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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.

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

17 hours ago

July 2021
23 July 2021
Monetary policy
Outcome of the ECB’s strategy review
On 7 July 2021 the Governing Council approved the ECB’s new monetary policy strategy, as documented in the monetary policy strategy statement and the longer overview note. The new strategy follows a thorough review, which was launched on 23 January 2020. The related press release is available on the ECB’s website. The Governing Council intends to periodically assess the appropriateness of its monetary policy strategy, with the next assessment expected in 2025. The Governing Council furthermore approved a comprehensive action plan, with an ambitious roadmap to further incorporate climate change considerations into its policy framework. A dedicated press release is available on the ECB’s website.
Market

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Christine Lagarde, Luis de Guindos: Monetary policy statement (with Q&A)

2 days ago

Christine Lagarde, President of the ECB,Luis de Guindos, Vice-President of the ECB
Frankfurt am Main, 22 July 2021
Jump to the transcript of the questions and answers
Good afternoon, the Vice-President and I welcome you to our press conference.
At today’s meeting, the Governing Council focused on two main topics: first, the implications of our strategy review for our forward guidance on the key ECB interest rates; and, second, our assessment of the economy and our pandemic measures.
In our recent strategy review, we agreed a symmetric inflation target of two per cent over the medium term. Our policy rates have been close to their lower bound for some time and the medium-term outlook for inflation is still well below our target. In these conditions, the Governing Council today

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Monetary policy decisions

2 days ago

22 July 2021
In its recent strategy review, the Governing Council agreed a symmetric inflation target of two per cent over the medium term. The key ECB interest rates have been close to their lower bound for some time and the medium-term outlook for inflation is still well below the Governing Council’s target. In these conditions, the Governing Council today revised its forward guidance on interest rates. It did so to underline its commitment to maintain a persistently accommodative monetary policy stance to meet its inflation target.
In support of its symmetric two per cent inflation target and in line with its monetary policy strategy, the Governing Council expects the key ECB interest rates to remain at their present or lower levels until it sees inflation reaching two per cent

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July 2021 euro area bank lending survey

4 days ago

20 July 2021
Credit standards broadly unchanged following significant net tightening in 2020
Loan demand by firms supported by fixed investment
Bank lending conditions reflect continued support by monetary, fiscal and supervisory authorities
According to the July 2021 euro area bank lending survey (BLS), credit standards – i.e. banks’ internal guidelines or loan approval criteria – remained broadly unchanged for loans or credit lines to enterprises (net percentage of banks standing at -1%, see Chart 1) in the second quarter of 2021. Credit standards were also broadly unchanged in net terms for loans to households for house purchase (net percentage of -1%) and for consumer credit and other lending to households (net percentage of 0%). These developments follow the significant net

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Isabel Schnabel: A new strategy for a changing world

10 days ago

Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at a virtual event series hosted by the Peterson Institute for International Economics
Frankfurt am Main, 14 July 2021
Last week the Governing Council of the European Central Bank (ECB) published its new monetary policy strategy.[1] It was the ECB’s first review of its strategy since 2003, with most features of the framework still dating back to its founding years.
Since those times, the world economy has changed in fundamental ways.
About half of today’s ten largest global firms by stock market capitalisation did not exist when the euro was launched in 1999. In that year, imports accounted for around 30% of euro area economic activity; on the eve of the pandemic, this share had increased to 45%. And whereas in 2000

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Eurosystem launches digital euro project

10 days ago

14 July 2021
Investigation phase of digital euro project to last 24 months
Design to be based on users’ preferences and technical advice by merchants and intermediaries
No technical obstacles identified during preliminary experimentation phase
The Governing Council of the European Central Bank (ECB) has decided today to launch the investigation phase of a digital euro project. Following the decision, the President of the Eurogroup Paschal Donohoe joined the meeting, congratulated the Governing Council and expressed his full support for the project.
“It has been nine months since we published our report on a digital euro. In that time, we have carried out further analysis, sought input from citizens and professionals, and conducted some experiments, with encouraging results. All

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Christine Lagarde: Interview with Financial Times

