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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
ECONOMIC BULLETIN
7 August 2025
ECB publishes Economic Bulletin
This publication presents the economic and monetary information which forms the basis for the Governing Council’s policy decisions. It is released eight times a year, two weeks after each monetary policy meeting.
Read our latest Economic Bulletin
MACROPRUDENTIAL BULLETIN
5 August 2025
Capital buffers for key banks
Our latest Macroprudential Bulletin focuses on capital buffers for systemically important banks. It looks at why buffer levels vary across countries, how this can affect financial stability and what steps are being taken to ensure more consistent requirements.
Read our Macroprudential Bulletin
PRESS RELEASE
15 July 2025
Launch of design contest for future banknotes
We have launched a public contest for the design of future euro banknotes. Designers from across Europe are encouraged to apply by 12:00 CET on Monday, 18 August. Successful applicants will be invited to submit design proposals.
Read the press release- 5 August 2025
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 5 August 2025
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 31 July 2025
- PRESS RELEASE
- 31 July 2025
- MFI INTEREST RATE STATISTICS
- 30 July 2025
- PRESS RELEASE
- 29 July 2025
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 29 July 2025
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 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
- 9 July 2025
- Remarks by Philip R. Lane, Member of the Executive Board of the ECB, at the House of the Euro
- 4 July 2025
- Welcome address by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, at the International Monetary Fund OEDNE/World Bank Group EDS19 Constituency Meeting
- 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
- 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
- 28 July 2025
- Stablecoins are reshaping global finance – with the US dollar at the helm. Without a strategic response, European monetary sovereignty and financial stability could erode. However, in this disruption there is also an opportunity for the euro to emerge stronger.Details
- JEL Code
- E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
- 25 July 2025
- Following the June NATO summit, Europe is confronting heightened challenges in financing its green, digital and defence transitions as new defence commitments place increased pressure on national and EU budgets. Balancing strategic priorities with debt sustainability is crucial. This blog outlines a three-pronged strategy.Details
- JEL Code
- E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
- 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
- 7 August 2025
- ECONOMIC BULLETIN
- 7 August 2025
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 5, 2025Details
- Abstract
- This article presents evidence from transactions data reported under the European Market Infrastructure Regulation (EMIR). Its aim is to assess the information content of euro area inflation-linked swap rates as measures of inflation compensation. It finds that both the breadth and the depth of overall activity have increased notably. The process of price discovery resulting from trading activity appears healthy on aggregate, and the sectoral composition of activity has shifted towards counterparties that can be deemed more responsive to changes in the inflation outlook. In particular, the hedge fund sector has increased its share of activity. An increasing share of transactions therefore seems to have been underpinned by the continuous updating of views on the inflation outlook.
- JEL Code
- E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
G14 : Financial Economics→General Financial Markets→Information and Market Efficiency, Event Studies, Insider Trading
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
- 7 August 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2025Details
- Abstract
- EU government spending on defence is expected to increase in response to heightened geopolitical tensions. This increase underpins efforts towards reaching a higher NATO defence spending commitment, as agreed at the NATO summit of 24-25 June. This box explores the implications for the euro area baseline projections and the risks around the baseline, as reflected in the June 2025 Eurosystem staff macroeconomic projections.
- JEL Code
- E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
H56 : Public Economics→National Government Expenditures and Related Policies→National Security and War
O40 : Economic Development, Technological Change, and Growth→Economic Growth and Aggregate Productivity→General
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
- 7 August 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2025Details
- Abstract
- This box examines euro area household perceptions of rising defence spending, a trend reinforced by EU governments’ commitments at recent security discussions. According to the May 2025 ECB Consumer Expectations Survey, 81% of households anticipate increased defence spending within the next year. Public debt is seen as the most likely source of financing, followed by cuts in other spending and tax hikes. Households predict a slight increase in inflation in response to higher defence spending, while their expectations on growth are more varied. They expect their financial well-being to stay largely the same, suggesting that increased defence spending will not have a strong impact on their propensity to spend.
- JEL Code
- D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
H56 : Public Economics→National Government Expenditures and Related Policies→National Security and War
- 7 August 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2025Details
- Abstract
- This box outlines the uncertainty related to the seasonal and calendar adjustment of the euro area Harmonised Index of Consumer Prices (HICP) for services. To gauge the impact of statistical estimations with respect to this uncertainty, we zoom in on historical revisions of seasonal and calendar adjustments conducted by the ECB and the results of alternative methods. The implications for the interpretation of services momentum – which moved up sharply recently – are derived from these findings.
