarian National Bank will be able to borrow up to €2 billion from the ECB in exchange for Bulgarian levs. The maximum maturity for each drawing will be three months. The swap line will remain in place until 31 December 2020, unless it is extended.Bulgaria is preparing for participation in the exchange rate mechanism (ERM II), which is a prerequisite for an EU Member State to join the euro area.For

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Fabio Panetta: Why we all need a joint European fiscal response

April 21, 2020

INTERVIEWContribution by Fabio Panetta, Member of the Executive Board, European Central Bank, published by Politico on 21 April 202021 April 2020The case for common European economic action in response to the coronavirus crisis has often been presented as a call for solidarity. As noble as that motivation may be, it’s not the only reason for governments to act together. A strong, symmetric fiscal response that offsets the economic damage from the pandemic is in the economic interest of all countries in the eurozone.The disadvantages of an asymmetric response are self-evident. In the realm of public health, if countries are forced to lift necessary public health measures (e.g. lockdowns) prematurely because the economic costs of containment are too high, the virus will inevitably begin to

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Luis de Guindos: Interview with Expresso

April 18, 2020

INTERVIEWInterview with Luis de Guindos, Vice-President of the ECB, conducted by João Silvestre on 15 April 202018 April 2020Is this the greatest crisis in living memory? According to the International Monetary Fund (IMF), this will be the worst downturn since the Great Depression. There is a great deal of uncertainty and, given this degree of uncertainty, we need to define and analyse several scenarios. The IMF’s baseline scenario is very similar to other public and private sector forecasts. It’s important to bear in mind that the impact on the economy, which will be huge, is concentrated in the second quarter of the year – as well as in March – and that the impact will be severe, but temporary. This temporary aspect is important. The calculations point to a contraction in the second

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