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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

Luis de Guindos: Macroprudential policy after the COVID-19 pandemic

2 days ago

Panel contribution by Luis de Guindos, Vice-President of the ECB, at the Banque de France / Sciences Po Financial Stability Review Conference 2021 “Is macroprudential policy resilient to the pandemic?”
1 March 2021
Introduction
It is a great pleasure to be here this afternoon and share some thoughts on the future of macroprudential policy in the euro area after the coronavirus (COVID-19) pandemic.
About one year ago, the euro area was hit by a major unexpected shock: the COVID-19 pandemic. While this health and economic crisis has had, and continues to have, a severe impact on European citizens and businesses, the euro area banking sector has so far weathered the crisis well. Rather than being part of the problem, it has been part of the solution. The banking sector has managed to

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Christine Lagarde: The coronavirus crisis and SMEs

2 days ago

Speech by Christine Lagarde, President of the ECB, at the “Jahresimpuls Mittelstand 2021” of Bundesverband Mittelständische Wirtschaft
Frankfurt am Main, 1 March 2021
It is a great pleasure to have the opportunity to speak to you today.
At the ECB we care deeply about connecting with small and medium-sized enterprises (SMEs), since they are the foundation of the European economy.
SMEs make up 99.8% of all non-financial companies in the EU, provide 66.6% of jobs and generate 56.4% of added value.[1] It is decisions by companies like yours to invest, hire and innovate that put the European economy on a path to growth.
But in Germany, being part of the Mittelstand has a special quality that is about much more than the firm’s size. It is about the philosophy of how to do business and

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Philip R. Lane: Interview with Expansión

5 days ago

Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Andrés Stumpf on 22 February
26 February 2021
After the Christmas holidays and a third wave of the pandemic, what’s the current situation of the European economy?
2021 is an unusual year. Some of the current restrictions on economic activity are going to be extended. But, while we’re facing these short-term risks, there is the prospect of vaccinations bringing a sea change in the second half of 2021. In the second quarter activity will already start to recover compared with current levels. The timing of this rebound will depend on how the public health situation develops, in terms of both the vaccinations and the delays that the mutations of the virus could cause.
If the restrictions are extended,

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Isabel Schnabel: Unconventional fiscal and monetary policy at the zero lower bound

5 days ago

Keynote speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Third Annual Conference organised by the European Fiscal Board on “High Debt, Low Rates and Tail Events: Rules-Based Fiscal Frameworks under Stress”
Frankfurt am Main, 26 February 2021
One of the greatest conundrums and policy challenges of our times is the coincidence of persistently low real long-term interest rates and low inflation.
Even before the coronavirus (COVID-19) pandemic, inflation across many advanced economies had been falling short of central banks’ aims for nearly a decade. In the euro area, hopes that inflation would sustainably recover to levels closer to 2% have been repeatedly and persistently disappointed, despite highly favourable financing conditions.
Years of subdued price

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Isabel Schnabel: Interview with LETA

6 days ago

Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Ingūna Ukenābele on 22 February 2021
25 February 2021
How would you describe the current economic situation in the euro area?
In the course of the pandemic, we have experienced the deepest economic downturn since World War II. After the strong decline in economic activity following the first wave of infections in the spring of 2020, we saw a strong rebound, supported by the decisive fiscal and monetary policy response. This positive development was interrupted by increasing infection numbers towards the end of last year, also affecting economic activity at the start of 2021. With respect to the health situation, we continue to face substantial uncertainty due to the new variants of the virus, which

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Philip R. Lane: The compass of monetary policy: favourable financing conditions

6 days ago

Speech by Philip R. Lane, Member of the Executive Board of the ECB, at Comissão do Mercado de Valores Mobiliários
25 February 2021
Introduction
Over the last year, the pandemic has presented a series of challenges to central banks. In addition to the initial task of stabilising markets, the scale and duration of the shock to the world economy and the global financial system has required extensive monetary accommodation.[1] Looking ahead, it is clear that the successful containment of the virus and the fostering of a sustainable recovery will require an extended period of favourable financing conditions for all sectors of the economy.
In my remarks today, I will set out some considerations for thinking about favourable financing conditions as the compass guiding monetary policy.
The

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Christine Lagarde: Investing in our climate, social and economic resilience: What are the main policy priorities?