- JEL Code
- E31; : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
- 7 August 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2025Details
- Abstract
- Real wages have been increasing in recent quarters, recovering after their decline during the period of high inflation in 2022. By the first quarter of 2025 – when deflated by price indices that reflect consumption patterns, such as the Harmonised Index of Consumer Prices and the private consumption deflator – real wages had almost returned to the levels recorded prior to the inflation surge. By contrast, when deflated by price indices that reflect the prices charged by domestic firms (such as the GDP deflator and sectoral value-added deflators), real wages have already surpassed the levels achieved before the high-inflation period. This reflects the fact that in the past few years, the rise in the cost of living has been higher than that in the prices charged domestically by euro area producers.
- JEL Code
- E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
J30 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→General
- 6 August 2025
- WORKING PAPER SERIES - No. 3088Details
- Abstract
- Do climate stress tests affect bank credit supply to brown firms? Using a difference-in-differences approach and detailed data on individual bank loans in the euro area, this paper provides novel evidence on the effects of the ECB’s 2022 climate risk stress test. Despite no capital implications or public disclosures, participating banks significantly reduced credit to greenhouse gas-intensive industries relative to nonparticipants. Among affected firms, smaller borrowers were more negatively impacted. Notably, only the best-performing banks in the climate stress test significantly reduce their brown credit after participation. This is evidence that banks which are more advanced in climate risk management more proactively consider transition risks in their lending. In contrast, banks less advanced in managing climate risk do not to the same extent discriminate against polluting firms.
- JEL Code
- E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers
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
- 6 August 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2025Details
- Abstract
- This box explores the implications of rising import penetration of Chinese products for the euro area labour market. As China advances into high value-added sectors, such as vehicles and specialised machinery, its exports increasingly challenge euro area firms across domestic and third-country markets. Panel regressions, following Autor et al. (2013), show that greater exposure per worker to imports from China is associated with a negative impact on the employment rate. Trade diversion effects arising from elevated US tariffs on Chinese goods are likely to intensify these trends, increasing China’s impact on euro area employment.
- JEL Code
- E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
F14 : International Economics→Trade→Empirical Studies of Trade
F16 : International Economics→Trade→Trade and Labor Market Interactions
J23 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Demand
- 6 August 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2025Details
- Abstract
- Consumer confidence plays an important role in determining economic activity. This box presents a consumer confidence indicator derived from the ECB’s Consumer Expectations Survey to explore its relation with household consumption. Analysis reveals that confidence levels vary by income quintile, with high-income households demonstrating greater sensitivity to economic news, in line with their greater financial literacy and higher share of discretionary spending. The consumer confidence indicator at the individual level is closely related to the actual spending of households, corroborating its usefulness for monitoring ongoing consumption growth. Developments in consumer confidence in 2025 to date point towards muted consumption growth overall, especially for households in the top 20% income bracket.
- JEL Code
- D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
- 6 August 2025
- OCCASIONAL PAPER SERIES - No. 373Details
- Abstract
- The European Union (EU) economy depends heavily on bank funding. For this reason, strengthening EU equity markets as an alternative funding source has been a policy priority under the Capital Markets Union (CMU) agenda, and more recently a key feature of the Savings and Investment Union (SIU). EU listed equity markets are smaller and structurally different from those in the United States (US), with differing market capitalisations of listed firms and differences in the number of companies listed, stemming from lower initial public offering (IPO) activity in Europe. This paper aims to understand the drivers behind the EU-US listing gap, focusing on two aspects: (1) the general firm-level benefits of listing, and (2) whether pre-listing financing opportunities in the EU are underdeveloped, hindering firm growth and ultimately market depth. This paper first puts forward an empirical analysis to assess how a firm’s decision to list impacts various key performance indicators, with a view to assessing the implications of listing for the economy at large. Second, it zooms in on innovative firms to shed light on the primary challenges faced by EU startups in their funding pipelines, with a focus on late-stage equity financing and venture capital (VC) markets. Focusing on the euro area (EA) as a proxy to derive broader benefits of listing in the EU, we find that EA companies’ key profitability measures, employment, innovation capacity and productivity all increase after listing – and are thus indicative of wider economic benefits. This is, however, associated with challenges for the long-term investment strategies of listed companies, such as potential short-termism – a topic widely studied in the literature. Moreover, a comparison with the US suggests that, while the benefits and risks of listing are qualitatively similar on the other side of the Atlantic, EA companies seem to benefit somewhat less from listing than their US peers. […]