11 days ago

Interview with Christine Lagarde, President of the ECB, conducted by Martin Arnold on 11 July 2021
13 July 2021
It is only a few days since you announced a new strategy. How will this change the ECB?
I think what has changed is how we define price stability and while in the past, we had this vaguely ambiguous and a little bit complex “below, but close to, two per cent”, we now have what I would call a simple, solid, symmetric two per cent target. So we express very firmly that we are determined to deliver two per cent. I think that is a big change. 
Number one, it is simple. So we do away with the perceptions, the ambiguity, the variations between what some see as 1.7, others as 1.95. It’s two per cent and it is simple. It is solid because it gives us space to manoeuvre our monetary

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Results of the June 2021 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter derivatives markets (SESFOD)

11 days ago

13 July 2021
Overall credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets tightened slightly for each counterparty type except banks/dealers, hedge funds and sovereigns
Financing conditions for various collateral types eased significantly, while demand for funding across almost all collateral types continued to weaken further
Initial margin requirements increased for all OTC derivatives, while liquidity and trading was broadly unchanged
Overall credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets tightened slightly over the March 2021 to May 2021 review period. Survey respondents reported a tightening of overall credit terms for each individual

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Christine Lagarde: Climate Change and Central Banks: Analysing, Advising and Acting

13 days ago

Speech by Christine Lagarde, President of the ECB, at the International Climate Change Conference in Venice
Venice, 11 July 2021
Both climate change and the transition to a carbon neutral economy pose substantial challenges for the economy and the financial system, with the potential to affect growth and inflation in the short term, but also over much longer horizons.
Physical risks, stranded assets and greater firm default risk expose the financial system to losses, which may impair the transmission of monetary policy. And the Eurosystem’s balance sheet itself is exposed to climate risk from the assets we hold, notably through our asset purchase programmes.
In short, climate change has consequences for us as a central bank pursuing our primary mandate of price stability, and our

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Isabel Schnabel: Interview with Frankfurter Allgemeine Sonntagszeitung

14 days ago

Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Patrick Bernau and Dennis Kremer on 8 July and published on 10 July 2021
8 July 2021
Ms Schnabel, the ECB has set itself a new, higher inflation target of two per cent. Do people now have to fear higher inflation?
No, they don’t. For one thing, the increase in the inflation target is minimal. And for another, a target of two per cent has an important function: it creates space so that our monetary policy can have its stabilising effect. In bad times, such as during the pandemic, monetary policy stimulates the economy through low interest rates and so has significant favourable effects on economic growth and employment. However, today’s interest rates are already so low that they cannot be reduced

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Meeting of 9-10 June 2021

15 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, 9-10 June 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 21-22 April 2021.
The nominal euro area ten-year GDP-weighted sovereign bond yield had increased by around 5 basis points, while short to medium-term yields had remained broadly unchanged. Taking into account also broader developments since the Governing Council’s 10-11 March meeting, a mild steepening of the yield curve could be observed – a typical phenomenon of an economy on the verge of recovery.

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

16 days ago

Christine Lagarde, President of the ECB,Luis de Guindos, Vice-President of the ECB
Frankfurt am Main, 8 July 2021
Jump to the transcript of the questions and answers
The Vice-President and I are very pleased to welcome you to our special press conference. Yesterday the Governing Council unanimously approved the ECB’s new monetary policy strategy. This brings to a successful conclusion the strategic review that we have been conducting over the last 18 months, drawing on an immense collective effort by staff at the ECB and the national central banks of the euro area. We have worked within the existing Treaty and taken the ECB’s primary mandate of price stability as a given. The review has allowed us to challenge our thinking, engage with numerous stakeholders, reflect, discuss and reach

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ECB presents action plan to include climate change considerations in its monetary policy strategy

16 days ago

8 July 2021
The ECB’s Governing Council is strongly committed:
to further incorporating climate change considerations into its monetary policy framework;
to expanding its analytical capacity in macroeconomic modelling, statistics and monetary policy with regard to climate change;
to including climate change considerations in monetary policy operations in the areas of disclosure, risk assessment, collateral framework and corporate sector asset purchases;
to implementing the action plan in line with progress on the EU policies and initiatives in the field of environmental sustainability disclosure and reporting.
The Governing Council of the European Central Bank (ECB) has decided on a comprehensive action plan, with an ambitious roadmap (see annex) to further incorporate climate

