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Civil war declaration: On April 14th and 15th, 2012 Federal Republic of Germany "_urkenstaats"s parliament, Deutscher Bundestag, received a antifiscal written civil war declaration by Federal Republic of Germany "Rechtsstaat"s electronic resistance for human rights even though the "Widerstandsfall" according to article 20 paragraph 4 of the constitution, the "Grundgesetz", had been already declared in the years 2001-03. more
ACCOUNT
28 August 2025
Account of July monetary policy meeting
The Governing Council agreed to keep interest rates unchanged. The incoming data since the June meeting had confirmed that inflation and the inflation outlook were in a good place, with inflation set to stabilise at the 2% target in the medium term.
Monetary policy account
ACCOUNT
28 August 2025
Account of the strategy assessment meeting
The Governing Council agreed that the use of the monetary policy toolkit had to be sufficiently agile so it could be flexibly adjusted in response to a change in conditions. To remain mindful of uncertainty, scenario and sensitivity analyses were deemed important in the decision-making process.
Strategy assessment meeting account
EXPLAINER
ECB High-Level Task Force on Simplification
This task force is developing proposals for simplifying the European regulatory, supervisory and reporting framework, while still maintaining the strong banking sector in Europe. Our explainer looks at its mandate, members and what it’s working on.
Find out more- 29 August 2025
- PRESS RELEASE
- 28 August 2025
- MONETARY POLICY ACCOUNTRelated
- 24 July 2025
- MONETARY POLICY DECISIONEnglishOTHER LANGUAGES (23) +
- 28 August 2025
- MONETARY POLICY ACCOUNTRelated
- 30 June 2025
- PAGEEnglishOTHER LANGUAGES (23) +Details
- Summary
- The ECB launched a strategy review in January 2020. We want to hear opinions from across Europe, including those from citizens, academics, Members of the European Parliament and civil society organisations.
- 28 August 2025
- MONETARY DEVELOPMENTS IN THE EURO AREAAnnexes
- 26 August 2025
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 26 August 2025
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 23 August 2025
- Opening panel remarks by Christine Lagarde, President of the ECB, at the annual Economic Policy Symposium “The policy implications of labour market transition” organised by the Federal Reserve Bank of Kansas City in Jackson Hole
- 20 August 2025
- Panel remarks by Christine Lagarde, President of the ECB, at the International Business Council of the World Economic Forum
- 24 July 2025
- Christine Lagarde, President of the ECB, Luis de Guindos, Vice-President of the ECB, Frankfurt am Main, 24 July 2025EnglishOTHER LANGUAGES (23) +Related
- 14 July 2025
- Introductory statement by Piero Cipollone, Member of the Executive Board of the ECB, at the Committee on Economic and Monetary Affairs of the European Parliament
- 10 July 2025
- Speech by Piero Cipollone, Member of the Executive Board of the ECB, at Banka Slovenije
- 26 July 2025
- Interview with Piero Cipollone, conducted by Miha Jenko on 10 July 2025
- 11 July 2025
- Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by David Barwick and Marta Vilar on 9 July 2025
- 16 June 2025
- Interview with Luis de Guindos, Vice-President of the ECB, conducted by Balázs Korányi and Francesco Cánepa on 12 June 2025
- 14 June 2025
- Interview with Christine Lagarde, President of the ECB, conducted by Su Liang on 12 June 2025
- 27 May 2025
- Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Christian Siedenbiedel on 20 May 2025
- 27 August 2025
- Services are playing a growing role in global trade. The ECB Blog shows that this trend has been driven by a decline in non-tariff trade barriers. The euro area has benefited more than other regions and is highly competitive in the services sector.