- JEL Code
- G10 : Financial Economics→General Financial Markets→General
G30 : Financial Economics→Corporate Finance and Governance→General
L10 : Industrial Organization→Market Structure, Firm Strategy, and Market Performance→General
L50 : Industrial Organization→Regulation and Industrial Policy→General
G24 : Financial Economics→Financial Institutions and Services→Investment Banking, Venture Capital, Brokerage, Ratings and Ratings Agencies
G32 : Financial Economics→Corporate Finance and Governance→Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms, Goodwill
L21 : Industrial Organization→Firm Objectives, Organization, and Behavior→Business Objectives of the Firm
L25 : Industrial Organization→Firm Objectives, Organization, and Behavior→Firm Performance: Size, Diversification, and Scope
- 5 August 2025
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 5, 2025Details
- Abstract
- This article examines the macroeconomic implications of critical dependencies in the euro area, the United States and China. Using a data-driven approach, it identifies products for which countries rely heavily on a small number of foreign suppliers for their imports in strategic sectors, such as health, energy and digital technologies. A complementary network analysis on the export side shows that, since the 1990s, the euro area and the United States have become significantly more vulnerable to supply disruptions originating from China, whereas China has reduced its dependence on western partners through strategic industrial policies. Using the list of critical dependencies established in the first analysis, a multi-country, multi-sector general equilibrium model, enriched with disaggregated input-output tables, is then used to quantify the impacts of potential supply disruptions. While the costs of a sudden halt to the supply of critical dependencies have risen for the euro area and the United States and declined for China, they remain much higher for China. Although the critical dependencies constitute a minor share of total trade and inputs to production, any disruption to their supply yields disproportionate economic costs owing to their low substitutability. These findings highlight the trade-off between resilience and openness, and call for targeted de-risking strategies (e.g. strengthening domestic capacities, diversifying sources) over broad-based protectionism.
- JEL Code
- F12 : International Economics→Trade→Models of Trade with Imperfect Competition and Scale Economies, Fragmentation
F13 : International Economics→Trade→Trade Policy, International Trade Organizations
O33 : Economic Development, Technological Change, and Growth→Technological Change, Research and Development, Intellectual Property Rights→Technological Change: Choices and Consequences, Diffusion Processes
- 5 August 2025
- WORKING PAPER SERIES - No. 3087Details
- Abstract
- Using a novel worldwide dataset of 5,264 syndicated loans issued to 329 firms from 2006 to 2021, we study how climate-related litigation risk affects firm’s cost of borrowing. We find robust empirical evidence that firms targeted by climate lawsuits pay significantly higher spreads on their bank loans. These effects are more pronounced for firms with weaker environmental performance and higher ESG controversies. The results suggest that lender’s view climate litigation as a material risk factor, which is increasingly priced into debt contracts.
- JEL Code
- G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G32 : Financial Economics→Corporate Finance and Governance→Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms, Goodwill
Q56 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Environment and Development, Environment and Trade, Sustainability, Environmental Accounts and Accounting, Environmental Equity, Population Growth
K32 : Law and Economics→Other Substantive Areas of Law→Environmental, Health, and Safety Law
- 5 August 2025
- MACROPRUDENTIAL BULLETIN - ARTICLE - No. 30Details
- Abstract
- Unwarranted heterogeneity in O-SII buffer levels across the European banking union may have adverse consequences for financial stability and the level playing field in the banking market. Analysis of national buffer-setting yields evidence of heterogeneity which does not result from differences in the size, concentration and funding structure of the domestic banking systems. From a banking union perspective, buffer-setting by national authorities results in heterogeneity at both the upper and the lower end of the distribution of a bank’s systemic relevance. The recent enhancement of the ECB’s O-SII floor methodology is designed to mitigate unwarranted O-SII buffer heterogeneity at the lower end of the buffer range. As the ECB can impose higher macroprudential requirements but not reduce macroprudential requirements, it is not possible for its methodology to address instances of unwarranted heterogeneity at the upper end.