9 days ago

Speech by Christine Lagarde, President of the ECB, at the opening plenary session of the European Parliamentary Week 2021 in virtual format
Frankfurt am Main, 22 February 2021
I would like to thank you warmly for inviting me to speak to you today. It is a privilege to have an opportunity to talk to the citizens’ representatives at the heart of European democracy.
Events like this one allow us to consider national debates in discussions about our common challenges as Europeans.
For all of us, the past year of the pandemic has been an extraordinary challenge. And, at all levels, the public policy response has been truly impressive. National responses have spearheaded the policy effort, with fiscal measures amounting to, on average, 4.5% of euro area GDP.
Yet the response to this

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

12 days ago

February 2021
19 February 2021
Market operations
Annual review of the list of acceptable non-regulated markets and the list of recognised agencies in the Eurosystem collateral framework
On 22 January 2021 the Governing Council decided, as a result of its annual review of these lists, to add the market SI ENTER to the list of accepted non-regulated markets and two agencies (UAB Valstybės investicinis kapitalas (VIK) and Slovenská záručná a rozvojová banka, a.s. (SZRB)) to the recognised agency list. Both lists are available on the ECB’s website.
Amendment to the decision on the third series of targeted longer-term refinancing operations
On 29 January 2021 the Governing Council adopted Decision (EU) 2021/124 (ECB/2021/3) amending Decision (EU) 2019/1311 (ECB/2019/21) on a third

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Meeting of 20-21 January 2021

13 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, 20-21 January 2021
1. Review of financial, economic and monetary developments and policy options
Financial market developments
Ms Schnabel reviewed the financial market developments since the Governing Council’s previous monetary policy meeting on 9-10 December 2020.
New global coronavirus (COVID-19) infections had reached a record high in the previous week and the risk of more protracted containment measures was rising amid the emergence of more infectious mutations of the virus and a pace of vaccination that was proceeding more slowly than expected. Sentiment in financial markets, however, had improved noticeably at the start of the year,

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Financial statements of the ECB for 2020

13 days ago

18 February 2021
ECB profit amounted to €1.6 billion (2019: €2.4 billion) and is distributed in full to national central banks
Net interest income on securities held for monetary policy purposes: €1.3 billion (2019: €1.4 billion)
ECB’s Balance Sheet grew to €569 billion (2019: €457 billion)
The European Central Bank’s (ECB’s) audited financial statements for 2020 show that the profit for the year was €1,643 million (2019: €2,366 million). The €722 million decrease compared to the previous year was mainly due to lower net interest income on foreign reserve assets and on securities held for monetary policy purposes. Following a decision by the Governing Council, there was also a transfer of €48 million to the ECB’s provision for financial risks, which reduced the ECB’s profit by

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ECB publishes consolidated banking data for end-September 2020

14 days ago

17 February 2021

Chart 1
Total assets of credit institutions headquartered in the EU
(EUR billions)

Data for total assets of credit institutions headquartered in the EU

Chart 2
Non-performing loans ratio of credit institutions headquartered in the EU (excluding the United Kingdom)
(EUR billions; percentages)
Notes: The non-performing loans ratio is defined as the ratio of non-performing loans to total loans.

Data for the non-performing loans ratio of credit institutions headquartered in the EU

Chart 3
Return on equity of credit institutions headquartered in the EU in September 2020
(percentages)
Notes: Return on equity is defined as the ratio of total profit (loss) for the year to total equity. The data show the return on equity calculated on the

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Fabio Panetta: Evolution or revolution? The impact of a digital euro on the financial system

21 days ago

Speech by Fabio Panetta, Member of the Executive Board of the ECB, at a Bruegel online seminar
Frankfurt am Main, 10 February 2021
Throughout history, innovations in money have challenged and altered the structure of the financial system. Time and time again, innovations have given rise to debates about the risks they pose and the rewards they bring, as well as the role of central banks in building confidence in money.
Paper banknotes are a case in point. As they were easy to carry, they made commerce more straightforward. But their success did not come easily. Attempts by central banks to issue banknotes in the 17th century resulted in too many being issued and even defaults, raising questions about their effects on stability and, ultimately, on the credibility of the sovereign. Yet

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Fabio Panetta: Interview with Der Spiegel

22 days ago

Interview with Fabio Panetta, Member of the Executive Board of the ECB, conducted by Tim Bartz
9 February 2021
Mr Panetta, ECB President Christine Lagarde has announced that within five years at the latest the central bank could introduce the digital euro. What is that? Why is it needed?
People are paying less and less with cash and more and more digitally, at supermarket checkouts or online. One in two Europeans would now prefer to pay digitally, and the pandemic has accelerated this development. As a supplement to cash, people want an efficient digital means of payment which protects data and is accepted throughout the euro area. We want to be able to respond to these demands swiftly, since the trend is going to grow stronger.
How will the digital euro work?
The details have not

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Christine Lagarde: European Parliament plenary debate on the ECB Annual Report