- 12 August 2025
- Investors who sell off sovereign bonds in times of stress are commonly referred to as “vigilantes” as they punish governments for what they consider to be bad policy choices. This post finds that investment funds account for most net sales of sovereign bonds in such times.Details
- JEL Code
- F30 : International Economics→International Finance→General
F34 : International Economics→International Finance→International Lending and Debt Problems
- 4 August 2025
- Digital payments are increasing and people are using banknotes and coins less frequently. Is cash on the way out? Piero Cipollone explains why cash is still indispensable and how the ECB is working to ensure it remains readily available and easy to use.Details
- JEL Code
- E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
- 31 July 2025
- Monetary policy has an impact on our daily lives. This post explores the ripple effects of the ECB’s recent monetary policy on housing affordability, housing sales and households’ home goods consumption.Details
- JEL Code
- E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
R21 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Household Analysis→Housing Demand
- 30 July 2025
- With trade tensions between China and the United States reaching new heights, Chinese exports may be redirected to the euro area. In a severe scenario, this additional supply and the accompanying lower import prices could bring down euro area inflation by as much as 0.15 percentage points.Details
- JEL Code
- F40 : International Economics→Macroeconomic Aspects of International Trade and Finance→General
- 27 August 2025
- WORKING PAPER SERIES - No. 3105Details
- Abstract
- Local projections (LPs) are widely used in empirical macroeconomics to estimate impulse responses to policy interventions. Yet, in many ways, they are black boxes. It is often unclear what mechanism or historical episodes drive a particular estimate. We introduce a new decomposition of LP estimates into the sum of contributions of historical events, which is the product, for each time stamp, of a weight and the realization of the response variable. In the least squares case, we show that these weights admit two interpretations. First, they represent purified and standardized shocks. Second, they serve as proximity scores between the projected policy intervention and past interventions in the sample. Notably, this second interpretation extends naturally to machine learning methods, many of which yield impulse responses that, while nonlinear in predictors, still aggregate past outcomes linearly via proximity-based weights. Applying this framework to shocks in monetary and fiscal policy, global temperature, and the excess bond premium, we find that easily identifiable events—such as Nixon’s interference with the Fed, stagflation, World War II, and the Mount Agung volcanic eruption—emerge as dominant drivers of oftenheavily concentrated impulse response estimates.
- JEL Code
- C32 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Time-Series Models, Dynamic Quantile Regressions, Dynamic Treatment Effect Models, Diffusion Processes
C53 : Mathematical and Quantitative Methods→Econometric Modeling→Forecasting and Prediction Methods, Simulation Methods
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
- 27 August 2025
- WORKING PAPER SERIES - No. 3104Details
- Abstract
- The distributive effects of carbon taxation are critical for its political acceptability and depend on both income and geographic factors. Using French administrative data, household surveys, and matched employer-employee records, we document that rural households spend 2.8 times more on fossil fuels than urban households and are employed in firms that emit 2.7 times more greenhouse gases. We incorporate these insights into a spatial heterogeneous-agent model with endogenous migration and wealth accumulation, linking spatial and macroeconomic approaches. After an increase in carbon taxes, we quantify that rural households face 20% higher welfare losses than urban households. In an optimal revenue-recycling exercise, we compare transfers targeting income and geography, and show that neglecting for geography reduces welfare gains by 7%. We conclude that carbon policies should account for spatial differences to improve political feasibility.
- JEL Code
- C61 : Mathematical and Quantitative Methods→Mathematical Methods, Programming Models, Mathematical and Simulation Modeling→Optimization Techniques, Programming Models, Dynamic Analysis
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
H23 : Public Economics→Taxation, Subsidies, and Revenue→Externalities, Redistributive Effects, Environmental Taxes and Subsidies
Q43 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Energy→Energy and the Macroeconomy
Q58 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Government Policy
R13 : Urban, Rural, Regional, Real Estate, and Transportation Economics→General Regional Economics→General Equilibrium and Welfare Economic Analysis of Regional Economies
- 26 August 2025
- WORKING PAPER SERIES - No. 3103Details
- Abstract
- We would like to thank Philipp Lane, Klaus Adam, Michael Ehrmann, Christophe Kamps, Timo Reinelt, Annalisa Ferrando, Philippine Cour-Thimann, Felix Hammermann, Davide Romelli, Andreas Kapounek, and colleagues from DG Communication for for their valuable feedback on earlier versions of this paper. This paper was presented at the 2025 AEA Conference in San Francisco, and we appreciate the feedback and suggestions received from the participants. We would also like to thank colleagues from 11 Business Areas of the ECB for their presentations to visitors, as well as colleagues from DG Communications for their support in conducting the surveys with the visitor groups, especially Alexandra Kroppenstedt, Nadia Bates, Christian Scherf, and Emma-Katharina David. This experiment is pre-registered in the AEA RCT registry (ID: AEARCTR-0012902). Declaration of Interest: Jung is employed by the European Central Bank. The views expressed in this article are those of the authors and do not necessarily reflect those of the ECB. The authors remain responsible for any errors or omissions.