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ECB’s Governing Council approves its new monetary policy strategy

16 days ago

8 July 2021
New strategy adopts symmetric 2% inflation target over medium term
Governing Council confirms that HICP remains appropriate price measure and recommends inclusion of owner-occupied housing over time
New monetary policy strategy is result of thorough review launched in January 2020
Governing Council approves ambitious climate change action plan
The Governing Council of the European Central Bank (ECB) has today published its new monetary policy strategy, which it has set out in a monetary policy strategy statement.
The Governing Council considers that price stability is best maintained by aiming for a 2% inflation target over the medium term. This target is symmetric, meaning negative and positive deviations of inflation from the target are equally undesirable. When

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Isabel Schnabel: Escaping low inflation?

21 days ago

Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Petersberger Sommerdialog
Frankfurt am Main, 3 July 2021
After having lived through the deepest contraction in post-war times, the euro area economy has embarked on a strong recovery from the pandemic.
Confidence indicators are at their highest level in more than two decades, reflecting surging optimism among firms and consumers. According to the June 2021 Eurosystem staff projections, the euro area is expected to grow by 4.6% this year and by 4.7% in 2022, the fastest expansion in the history of the monetary union.
Inflation, too, has started to recover from the negative rates seen at the end of last year. The recent pick-up in price pressures has given rise to a controversial debate among economists,

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Christine Lagarde: Interview with La Provence

22 days ago

Interview with Christine Lagarde, President of the ECB, conducted by Marie Cécile Berenger
2 July 2021
What was the European Central Bank’s role in the health crisis?
Let’s recall the situation prevailing in early March 2020 when all the political and economic players in the public and private sectors suddenly realised that the health crisis would also have severe economic consequences. The financial markets were then gripped by major uncertainty. Like the other major central banks in the world that I was in contact with at that time, the European Central Bank (ECB) had a dual role. The first role was to stabilise the markets. We launched our pandemic emergency purchase programme, with an envelope which was increased to €1,850 billion over time, to calm the markets and help stabilise

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Joint ECB/ESRB report shows uneven impacts of climate change for the EU financial sector

23 days ago

1 July 2021
Financial stability vulnerabilities from climate change concentrated in certain regions, sectors and firms, with evolution of risks conditional on effective and timely transition to low carbon economy
Granular exposure mapping of climate hazards to financial risk reveals vulnerability to river flooding widespread across countries, compounded by wildfire, heat and water stress risk in some regions
Transition risk resulting from financial market repricing has cross-sector impact and varies within sectors owing to differences in emissions efficiency
Long-term scenario analyses suggest timely and orderly macroeconomic policies to tackle climate-related risk can reduce financial stability risks, notably for highest greenhouse-gas emitting sectors
The European Central

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Christine Lagarde: Financing a green and digital recovery

25 days ago

Speech by Christine Lagarde, President of the ECB, at the Brussels Economic Forum 2021
Frankfurt am Main, 29 June 2021
Thank you for inviting me to speak to you today.
The economist Rudi Dornbusch once said that “in economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”
That describes the situation we face today very well. The pandemic has accelerated pre-existing trends at a pace we could never have imagined. There are possibilities for our economy in 2022 which seemed at least a decade away in 2019.
Companies have digitised their activities 20 to 25 times faster than they had previously thought possible. One in every five workdays are expected to move to the home after the pandemic ends, compared with just one in

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Changes to the Eurosystem’s loan-level data requirements

26 days ago

28 June 2021
ESMA reporting templates to be used as of 1 October 2021, replacing the current ECB templates
All asset-backed securities (ABSs) seeking collateral eligibility are subject to the same Eurosystem loan-level data requirements, regardless of any disclosure exemption under the Securitisation Regulation
New reporting template for non-marketable debt instruments backed by eligible credit claims (DECCs)
In March 2019, the ECB decided[1] that the loan-level data reporting requirements of the Eurosystem collateral framework will converge towards the disclosure requirements specified in the Securitisation Regulation (Regulation (EU) No 2017/2402). Today, the ECB announces that the “ESMA reporting activation date”[2] occurred on 25 June 2021, when all related conditions were

