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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

Frank Elderson: Integrating the climate and environmental challenge into the missions of central banks and supervisors

2 days ago

Speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, at the 8th Conference on the Banking Union, Goethe University, Frankfurt am Main
Frankfurt am Main, 23 September 2021
Many thanks for your kind introduction and for having me here today at this 8th Conference on the Banking Union. I am especially happy to be here, for this is the first time since I joined the European Central Bank last December that I am joining in a conference on site. It shows that we are indeed making progress in moving closer towards a world after the pandemic, which is the topic of this session of the conference. That being said, we are not there yet, and we are all certainly mindful of the many risks to global public health that currently still

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Firms and banks to benefit from early adoption of green policies, ECB’s economy-wide climate stress test shows

3 days ago

22 September 2021
Firms and banks to be severely affected if climate change issues not addressed
Orderly and swift transition to minimise costs and maximise benefits outweighs short-term cost of transition to zero-carbon economy over medium to longer term
Investment in sectors and regions heavily exposed to climate risk set to suffer most
The European Central Bank (ECB) today published the results of its economy-wide climate stress test. The exercise tested the impact of climate change on more than four million firms worldwide and 1,600 euro area banks under three different climate policy scenarios.
The results show that firms and banks clearly benefit from adopting green policies early on to foster the transition to a zero-carbon economy. The exercise also reveals that the

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Isabel Schnabel: Asset purchases: from crisis to recovery

5 days ago

Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Annual Conference of Latvijas Banka on "Sustainable Economy in Times of Change"
Frankfurt am Main, 20 September 2021
Asset purchases have become an important tool for central banks worldwide to secure price stability in the vicinity of the zero lower bound. The experience over the past decade has yielded many insights into how precisely asset purchases affect financial and economic conditions, the latest example being the response to the coronavirus (COVID-19) pandemic.
There is by now broad consensus that asset purchases can support economic growth and inflation in three main ways[1]: first, through the market stabilisation channel, by which asset purchases provide liquidity when there are deep dislocations

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Luis de Guindos: Interview with Het Financieele Dagblad

7 days ago

Interview with Luis de Guindos, Vice-President of the ECB, conducted by Joost van Kuppeveld and Daan Ballegeer
17 September 2021
[Introduction by the FD on inflation and its effect on savings]
“I fully understand that many people are complaining about the low interest rates, but you can’t look at purchasing power purely in terms of inflation,” De Guindos says. “You need to look at all of the effects of our policy. If negative rates are necessary for Europeans in order to boost the economy and retain their jobs, then that helps a significant share of society. With such a policy there are always trade-offs. As a Spanish minister of finance once said, what is good for your kidneys is bad for your liver, and what’s bad for your kidneys is good for your liver. You need to seek a balance.”

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Christine Lagarde: Interview with Bloomberg

9 days ago

Interview with Christine Lagarde, President of the ECB, conducted by David Rubenstein, Bloomberg, on 13 September
16 September 2021
Today we’re in conversation with Christine Lagarde, who is the President of the European Central Bank.
As we now look at the post-COVID environment, what would you say is the situation in Europe? Is Europe recovering more rapidly, or not quite as rapidly as you’d thought, from the COVID pandemic?
Actually, Europe is recovering more rapidly than we had anticipated. We have, as a result of that, significantly upgraded our projections. Our projection for this year is plus 5%, so it’s a significant upgrade, plus 4.6% next year and back to pre-COVID type of growth subsequently. But this year it’s certainly going faster than we had thought – to the point

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Isabel Schnabel: The monetary policy non-puzzle in bond markets

9 days ago

Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Bond Market Contact Group meeting
Frankfurt am Main, 15 September 2021
Sovereign bond markets in the euro area and the United States have taken a remarkable turn over the summer.[1] Despite the ongoing strong recovery from the crisis, the revival of inflation and surveys signalling firming expectations among market participants that central bank asset purchases globally may gradually slow in the near future, sovereign bond yields have declined and partly reversed the upward trend observed in the beginning of the year.
In my remarks today I will discuss the drivers of recent bond market developments and zoom in on two factors that may currently pull yields lower: one relates to concerns regarding the spread of

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ECB appoints Isabel Vansteenkiste as Director General International and European Relations