- JEL Code
- C83 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs→Survey Methods, Sampling Methods
C93 : Mathematical and Quantitative Methods→Design of Experiments→Field Experiments
D83 : Microeconomics→Information, Knowledge, and Uncertainty→Search, Learning, Information and Knowledge, Communication, Belief
D84 : Microeconomics→Information, Knowledge, and Uncertainty→Expectations, Speculations
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
- 25 August 2025
- WORKING PAPER SERIES - No. 3102Details
- Abstract
- This paper examines the effects of trade policy shocks on the US economy using a novel identification strategy that combines narrative information on trade policy changes with stock market data. We introduce a new data set of daily trade policy statements from 2007 to 2019, allowing us to capture a comprehensive range of trade policy actions. By analyzing stock price reactions of trade-exposed and non-trade-exposed firms around these statements, we can identify unanticipated trade policy shocks. Using the local projection method, we analyze asymmetries and non-linearities based on the sign and magnitude of the shocks. We find that the gains from trade liberalizations and the damage from protectionism are of equal magnitude in absolute terms, with no non-linearities observed along this dimension. On the other hand, trade policy shocks originating from trading partners have a stronger impact on the economy than those initiated by the US. Moreover, the implementation of policy changes generates a more significant response than mere announcements. Uncertainty about policymakers’ commitment to planned policy changes leads firms and households to adopt a cautious “wait and see” approach. As an extension, we explore whether using President Trump’s tweets instead of official statements affects our results.
- JEL Code
- F10 : International Economics→Trade→General
F13 : International Economics→Trade→Trade Policy, International Trade Organizations
F14 : International Economics→Trade→Empirical Studies of Trade
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
G14 : Financial Economics→General Financial Markets→Information and Market Efficiency, Event Studies, Insider Trading
- 25 August 2025
- SURVEY OF MONETARY ANALYSTS
- 21 August 2025
- WORKING PAPER SERIES - No. 3101Details
- Abstract
- This paper studies the role of financial intermediaries in the transmission of central bank corporate bond purchases to bond yields. Contrary to standard expectations, we find that mutual funds—typically viewed as price-elastic investors—amplify, rather than dampen, the effects of these interventions on bond spreads. Following the ECB’s corporate bond purchase announcements in 2016 and 2020, bonds predominantly held by mutual funds experienced significantly larger and more persistent declines in spreads compared to those held by price-inelastic investors such as insurance companies, even after controlling for a broad set of bond characteristics. Drawing on additional empirical evidence and an equilibrium asset pricing model, we show that the state-contingent nature of the policy reduces perceived market risk for procyclical investors like mutualfunds, thereby boosting demand and compressing risk premia.