- 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
- 5 August 2025
- MACROPRUDENTIAL BULLETIN - ARTICLE - No. 30Details
- Abstract
- Capital buffers for other systemically important institutions (O-SIIs) are set by national authorities. They vary greatly across the EU Member States participating in the banking union. On 1 January 2025 the ECB started using an enhanced floor methodology to assess national O-SII buffer decisions. This methodology adopts a banking union (BU) perspective to address “too-big-to-fail”-related risks at the BU level. The aim is to reduce the heterogeneity in O-SII buffers and achieve a more consistent treatment of the most systemically important institutions. Furthermore, the enhanced methodology recognises the progress made on the European banking union, in line with the approach taken in the G-SIB framework. It introduces a BU floor for O-SII buffers, calibrated based on a linear function mapping O-SII scores from the BU perspective to minimum buffer rates. The enhanced methodology will be fully phased in by 2028.
- 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
- 4 August 2025
- WORKING PAPER SERIES - No. 3086Details
- Abstract
- We introduce an estimated medium scale Heterogeneous-Agent New Keynesian model for forecasting and policy analysis in the Euro Area and discuss the applications of this type of models in central banks, focusing on two main exercises. First, we examine an alternative scenario for monetary policy during the early 2020s inflationary episode, showing that earlier hikes in interest rates would have affected more strongly households at the lower end of the wealth distribution, whose consumption our model suggests was already depressed relative to the rest of the population. To provide intuition for this result, we introduce a new decomposition of the effects of monetary policy on consumption across the wealth distribution. Second, we show that introducing heterogeneous households does not come at the cost of forecasting accuracy by comparing the performance of our model to its exact representative-agent counterpart and demonstrating nearly identical results in predicting key aggregate variables.
- JEL Code
- D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
E12 : Macroeconomics and Monetary Economics→General Aggregative Models→Keynes, Keynesian, Post-Keynesian
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
- 4 August 2025
- WORKING PAPER SERIES - No. 3085Details
- Abstract
- In modern macroeconomics, the marginal propensity to consume out of transitory income shocks is a central object of interest. This paper empirically explores a parallel concept in banking: the marginal propensity to lend out of unsolicited deposit inflows (MPLD). Using county-level dividend payouts as an instrument for deposit inflows, I estimate the MPLD for U.S. banks and show that before QE, the average bank operated “hand-to-mouth” — it transformed approximately every dollar of deposit inflow into new loans, consistent with tight liquidity constraints. However, since then, the MPLD has dropped to 0.35. Moreover, the MPLD decreases in banks’ cash-to-asset ratio and deposit market power. The findings suggest that the QE-induced abundant reserves regime significantly relaxed liquidity constraints for the majority of banks, but did not eliminate them entirely.
- JEL Code
- G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers - Network
- ECB Lamfalussy Fellowship Programme
- 4 August 2025
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 5, 2025Details
- Abstract
- Understanding the future of the demand for cash calls for an analysis that separates secular trends and age-related behaviours on different cash usage indicators. This article uses data from the 2019, 2022 and 2024 editions of the Eurosystem study on the payment attitudes of consumers in the euro area (SPACE) survey. It applies an age-period-cohort-interaction (APC-I) framework to illuminate patterns in transactional cash use, precautionary cash hoarding and the perceived importance of cash. Our findings reveal significant period effects, including sustained trends (such as a decline in transactional cash use and an increased reported importance of having cash as an available option) and temporary changes (like a post-pandemic peak in cash hoarding). Age effects are a significant factor shaping cash habits: youngest cohorts (18-27) are characterised by a higher propensity to hoard cash than older groups, paired with average transactional cash use. Meanwhile, cash use in everyday transactions is led by older demographics (63-77), while middle-aged cohorts (28-47) tend to use cash less. Cohort analysis reveals that beneath the general rise in the stated importance of cash across all ages, specific birth cohorts exhibit distinct attitudes. Our analysis indicates that cash fulfils enduring, albeit evolving, roles across different demographic groups, particularly for younger people. The article concludes by discussing policy challenges that will need to be addressed to continue fostering a resilient and inclusive payment system that accommodates digital innovation alongside cash.
- JEL Code
- E41 : Macroeconomics and Monetary Economics→Money and Interest Rates→Demand for Money
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
J10 : Labor and Demographic Economics→Demographic Economics→General
C31 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Cross-Sectional Models, Spatial Models, Treatment Effect Models, Quantile Regressions, Social Interaction Models
- 1 August 2025
- LEGAL ACT
Interest rates
| Deposit facility | 2.00 % |
| Main refinancing operations (fixed rate) | 2.15 % |
| Marginal lending facility | 2.40 % |
Inflation rate
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| USD | US dollar | 1.1604 | |
| JPY | Japanese yen | 171.22 | |
| GBP | Pound sterling | 0.87170 | |
| CHF | Swiss franc | 0.9369 |
Financial stability
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