Bank lending is a key channel through which monetary policy affects the real economy. This column explores how the effects of monetary policy on credit are shaped by bank specialisation in borrower industries and size categories. Analysing granular loan data reveals that such specialisation is widespread among euro area banks. Moreover, higher specialisation is typically […]
French political quagmire leaves euro at two-month lows. The yen stabilised on Friday but was still headed for its steepest weekly drop in a year on Friday, as the chances of a near-term rate hike faded, while the euro was rooted near two-month lows by political crisis in France. The yen edged up 0.2% to […]
Rising interest rates expose the interaction between hidden losses on long-duration assets and flighty uninsured deposits. This column uses confidential data for 139 euro area banks to analyse this mechanism. It estimates that unrealised losses on loans and bonds held at amortised cost averaged about 30% by September 2023, and were largest for smaller retail […]
The euro was up less than 0.1% at $1.1652, while sterling was flat at $1.3462. The U.S. dollar was little changed on Monday before Tuesday’s deadline for Washington and Beijing to strike a tariff deal and a key U.S. inflation report that could help determine whether the Federal Reserve lowers borrowing costs next month. The […]
Internal balance-of-payment crises should be taken as a strong signal of weakness and a wake-up call to reform euro area structures The single currency was expected to make the balance of payments irrelevant between the euro-area member states. This benign view has been challenged by recent developments, especially as imbalances between euro-area central banks have […]
Central banks raise interest rates to reduce aggregate demand and bring inflation down. This column uses credit register data and product-level price data from the euro area to highlight a parallel and potentially offsetting supply-side mechanism. It shows that in markets where firms rely more heavily on floating-rate loans, the ECB’s monetary tightening had a […]
Tariffs disrupt trade flows and influence prices, but their broader impact depends on how they are structured and the type of goods targeted. This column examines the economic implications of tariffs across the supply chain, with a particular focus on how different modes of retaliation to US tariffs impact economic activity, inflation, and trade. The […]