23 days ago

Introductory statement by Christine Lagarde, President of the ECB, at the plenary session of the European Parliament
Brussels, 8 February 2021
Honourable President of the European Parliament,
Executive Vice-President of the Commission,
Honourable Members of the European Parliament,
I am pleased to join you today for the plenary debate on your draft resolution on the ECB Annual Report. The circumstances could hardly be more different from my first appearance here last year.
The pandemic has confronted us with a serious public health and economic crisis. The start of vaccination campaigns provides hope. But people across Europe are still facing the dire social and economic consequences of the virus and the future remains uncertain.
In these circumstances, a close dialogue between

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Christine Lagarde: Interview with Le Journal du Dimanche

24 days ago

Interview with Christine Lagarde, President of the ECB, conducted by Marie-Pierre Gröndahl and Hervé Gattegno
7 February 2021
There’s been a glut of bad news throughout Europe recently. How can we hold to the economic projections?
Uncertainties are indeed multiplying. As far as the economists at the ECB can remember, there have never been as many. Our projections are published every three months. One way of preserving a degree of optimism despite the current circumstances is simply to think back to the ECB’s projections released in September 2020 and the multiple uncertainties they took into account. What were the salient facts back then? The terms of the final Brexit deal were not yet known. The risks of a no-deal exit were still present, as much for the European Union as for the

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ECB extends bilateral euro liquidity lines with non-euro area central banks

27 days ago

4 February 2021
ECB decided to extend temporary euro liquidity lines by nine months to March 2022
Objective of these euro liquidity lines is to address possible euro liquidity needs in non-euro area countries in presence of market dysfunctions due to COVID-19
The European Central Bank (ECB) decided in December 2020 to offer a nine-month extension of its temporary swap and repo lines with non-euro area central banks. The central banks of Albania, Croatia, Hungary, the Republic of North Macedonia, Romania, San Marino and Serbia have agreed to extend the duration of their euro liquidity lines with the ECB to March 2022.
The lines were established earlier in 2020 to provide euro liquidity to financial institutions in the respective countries via the corresponding national central

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Philip R. Lane: Interview with Süddeutsche Zeitung

January 31, 2021

Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Markus Zydra on 26 January and published on 1 February 2021 as a shortened version in Süddeutsche Zeitung
31 January 2021
Mr Lane, the ECB aspires to be closer to the people. Distributing helicopter money would be a good way to go about that. Why does the ECB prefer to channel its support to banks rather than directly to citizens? Is this a taboo topic?
Of course we track the academic and the wider debate. But at the ECB we should focus on the policies that we are actually pursuing and the options that are on the table, and not the outer reaches of monetary theory.
Is the idea of helicopter money off the table for good?
It’s not particularly productive to engage in hypothetical discussions, but

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Isabel Schnabel: Interview with Deutschlandfunk

January 31, 2021

Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Klemens Kindermann on 29 January 2021 and published on 31 January 2021
31 January 2021
Perhaps a question of general interest to start off with: how is the ECB operating during the coronavirus pandemic? Is everyone working from home?
The ECB put some comprehensive measures in place very early on. And this means that the vast majority of our people have been working from home for many months now. To be honest, I find it really remarkable how well it has worked because the ECB is a very complex institution that now is almost completely in teleworking mode.
Talking of coronavirus: the pandemic has caused the euro area economy to collapse – by 5% in Germany alone last year. The prospect of a vaccine

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Isabel Schnabel: The sovereign-bank-corporate nexus – virtuous or vicious?

January 28, 2021

SPEECHSpeech by Isabel Schnabel, Member of the Executive Board of the ECB, at the LSE conference on “Financial Cycles, Risk, Macroeconomic Causes and Consequences”Frankfurt am Main, 28 January 2021One year after the first cases were reported in Europe, the coronavirus (COVID-19) pandemic continues to take a tragic human toll and to pose enormous challenges to workers, firms, the financial system and policymakers in the euro area.[1]Without the forceful responses of fiscal, monetary and prudential authorities the economic and social costs of this crisis would have been significantly higher. Governments, in particular, have stabilised aggregate demand and incomes by absorbing economic and financial risks of the private sector as the crisis unfolded.Through the generous issuance of guarantee

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Philip R. Lane: Interview with SKAI TV

January 27, 2021

INTERVIEWInterview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Elena Laskari on 26 January 202127 January 2021Euro area economies are still under pressure because of the second wave of the pandemic and it is still unclear if we are closer to the end of the tunnel or closer to a third wave. According to the ECB’s forecasts, how many years will it take for our economies to heal the scars of the pandemic and return to where they were in 2019?There’s no doubt that in the near term it’s a difficult situation. Many parts of the European economy are under some kind of lockdown measure right now, but we think this is maybe more delaying the recovery rather than posing a major long-term problem. So, we still think that by the middle of next year, so maybe towards the