- JEL Code
- E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
- 20 August 2025
- WORKING PAPER SERIES - No. 3100Details
- Abstract
- When economic analysis requires simultaneous inference across multiple variables and time horizons, this paper shows that conventional pointwise quantiles in Bayesian structural vector autoregressions significantly understate the uncertainty of impulse responses. The performance of recently proposed joint inference methods, which produce noticeably different error band estimates, is evaluated, and calibration routines are suggested to ensure that they achieve the intended nominal probability coverage. Two practical applications illustrate the implications of these findings: (i) within a structural vector autoregression, the fiscal multiplier exhibits error bands that are 51% to 91% wider than previous estimates, and (ii) a pseudo-out-of-sample projection exercise for inflation and gross domestic product shows that joint inference methods could effectively summarize uncertainty for forecasts as well. These results underscore the importance of using joint inference methods for more robust econometric analysis.
- JEL Code
- C22 : Mathematical and Quantitative Methods→Single Equation Models, Single Variables→Time-Series Models, Dynamic Quantile Regressions, Dynamic Treatment Effect Models &bull Diffusion Processes
C32 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Time-Series Models, Dynamic Quantile Regressions, Dynamic Treatment Effect Models, Diffusion Processes
C52 : Mathematical and Quantitative Methods→Econometric Modeling→Model Evaluation, Validation, and Selection
- 19 August 2025
- WORKING PAPER SERIES - No. 3099Details
- Abstract
- This study evaluates the effectiveness of EU Cohesion Policy as an investment programme, employing a novel dataset that links firm-level data from Orbis with project-level information from the Kohesio database. It focuses on two key questions: (1) Which firms receive EU funding? (2) How does receiving EU funding affect firm performance? By applying a logit model and a local projection difference-in-differences approach, we provide new insights into the allocation mechanisms of EU Cohesion Policy funds and their firm-level impact. Our findings show that funding tends to be allocated to firms that already perform relatively well, and that firms receiving EU funding experience a persistent productivity increase of approximately 3% after 4 years, with smaller and more financially constrained firms experiencing relatively greater improvements. Moreover, funding targeting “SME investment” tends to enhance firm performance disproportionately more than other categories, whereas projects directed the “green transition” appear comparatively less beneficial.
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
D24 : Microeconomics→Production and Organizations→Production, Cost, Capital, Capital, Total Factor, and Multifactor Productivity, Capacity
H54 : Public Economics→National Government Expenditures and Related Policies→Infrastructures, Other Public Investment and Capital Stock
O38 : Economic Development, Technological Change, and Growth→Technological Change, Research and Development, Intellectual Property Rights→Government Policy
O52 : Economic Development, Technological Change, and Growth→Economywide Country Studies→Europe
- 18 August 2025
- MACROPRUDENTIAL BULLETIN - ARTICLE - No. 31Details
- Abstract
- Amid changes in the global macro-financial environment, macroprudential policy within the banking union and beyond has increasingly prioritised the proactive enhancement of resilience. This article argues that this shift towards a more pre-emptive implementation of macroprudential policy has enhanced its complementarity with monetary policy. A sufficiently resilient financial sector is essential to exclude conflicts between price stability and financial stability, the respective primary objectives of monetary and macroprudential policies, as highlighted in the latest 2025 ECB’s monetary policy strategy statement. Without sufficient resilience, monetary policy could at times negatively affect financial stability, for example when the monetary policy stance remains very accommodative for extended periods or undergoes significant tightening over a short time span. In particular, the early activation of the Countercyclical Capital Buffer (CCyB) fosters banking sector resilience by ensuring the availability of sufficient capital that can be released in the event of (also non-financial) shocks. This approach supports monetary policy to focus solely on its primary objective of price stability, thereby largely eliminating the potential for conflict between price stability and financial stability.
- JEL Code
- E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E61 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Policy Objectives, Policy Designs and Consistency, Policy Coordination
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
- 15 August 2025
- LETTERS TO MEPS
- 14 August 2025
- WORKING PAPER SERIES - No. 3098Details
- Abstract
- We employ a novel regional dataset on European private investment and business R&D spanning the years 2000 to 2021, along with comprehensive historical data on European Union Structural and Investment (ESI) funds, to estimate whether ESIfunds have crowding-in or crowding-out effects on private investment and business R&D. Our analysis, leveraging regional variation and a fiscal instrument immune to region-specific shocks, reveals a significant crowding-in effect, with 1 euro in ESI funds increasing private investment by 1.1 euros and business R&D by 0.1 euros after two years. The effect is stronger in developed regions for private investment and in less developed regions for R&D. Additionally, crowding-in effects are stronger in regions where corporate private debt is relatively higher. Among the different ESI funds, the Cohesion Fund (CF) shows the largest estimated impact, while the European Regional Development Fund (ERDF) yields somewhat smaller but statistically more robust results.
