AI can boost productivity – if firms use it

28 March 2025By Antonin Bergeaud, Guzmán González-Torres Fernández, Vincent Labhard and Richard SellnerWe constantly hear of exciting new ways AI tools can help to tackle economic problems and the productivity gains they bring. However, benefits can only materialize when firms actually use AI.This post is part of a miniseries related…

AI versus green: clash of the transitions?

25 March 2025By Miles ParkerAI adoption requires enormous amounts of electricity. And so does greening the economy. Are the digital and green transitions clashing or can they be successfully achieved together? The ECB Blog takes a closer look.This post is part of a miniseries related to the ECB conference “The…

AI adoption and employment prospects

21 March 2025By António Dias da Silva and Marco WeisslerAI is already part of many workers’ daily routines. Some fear losing their jobs, but most don’t. The ECB Blog looks at how workers are using AI tools, how they feel about it and what that means for work in the…

Claudia Buch, Isabel Schnabel: Managing liquidity in a changing environment

18 March 2025By Claudia Buch and Isabel SchnabelAs the normalisation of the Eurosystem balance sheet progresses, the aggregate amount of central bank liquidity available to banks in the euro area will fall over the coming years. This blog explains the role played by the Eurosystem’s refinancing operations within the operational…

The gender gap at work is closing – but slowly

7 March 2024 By Clémence Berson, Vasco Botelho, Luis Guirola Abenza, Laura Hospido, Friderike Kuik, Christiane Nickel and Manuel Rojo Lopez The gender gap in labour markets is narrowing. But this process has slowed down. The ECB Blog gives an overview of recent developments for all euro area countries. The…

Why a more competitive economy matters for monetary policy

11 February 2025By Marinela-Daniela Filip, Daphne Momferatou and Susana Parraga-Rodriguez At the heart of the euro area’s competitiveness challenges lies weak productivity growth. The ECB Blog looks at how this makes it more difficult to carry out monetary policy. While companies in the euro area are getting more productive, they…

Europe has strengths it can build on

1 February 2025Christine Lagarde, President of the European Central Bank, and Ursula von der Leyen, President of the European CommissionRemaining competitive is fundamental for Europe’s future. We need faster economic growth and higher productivity to protect the quality of life for Europeans – from their jobs and incomes to their…

Luis de Guindos, Frank Elderson: Why prudent projections are the backbone of sound stress testing

20 January 2025By Luis de Guindos, Vice-President of the ECB, and Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECBStress tests are of crucial importance to assess banks’ resilience under adverse economic conditions. In previous stress tests, however, some banks…

Exploring an uncertain future with the help of scenarios

15 January 2025By Matteo Ciccarelli, Matthieu Darracq Pariès, Bettina Landau and João SousaCentral banks project future developments based on past data patterns and a set of assumptions. Crises can change economic structures, complicating this forecasting. The ECB Blog explains how scenario, risk and sensitivity analyses address the new uncertainty.We use…

Public vs. private R&D: impacts on productivity

10 January 2025By Arnaud DyèvreThis is the third post in our series featuring work submitted to the ECB’s 2024 Young Economist Prize. Arnaud Dyèvre was selected as one of the finalists with the research highlighted in this post. Applications for the 2025 Prize will be open from 13 January to…

What drives domestic inflation? The triangle of wages, profits and productivity

16 December 2024By Stefan Gebauer, Thomas McGregor and Sebastiaan PoolThough overall inflation has come down a lot, domestic inflation remains stubbornly high. This is typical for monetary policy tightening cycles. To understand why, The ECB Blog looks at how monetary policy is transmitted to wages, profits and productivity.In response to…

Greece, Ireland, Portugal and Cyprus: Crisis and Recovery

3 December 2024By Daniela Filip, Klaus Masuch, Ralph Setzer and Vilém Valenta At the height of the financial crisis Greece, Ireland, Portugal and Cyprus needed help. The international assistance came under the condition of economic adjustment aiming to restore financial stability, debt sustainability and growth. How did the four countries…

Financial intermediation beyond banks: taking a macroprudential approach

28 November 2024By François Haas, Cornelia Holthausen and Vasileios Madouros[1]The European Commission is seeking the views of stakeholders on policies to guard against the build-up of systemic risk in the financial sector beyond banks. This ECB Blog post describes the pillars of a macroprudential approach for the so-called non-bank financial…

Luis de Guindos: Can our financial system support the green transition when the going gets tough?

19 November 2024By Luis de GuindosMeeting the EU’s climate neutrality targets calls for deep structural changes and significant private funding, requiring a healthy financial system. That’s why we’ve tested how resilient banks, investment funds and insurers are to stresses arising during the green transition. ECB Vice-President Luis de Guindos explains…

Quantitative Tightening: How do shrinking Eurosystem bond holdings affect long-term interest rates?

14 November 2024 By Yıldız Akkaya, John Hutchinson, Kasper Jørgensen and Emanuel SkeppåsThe Eurosystem has started to reduce its bond holdings. This ECB Blog post investigates how strongly the shrinking balance sheet affects long-term interest rates. Estimates based on the Survey of Monetary Analysts suggest: an expected €1 trillion reduction…

Christine Lagarde: Mind the gap: what it takes to finance a greener future

12 November 2024Christine LagardeComplacency in fighting climate change and preserving biodiversity is endangering our economic survival. The longer we wait, the higher the costs will be. Christine Lagarde, President of the European Central Bank, warns of the growing gap between the commitments made and the investment needed.We’ve all heard it…

Piero Cipollone: The digital euro: what’s in it for you?