11 days ago

13 September 2021
Isabel Vansteenkiste to take up new role on 1 November 2021
Ms Vansteenkiste succeeds Hans-Joachim Klöckers on his retirement from ECB on 31 October 2021
The Executive Board of the European Central Bank (ECB) has appointed Isabel Vansteenkiste as Director General International and European Relations. The Directorate General monitors and forecasts global economic trends and assists the Executive Board by preparing policy positions on international and EU/euro area matters and by making the arrangements for meetings of, for example, the International Monetary Fund (IMF), the G7 and G20 finance ministers and central bank governors, and EU and euro area finance ministers (ECOFIN and the Eurogroup).
Ms Vansteenkiste is currently Deputy Director General Monetary Policy

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Isabel Schnabel: New narratives on monetary policy – the spectre of inflation

12 days ago

Speech by Isabel Schnabel, Member of the Executive Board of the ECB, 148th Baden-Baden Entrepreneurs’ Talk
Frankfurt am Main, 13 September 2021
Sentiment in the euro area is brightening. Despite growing COVID-19 incidence numbers, consumers and firms are becoming more upbeat about the future. The European Commission’s economic sentiment indicator has improved markedly since the beginning of the year and was near record highs in August.
At the same time, consumer prices are increasing at a faster pace, following years of very low inflation. In August, inflation in the euro area stood at 3%, significantly exceeding the 2% mark that the Governing Council of the European Central Bank (ECB) has defined as its new medium-term inflation target (Slide 2). In Germany, the inflation rate, as

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Christine Lagarde, Luis de Guindos: Monetary policy statement

15 days ago

Christine Lagarde, President of the ECB,Luis de Guindos, Vice-President of the ECB
Frankfurt am Main, 9 September 2021
Good afternoon, the Vice-President and I welcome you to our press conference.
The rebound phase in the recovery of the euro area economy is increasingly advanced. Output is expected to exceed its pre-pandemic level by the end of the year. With more than 70 per cent of European adults fully vaccinated, the economy has largely reopened, allowing consumers to spend more and companies to increase production. While rising immunity to the coronavirus means that the impact of the pandemic is now less severe, the global spread of the Delta variant could yet delay the full reopening of the economy. The current increase in inflation is expected to be largely temporary and

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Monetary policy decisions

15 days ago

9 September 2021
Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the pandemic emergency purchase programme (PEPP) than in the previous two quarters.
The Governing Council also confirmed its other measures, namely the level of the key ECB interest rates, its forward guidance on their likely future evolution, its purchases under the asset purchase programme (APP), its reinvestment policies and its longer-term refinancing operations. Specifically:
Key ECB interest rates
The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain

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Christine Lagarde: Interview with TIME

23 days ago

Interview with Christine Lagarde, President of the ECB, conducted by Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, on 30 August 2021
1 September 2021
I’m Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. And I have the great pleasure to have a discussion today with the President of the European Central Bank, Christine Lagarde. President Lagarde, I think we met for the first time just about 20 years ago, and you were a very prominent lawyer at the time. In the meantime, you have developed also a career as a politician, as an economist, as a statesman, and as a banker.
Knowing and admiring your global perspectives and, I would say, your global responsibilities, I would like to concentrate our discussion on what I consider the four

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Luis de Guindos: Interview with El Confidencial

24 days ago

Interview with Luis de Guindos, Vice-President of the ECB, conducted by Miquel Roig and Jorge Zuloaga on 26 August and published on 1 September 2021
1 September 2021
You are almost halfway through your term as Vice-President of the ECB. How would you assess your term so far, and what aims do you have for the second half?
These three years have been extremely interesting, and they have been marked, above all else, by the pandemic – an extraordinary event that has sparked an enormous health crisis. It had an extremely severe economic impact in a short space of time, which required an unprecedented economic and monetary policy response. The next 18 to 24 months will be defined by attempts to leave the economic consequences of the pandemic behind us and to minimise its structural impact.

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Meeting of 21-22 July 2021

29 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, 21-22 July 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 June 2021.
Long-term government bond yields had declined notably across advanced economies, including in the euro area, despite the ongoing strong recovery from the shock of the coronavirus (COVID-19) pandemic. Model-based evidence on the drivers of euro area yields suggested that a very large share of the recent decline in euro area risk-free rates reflected foreign spillovers, mainly in the

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Philip R. Lane: Interview with Reuters

August 25, 2021

Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Balazs Koranyi and Frank Siebelt
25 August 2021
Could you give us an update on the outlook for the eurozone economy?
It’s important to differentiate between the first and the second halves of the year. It’s significant that second quarter GDP came in well ahead of our June projections. That reflects an earlier opening up, with many countries opening in the middle of the second quarter and onwards. The strength of the world economy and progress in vaccinations were also important factors.
In terms of the second half of the year, it’s still early days. But there’s probably some counterbalance to that good second quarter. The counterbalance is that it looks like bottlenecks are going to be more