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
H54 : Public Economics→National Government Expenditures and Related Policies→Infrastructures, Other Public Investment and Capital Stock
O38 : Economic Development, Technological Change, and Growth→Technological Change, Research and Development, Intellectual Property Rights→Government Policy
O52 : Economic Development, Technological Change, and Growth→Economywide Country Studies→Europe
R11 : Urban, Rural, Regional, Real Estate, and Transportation Economics→General Regional Economics→Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
R58 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Regional Government Analysis→Regional Development Planning and Policy
- 14 August 2025
- WORKING PAPER SERIES - No. 3097Details
- Abstract
- This paper explores empirically the cost channel of monetary policy transmission during the recent period of monetary policy tightening in the euro area. We combine unique data on firms’ selling price expectation from the Survey on the access to finance of enterprises (SAFE), information on firms’ borrowing from the euro area-wide credit register (AnaCredit) and ECB monetary policy surprises. Firms revise upwards their one-year-ahead selling price expectations following monetary announcements in a tightening cycle and this effect increases in firms’ working capital exposure. The paper provides supportive evidence on the existence of a cost channel of monetary policy, adding to our understanding of monetary policy transmission to firms in the euro area.
- JEL Code
- G30 : Financial Economics→Corporate Finance and Governance→General
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
D84 : Microeconomics→Information, Knowledge, and Uncertainty→Expectations, Speculations - Network
- Challenges for Monetary Policy Transmission in a Changing World Network (ChaMP)
- 13 August 2025
- WORKING PAPER SERIES - No. 3096Details
- Abstract
- We introduce a mixed-frequency model that identifies the impact of supply shocks on inflation in the United States in real time. The model decomposes weekly movements in inflation-linked swap rates—market-based inflation expectations—and isolates three supply shocks: global value chain disruptions, energy supply shocks, and domestic supply constraints, separating them from demand-driven factors. We show how these shocks contributed to a post-Covid feedback loop that intensified inflation. By linking weekly shocks to monthly inflation components up to the industry level, we find that global value chain disruptions generate the most persistent and broad-based price pressures, while energy and domestic supply shocks tend to produce more transitory effects, as their narrower inflationary impact is more easily offset by demand-dampening, contractionary forces. Our model captures these various supply-side dynamics effectively and offers timely insights to support a more responsive monetary policy.
- JEL Code
- C54 : Mathematical and Quantitative Methods→Econometric Modeling→Quantitative Policy Modeling
C58 : Mathematical and Quantitative Methods→Econometric Modeling→Financial Econometrics
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
G15 : Financial Economics→General Financial Markets→International Financial Markets
- 13 August 2025
- WORKING PAPER SERIES - No. 3095Details
- Abstract
- This paper studies the role of collateral using the euro area corporate credit registry, Ana-Credit. We document key facts about the importance, distribution, and composition of collateral, including its presence, types, and values. On average, 70% of credit amounts are collateralized. Real estate and financial assets are the most pledged, while physical movable assets and other intangible assets are less present. In addition, we show that the aggregate collateral value pledged to the banking sector is substantial, driven mainly by real estate in most countries. For the first time, we examine the collateral channel in bank credit using the actual value of individual collateral. By exploiting within-firm and within-bank variations for newly issued secured loans, we find that the elasticity of collateral value to loan commitment amounts is around 0.7-0.8. This collateral value elasticity exhibits substantial country and time heterogeneity, which can be explained by legal, financial, and macro conditions.