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ECB to invest in Bank for International Settlements’ green bond fund

January 25, 2021

PRESS RELEASE25 January 2021ECB to use own funds portfolio to invest in BIS’ euro-denominated green bond fundBIS’ fund invests in renewable energy production and energy efficiency projectsStep marks ECB’s contribution to environmental objectives and EU climate goalsThe European Central Bank (ECB) has decided to use part of its own funds portfolio to invest in the euro-denominated green bond investment fund for central banks (EUR BISIP G2) introduced by the Bank for International Settlements (BIS). With this investment, the ECB contributes, within its mandate, to global efforts to promote environmental objectives – including the EU climate goals – and to combat climate change. The BIS green bond fund invests in renewable energy production, energy efficiency and other environmentally

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ECB sets up climate change centre

January 25, 2021

PRESS RELEASE25 January 2021New unit, operational as of early 2021, to strengthen and bring together ECB work on climateDecision reflects growing importance of climate change for the economy and the ECB’s policy Climate change centre will shape and steer climate agenda The European Central Bank (ECB) has decided to set up a climate change centre to bring together the work on climate issues in different parts of the bank. This decision reflects the growing importance of climate change for the economy and the ECB’s policy, as well as the need for a more structured approach to strategic planning and coordination. The new unit, which will consist of about ten staff working with existing teams across the bank, will report to the ECB’s President, Christine Lagarde, who oversees the ECB’s work on

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Christine Lagarde: Climate change and central banking

January 25, 2021

SPEECHKeynote speech by Christine Lagarde, President of the ECB, at the ILF conference on Green Banking and Green Central BankingFrankfurt am Main, 25 January 2021In the famous fable “Belling the Cat”,[1] a group of mice gather to discuss how to deal with a cat that is eating them one by one. They hatch a plan to put a bell on the cat so they can hear it coming and escape before being caught. When it comes to who will actually do it, however, each mouse finds a reason why they are not the right mouse for the job, and why another mouse should do it instead. The cat never does receive a bell – and the story ends poorly for the mice.In many ways, that fable describes mankind’s reaction to the threats posed by climate change. Already in 1986, the front cover of Der Spiegel showed Cologne

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Philip R. Lane: Macroeconomic policies in the short term and the medium term

January 25, 2021

SPEECHPanel contribution by Philip R. Lane, Member of the Executive Board of the ECB, at the Lámfalussy Lectures E-Conference 2021 organised by the Magyar Nemzeti Bank25 January 2021The current configuration of macroeconomic policies around the world is striking. The large-scale-but-temporary nature of a pandemic calls for an outsized fiscal response that takes account of the shortfall of income for many workers and firms; the asymmetric effects across industries (depending on their reliance on physical proximity to customers); and the compelling case for smoothing the financing of the cost of extensive fiscal support over a very extended period. The optimal contribution of monetary policy in a pandemic is also analytically straightforward: the ample provision of liquidity to protect

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Frank Elderson: Hearing of the Committee on Economic and Monetary Affairs of the European Parliament

January 25, 2021

SPEECHIntroductory statement by Frank Elderson, Member of the Executive Board of the ECB, at the ECON Committee of the European ParliamentBrussels, 25 January 2021Madam Chair,Honourable members of the Economic and Monetary Affairs Committee,Ladies and gentlemen,IntroductionIt is a great honour for me to appear again before your Committee, this time in order for you to assess my suitability for the role of Vice-Chair of the Supervisory Board of the ECB. The European Parliament’s role in this process reflects the highest principles of democracy and accountability. Interactions such as this are of great value to European citizens, given the expertise in supervisory topics acquired by this Committee since the establishment of ECB Banking Supervision. In my remarks today, I will briefly

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Fabio Panetta: Sustainable finance: transforming finance to finance the transformation

January 25, 2021

SPEECHKeynote speech by Fabio Panetta, Member of the Executive Board of the ECB, at the 50th anniversary of the Associazione Italiana per l’Analisi Finanziaria (by videoconference)25 January 2021IntroductionI would like to start by thanking the Italian Association for Financial Analysts (Associazione Italiana per l’Analisi Finanziaria, AIAF) for inviting me to speak on the occasion of its 50th anniversary.[1] Promoting high standards in financial analysis is vitally important for guaranteeing the development and the integrity of markets, to ensure they can serve the real economy. The work performed by the AIAF over the past 50 years in the fields of research, training and reporting and its strong ties with financial operators and savers have helped bring Italian standards in line with

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