The European Central Bank (ECB) is the prime component of the Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's most important central banks.The ECB Governing Council makes monetary policy for the Eurozone and the European Union, administers the foreign exchange reserves of EU member states, engages in foreign exchange operations, and defines the intermediate monetary objectives and key interest rate of the EU. The ECB Executive Board enforces the policies and decisions of the Governing Council, and may direct the national central banks when doing so. The ECB has the exclusive right to authorise the issuance of euro banknotes. Member states can issue euro coins, but the volume must be approved by the ECB beforehand. The bank also operates the TARGET2 payments system.The ECB was established by the Treaty of Amsterdam in May 1999 with the purpose of guaranteeing and maintaining price stability. On 1 December 2009, the Treaty of Lisbon became effective and the bank gained the official status of an EU institution. When the ECB was created, it covered a Eurozone of eleven members. Since then, Greece joined in January 2001, Slovenia in January 2007, Cyprus and Malta in January 2008, Slovakia in January 2009, Estonia in January 2011, Latvia in January 2014 and Lithuania in January 2015. The current President of the ECB is Christine Lagarde. Headquartered in Frankfurt, Germany, the bank formerly occupied the Eurotower prior to the construction of its new seat.The ECB is directly governed by European Union law. Its capital stock, worth €11 billion, is owned by all 27 central banks of the EU member states as shareholders. The initial capital allocation key was determined in 1998 on the basis of the states' population and GDP, but the capital key has been readjusted since. Shares in the ECB are not transferable and cannot be used as collateral.....
Despite its stability over time, as for any statistical relationship, Okun's law is subject to deviations that can be large at times. In this paper, we provide a mapping between residuals in Okun's regressions and structural shocks identified using a SVAR model by inspecting how unemployment responds to the state of the economy. We show that deviations from Okun's law are a natural and expected outcome once one takes a multi-shock perspective, as long as shocks to labour-saving technology, labour supply and structural factors in the labour market are taken into account. Our simple recipe for policy makers is that, if a positive deviation from Okun's law arises, it is likely to be generated by either positive labour supply or labour-saving technology shocks or by negative structural factors shocks.
The holy grail of cross - border payments is a solution allowing cross - border payments to be immediate, cheap, universal, and settled in a secure settlement medium. The search for such a solution is as old as international commerce and the implied need to pay. Based on Bindseil and Pantelopoulos (2022), this policy brief describes in particular one vision as to how the holy grail can be found within the next decade through interlinked instant payment systems with a FX conversion layer. In doing so, the settlement mechanics are explained, and an assessment is provided on its potential to be the holy grail of cross - border payments.
Using confidential information on banks' portfolios, we show that banks that emphasize the sustainability of their lending policies in their disclosures do not exhibit a reduced environmental impact and, if anything, they extend a higher volume of credit to brown borrowers, without charging higher interest rates, shortening debt maturity, or requiring more collateral. These results cannot be attributed to the financing of borrowers' transition toward greener technologies. Examining the mechanisms behind the strategic disclosure choices reveals that banks extend credit to existing brown borrowers, especially those who are financially underperforming.
This paper analyses the pass-through of gas shocks to inflation in the euro area. First, it uses a Bayesian Structural Vector Autoregressive (BSVAR) framework to estimate the effects of gas supply shocks on headline inflation in the euro area and its four largest economies. A gas supply shock that increases gas prices by 10% raises euro area headline inflation by 0.6 percentage points after one year. The transmission of gas supply shocks is driven by direct and indirect effects, i.e. by households consuming gas products and by second-round effects through production costs. We document cross-country heterogeneity arising from differences in reliance on energy commodities across consumption and production, as well as from variation in the regulation of retail energy prices. Second, we build a New Keynesian Dynamic Stochastic General Equilibrium (NK-DSGE) model augmented with energy and show that indirect effects account for approximately 75% of the cumulative response of headline inflation after three years.
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