1 November 2024By Piero CipolloneAs they juggle various cards, apps and devices, most Europeans find that digital payments have fallen short of their promise to provide a convenient euro area-wide solution. The ECB’s Piero Cipollone explains how a digital euro would blend the simplicity of cash with digital convenience. Twenty-five…

Cross-border deposits: growing trust in the euro area

24 October 2024By Matthias RumpfPeople have tended to be quite hesitant to trust banks abroad. That seems to be changing. In a post featuring interactive charts for you to explore, The ECB Blog shows that cross-border bank deposits of private households have picked up recently. To what extent are euro…

Critical inputs from China: how vulnerable are European firms to supply shortages?

9 October 2024By Dennis Essers, Laura Lebastard, Michele Mancini, Ludovic Panon and Jacopo TiminiChina has been an important and reliable supplier of critical inputs for European industries for decades. But how vulnerable would our companies be if that suddenly stopped? The ECB Blog estimates the potential losses in value added…

Monetary policy transmission: why consumers’ housing situations matter

3 October 2024By Lorenzo Baldassarri, Dimitris Georgarakos, Geoff Kenny and Justus MeyerMonetary policy decisions have direct financial consequences for many consumers, especially as they influence mortgage conditions. The ECB Blog looks at how these effects differ based on consumers’ mortgage situations and why that matters for the transmission of monetary…

Delivering a soft landing: a historical perspective of monetary policy cycles

25 September 2024By Ema Ivanova[1], Thomas McGregor, Stefano Nardelli[2] and Annukka RistiniemiThe views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.The job of central banks is to help the economy navigate shocks and…

Hedge funds: good or bad for market functioning?

23 September 2024By Federico Maria Ferrara, Tobias Linzert, Benoit Nguyen, Imène Rahmouni-Rousseau, Marta Skrzypińska and Lia Vaz Cruz[1]Hedge funds have substantially increased their trading activity in euro area government bond and repo markets. The ECB Blog evaluates how this plays out for market functioning and intermediation. Government bonds are central…

Obstacles to the greening of energy-intensive industries

17 September 2024By Gert Bijnens, Cédric Duprez[1] and John Hutchinson Energy-intensive firms continue to suffer from low profits margins even as energy prices have fallen from their peak. The ECB Blog discusses implications for the green transition in the EU. Skyrocketing energy prices during the recent crisis ate into most…

Why competition with China is getting tougher than ever

3 September 2024By Alexander Al-Haschimi, Lorenz Emter, Vanessa Gunnella, Iván Ordoñez Martínez, Tobias Schuler and Tajda SpitalEuro area exporters are facing tougher competition from China. But why is that? The ECB Blog looks at the important role played by price competitiveness and the ongoing industrial upgrades being made in China.Euro…

How central bank communication affects the economy

31 July 2024By Stefan Gebauer, Thomas McGregor and Julian SchumacherCentral banks choose their words very carefully. And rightly so – policy makers’ wording can move markets and, eventually, the economy. This ECB Blog post shows how unexpected changes in communication influence growth and inflation.Central banks need to communicate clearly. This…

Repo markets: Understanding the effects of a declining Eurosystem market footprint

23 July 2024By Svetla Daskalova, Federico Maria Ferrara, Pedro Formoso da Silva, Pamina Karl and Thomas Vlassopoulos[1]Repo markets are vital for banks to source liquidity and securities. They also represent an essential link in the monetary policy transmission chain. While the Eurosystem is in the process of reducing its market…

The geopolitics of green minerals

10 July 2024By Jakob Feveile Adolfsen, Danielle Kedan and Marie-Sophie LappeThe green transition will significantly increase demand for key minerals over the coming decades. The impact on energy prices will ultimately depend on how supply adjusts. The ECB Blog looks at the geopolitical risks involved. The green transition relies on…

How euro area firms’ inflation expectations affect their business decisions

4 July 2024By Ursel Baumann, Annalisa Ferrando, Dimitris Georgarakos, Yuriy Gorodnichenko, Judit Rariga and Timo Reinelt Firms’ inflation expectations are key for monetary policy makers. The ECB Blog presents new survey data on these expectations, evidence on what influences them, how they change when new information becomes available, and if…

Mind the gap: Europe’s strategic investment needs and how to support them

27 June 2024By Othman Bouabdallah, Ettore Dorrucci, Lucia Hoendervangers and Carolin NerlichEurope needs trillions of euros to manage climate change, become digital and defend itself. How can EU and national policymakers support these projects? This Blog post discusses the options in times of low growth and high public debt levels.The…

Piero Cipollone: Maintaining the freedom to choose how we pay

25 June 2024By Piero CipolloneA digital euro would combine the convenience of digital payments with cash-like features. ECB Executive Board member Piero Cipollone explains how a digital euro would enhance Europeans’ freedom of choice when deciding how to pay.Freedom lies at the heart of the European Union’s principles. Every EU…

How banks deal with declining excess liquidity

18 June 2024Tom Hudepohl, Pamina Karl, Tobias Linzert, Benoit Nguyen, Marta Skrzypińska, Lia Vaz Cruz[1] With the reduction of the Eurosystem’s balance sheet, central bank liquidity is declining. As liquidity is unevenly distributed among banks, an effective redistribution and use of market funding are essential. This worked well so far,…

Making the digital euro truly private

13 June 2024By Maarten G.A. DamanMany people appreciate privacy when paying, and want their data protected. Current electronic means of payment are not optimal in this regard. We are designing the digital euro to be the most private electronic payment option. The ECB Blog explains.Paying is a private affair for many…

Christine Lagarde: Why we adjusted interest rates

8 June 2024By Christine LagardeThe ECB has cut interest rates. President Christine Lagarde explains why and sets out what still needs to be done to bring inflation back to 2% over the medium term.Two years ago, we started raising interest rates because inflation was far too high. Today, the situation…