- JEL Code
- E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G33 : Financial Economics→Corporate Finance and Governance→Bankruptcy, Liquidation - Network
- Challenges for Monetary Policy Transmission in a Changing World Network (ChaMP)
- 12 August 2025
- WORKING PAPER SERIES - No. 3094Details
- Abstract
- This study investigates the impact of supervisory stress testing on banks’ behaviors and their systemic risk implications. Utilizing confidential supervisory data from the European Banking Authority’s EU-wide stress tests in 2021 and 2023, we employ a difference-in-differences framework to analyze how these exercises influence portfolio management decisions among European banks. This methodology allows us to compare stress-tested banks with similar non-tested institutions before and after the stress test events, isolating the effects specifically associated with the EU-wide assessments. Our findings reveal significant patterns of anticipatory behavior, with banks strategically window-dressing their capital ratios before stress tests begin. This behavior is particularly pronounced among institutions that subsequently receive the lowest scores in terms of capital depletion. We document that these anticipatory adjustments lead to decreased portfolio similarity across banks, an effect that persists after the stress tests and remains consistent across different similarity measures. Importantly, such a decrease in similarity does not spin off into more granular business model or country clusters, thus limiting potential systemic risk through portfolio synchronization. Our results, while considering how financial institutions incorporate stress test considerations into their strategic decision-making, highlight the dual role of stress tests in enhancing individual bank resilience and reducing systemic vulnerabilities. These findings contribute to the ongoing debate on effective banking supervision and the design of regulatory stress testing frameworks.
- JEL Code
- G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
C23 : Mathematical and Quantitative Methods→Single Equation Models, Single Variables→Panel Data Models, Spatio-temporal Models
- 12 August 2025
- WORKING PAPER SERIES - No. 3093Details
- Abstract
- This paper investigates the economic impact of technological innovation, focusing on generative AI (GenAI) following ChatGPT’s release in November 2022. We propose a novel framework leveraging large language models to analyze earnings call transcripts. Our method quantifies firms’ GenAI exposure and classifies sentiment as opportunity, adoption, or risk. Using panel econometric techniques, we assess GenAI exposure’s impact on S&P 500 firms’ financial performance over 2014-2023. We find two main results. First, GenAI exposure rose sharply after ChatGPT’s release, particularly in IT, Consumer Services, and Consumer Discretionary sectors, coinciding with sentiment shifts toward adoption. Second, GenAI exposure significantly influenced stock market performance. Firms with early and high GenAI exposure saw stronger returns, though earnings expectations improved modestly. Panel regressions show a 1 percentage point increase in GenAI exposure led to 0.26% rise in quarterly excess returns. Difference-in-Difference estimates indicate 2.4% average quarterly stock price increases following ChatGPT’s release.
- JEL Code
- C80 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs→General
G14 : Financial Economics→General Financial Markets→Information and Market Efficiency, Event Studies, Insider Trading
G30 : Financial Economics→Corporate Finance and Governance→General
L25 : Industrial Organization→Firm Objectives, Organization, and Behavior→Firm Performance: Size, Diversification, and Scope
O33 : Economic Development, Technological Change, and Growth→Technological Change, Research and Development, Intellectual Property Rights→Technological Change: Choices and Consequences, Diffusion Processes
- 11 August 2025
- WORKING PAPER SERIES - No. 3092Details
- Abstract
- The March 2023 banking turmoil has intensified discussions whether social media and the digitalisation of finance have become significant factors in driving severe deposit outflows. We introduce the concept of deposits-at-risk and utilize quantile regressions for disentangling determinants of stressed outflows at the lowest tail of the distribution. For a sample of large banks directly supervised by the ECB, our findings indicate that an increased use of online banking services leads to a small amplification of extreme deposit outflows, but this effect is not further exacerbated by the availability of a mobile banking app. Online banking use and availability of a mobile app do not have a causal effect on deposit volatility in normal times. Finally, social media are impactful only in idiosyncratic cases.