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Luis de Guindos: Euro area banks in the recovery

26 days ago

Speech by Luis de Guindos, Vice-President of the ECB, at the Frankfurt Euro Finance Summit
Frankfurt am Main, 28 June 2021
I am delighted to take part once again in the Frankfurt Euro Finance Summit and very pleased to be able to attend in person. Today, I will focus on the banking sector and on financial system stability which is a necessary condition for the recovery from the pandemic crisis.
Banks have weathered the pandemic and the economic outlook is now brightening
The euro area economy was struck in 2020 by the extraordinary and severe coronavirus (COVID-19) pandemic shock, with economic activity contracting sharply in the first half of the year. It recovered in the second half, albeit partially and unevenly across countries. Overall, GDP fell by 6.6% compared with 2019.

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Fabio Panetta: Monetary-fiscal interactions on the way out of the crisis

26 days ago

Keynote speech by Fabio Panetta, Member of the Executive Board of the ECB, at the Conference of the Governors of Mediterranean Central Banks on “Central banks at the frontline of the COVID-19 crisis: weathering the storm, spurring the recovery”
Frankfurt am Main, 28 June 2021
The pandemic has seen a paradigm shift. For the first time in decades, monetary and fiscal policies across advanced economies are working together to stimulate demand. And following many years of low growth and low inflation, both are now picking up.
The key question is whether this moment will last.
Some view close monetary-fiscal interactions as an exceptional response to the pandemic emergency that should end when the pandemic does. But the experience we have gained since the great financial crisis shows

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

29 days ago

June 2021
25 June 2021
Market operations
Operationalisation of the administration of the NextGenerationEU loans and grants
On 26 May 2021 the Governing Council adopted Decision (EU) 2021/874 (ECB/2021/25) amending Decision (EU) 2019/1743 on the remuneration of holdings of excess reserves and of certain deposits. The amendment includes operational aspects related to the administration of the loans and grants disbursed under the EU’s NextGenerationEU (NGEU) emergency support package. Accordingly, the ECB will open two accounts for the European Commission: one to hold the prudential NGEU cash holdings needed to ensure the successful management of NGEU payments, and one to serve as a pass-through account through which to disburse grants to the Member States. The European Commission will

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ECB publishes consolidated banking data for end-December 2020

June 24, 2021

24 June 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 December 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 basis

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Christine Lagarde: Hearing of the Committee on Economic and Monetary Affairs of the European Parliament

June 21, 2021

Introductory statement by Christine Lagarde, President of the ECB, at the Hearing of the Committee on Economic and Monetary Affairs of the European Parliament (by videoconference)
Frankfurt am Main, 21 June 2021
Dear Chair,
Honourable members of the Economic and Monetary Affairs Committee,
Ladies and Gentlemen,
I am very happy to appear before this Committee again today.
While we are still meeting in a virtual setting, the health situation and economic prospects across Europe have improved on the back of significant progress in vaccinations − with more than 100 million people in the European Union now fully vaccinated. This makes me hopeful that we will meet again in person in Brussels in the near future.
In my remarks today I will first discuss the economic outlook for the euro

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ECB’s Governing Council discussed future monetary policy strategy

June 20, 2021

20 June 2021
First in-person meeting since March 2020 took place over weekend
Informal in-depth discussion about ECB’s strategy review
The Governing Council of the European Central Bank (ECB) convened on 18-20 June 2021 in the Taunus region close to Frankfurt am Main for its annual retreat. It was the first in-person meeting of the members of the Governing Council since March 2020.
The retreat focused on advancing the discussions about the ECB’s monetary policy strategy review. The topics addressed by the review included, among others, the definition and measurement of price stability, the underlying analytical framework, the medium-term orientation, the role of climate change in formulating monetary policy, and the modernisation of policy communication.
“It was good to meet again

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