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Isabel Schnabel: The rise of non-bank finance and its implications for monetary policy transmission

August 24, 2021

Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Annual Congress of the European Economic Association (EEA)
Frankfurt am Main, 24 August 2021
Introduction
The financial system plays a central role in transmitting monetary policy to the real economy.[1] Whenever a central bank adjusts its policy instruments, it relies on private financial intermediaries to translate the monetary impulse into the financing conditions for firms and households. In today’s speech, I will discuss how this process is shaped by the structure of the financial system and, specifically, by the relative importance of bank versus non-bank finance in the economy.
This question is motivated by the pronounced rise in non-bank financial intermediation in the euro area, especially after the

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Isabel Schnabel: Interview with Focus

August 21, 2021

Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Carla Neuhaus on 17 August and published on 20 August 2021
21 August 2021
Ms Schnabel, do you see the images of the catastrophic floods in Germany or the forest fires in Greece as a sign that the ECB should also do something to counter climate change?
For me, the latest events have confirmed that we are doing the right thing with our new strategy. Only recently we decided to give more consideration to climate protection in our monetary policy. Climate change is the greatest challenge of the 21st century. Unfortunately, we will likely see extreme weather events, such as those we have just experienced, more frequently in future.
But why is that a topic for a central bank?
Climate change has

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ECB publishes consolidated banking data for end-March 2021

August 5, 2021

5 August 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
(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 March 2021
(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 of figures for the first quarter

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Luis de Guindos: Interview with Handelsblatt

July 29, 2021

Interview with Luis de Guindos, Vice-President of the ECB, conducted by Frank Wiebe and Jan Mallien
29 July 2021
Mr De Guindos, the European banks’ stress test results will be announced on Friday evening. What can we expect?
We are not publishing any details until Friday evening, but I can already tell you this much: European banks are robust, they are resilient. The adverse scenario is even more challenging this time than it was in the last test held in 2018 and, on top of that, banks have just come through the difficult year of 2020. Despite this demanding framework, banks have generally performed well in the test.
The average is one thing, the distribution another. Were there significant outliers?
You are right. The range was probably not any wider than last time. But we must

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Meeting of 7 July 2021

July 29, 2021

Account of the monetary policy meeting of the Governing Council of the European Central Bank held in Frankfurt am Main on Wednesday, 7 July 2021
Conclusion of the ECB’s strategy review 2020-21
The President started her introduction by looking back at the strategy review that the Governing Council had been conducting over the previous 18 months, drawing on an immense collective effort by staff at the ECB and the national central banks (NCBs) of the euro area. While taking the ECB’s primary mandate of price stability as a given, the review had allowed the Governing Council to challenge its thinking, engage with numerous stakeholders, reflect, discuss and reach common ground on how to adapt its strategy. The new strategy, which would be reflected in the document entitled “The ECB’s

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Fabio Panetta: Interview with Corriere della Sera

July 29, 2021

Interview with Fabio Panetta, Member of the Executive Board of the ECB, conducted by Federico Fubini
29 July 2021
Now that a strong pick-up is under way, is it right for governments to keep running a deficit to provide an expansionary impetus?
The risks of an incomplete recovery are still high, while the risks of the economy overheating and high inflation are still contained. There is still ample slack in the European economy, with people out of work and production plants that have not reopened. We are still not back to the level of GDP that prevailed before the crisis; we’ll only return to that level in the months between the end of this year and the start of the next year. And we are well below the pre-crisis growth path, namely the point we would have reached if the economy had

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ECB publishes an independent review of TARGET incidents in 2020

July 28, 2021

28 July 2021
Review launched in late 2020 after incidents affecting TARGET Services
Deloitte makes 18 recommendations
Eurosystem will implement recommended measures
The European Central Bank (ECB) has today published the report that presents the results of Deloitte’s independent review of incidents that affected TARGET2 and TARGET2 Securities in 2020.
The Eurosystem’s response accepts Deloitte’s general conclusions and recommendations made in the review and commits to implement them.
The ECB announced the launch of an independent review in November 2020 after an incident, which affected TARGET2 on 23 October 2020, caused an extended outage. In total, five major information technology (not cyber) related incidents occurred in 2020, affecting payment transactions and securities

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

July 23, 2021

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)

July 22, 2021

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

July 22, 2021

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

July 20, 2021

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

July 14, 2021

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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