- JEL Code
- G20 : Financial Economics→Financial Institutions and Services→General
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
- 11 August 2025
- WORKING PAPER SERIES - No. 3091Details
- Abstract
- Traditional exposure measures focus on direct exposures to evaluate the losses an institution is exposed to upon the default of a counterparty. Since the Global Financial Crisis of 2007-2008, the importance of indirect exposures via common asset holdings is increasingly recognized. Yet direct and indirect exposures do not to capture the losses that result from shock propagation and amplification following the counterparty's default. In this paper, we introduce the concept of \higher-order exposures" to refer to these spill-over losses and propose a way to formalize and quantify these. Using granular data on the South African banking and investment fund sectors and a contagion model that captures the most commonly studied contagion channels and their interactions, we demonstrate that higher-order exposures make up a significant part of exposures -particularly during times of financial distress when exposures matter most. We also show that higher-order exposures cannot simply be extrapolated from direct or indirect exposures, since they depend strongly on the network structure and the robustness of individual institutions. Our findings suggest that exposures should be properly understood as consisting of direct, indirect and higher-order exposures in the design and calibration of those tools in the regulators' arsenal where exposures matter - including large exposure limits, capital requirement calibration, stress test design and resolution. Failure to do so may result in both lax ex-ante regulation and ill-informed ex-post handling of financial crises.
- JEL Code
- G01 : Financial Economics→General→Financial Crises
G17 : Financial Economics→General Financial Markets→Financial Forecasting and Simulation
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
- 7 August 2025
- WORKING PAPER SERIES - No. 3090Details
- Abstract
- Add full abstract text in one paragraph.This paper examines how the ECB’s 2022–2023 interest-rate hikes affected euro-area banks’ economic net worth and vulnerability to deposit runs. Drawing on granular, confidential data for 139 banks, we estimate each bank’s economic net worth and find that unrealised losses on loans and bonds averaged around 30 per cent of equity. By September 2023, however, roughly half of these losses had been offset by gains from the deposit franchise and interest-rate swaps. We develop a theoretical framework linking banks’ economic net worth and deposit-rate setting to depositor behaviour and run incentives. Further results indicate that banks with larger unrealised lossesraised their deposit rates by less - a pattern we interpret as banks leveraging a more valuable deposit franchise to fund longer-duration assets. Although euro-area banks as a whole avoided widespread runs, several institutions nonetheless carried substantial mark-to-market losses, suggesting latent fragilities.
- JEL Code
- G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest Rates: Determination, Term Structure, and Effects
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
- 7 August 2025
- WORKING PAPER SERIES - No. 3089Details
- Abstract
- How does environmental, social and governance regulation of banks affect capital provision to the sustainability transition? As ambitious sustainability targets face funding challenges, the financial sector is tasked with channeling more private capital into sustainable investments. However, scaling sustainable technologies often requires investment in non-ESG-compliant assets. The mobility transition to electric vehicles, for example, demands increased supply of battery raw materials like Lithium, Cobalt, Manganese, and Nickel. This paper analyzes how ESG regulation impacts capital provision to mining companies supplying these materials. Concretely, we assess effects of the European Union’s Sustainable Finance Disclosure Regulation and of the Taxonomy on banks’ public holdings and cost of capital, using two large, novel data sets. We find that the introduction of the ESG regulations has a dampening effect on banks’ holdings in battery raw material mining companies, in particular those with poor ESG performance. The companies’ cost of capital and lending behavior remain unchanged.
- JEL Code
- G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
Q50 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→General
Interest rates
| Deposit facility | 2.00 % |
| Main refinancing operations (fixed rate) | 2.15 % |
| Marginal lending facility | 2.40 % |
Inflation rate
More on inflationExchange rates
| USD | US dollar | 1.1658 | |
| JPY | Japanese yen | 171.72 | |
| GBP | Pound sterling | 0.86680 | |
| CHF | Swiss franc | 0.9364 |
Financial stability
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