Policymakers take decisions in real time based on incomplete information about current economic conditions. Central banks and economic analysts largely rely on official statistics together with soft data and surveys, to assess the state of the economy. Although a wide range of high-quality conventional data is available, the datasets are released with lags ranging from a few days or weeks to several months after the reference period. For these reasons, central banks have been looking at ways to exploit timelier data and employ more sophisticated methods to enhance accuracy when forecasting metrics that are relevant for policymaking.

Over recent years, policy institutions have started to explore new sources of data and alternative statistical methods for the real-time assessment of economic activity. Since the financial crisis, they have stepped up their efforts to systematically use micro and survey data to better gauge changes in aggregate consumption, investment and...

The pandemic and the containment adopted entailed economic disruptions worldwide, which induced substantial government interventions to support firms. In anticipation of the negative consequences of the restrictions imposed around the world, governments quickly deployed a set of diverse tools to mitigate the impact of the crisis on the corporate sector.

In the euro area, the bulk of government interventions in 2020 and the first half of 2021 focused on mitigating liquidity and solvency risks and supporting employment in the non-financial corporation (NFC) sector. Around two-thirds of fiscal packages have provided firms and employees with direct support, on top of state guarantees for loans. The exact magnitude of the support is difficult to estimate, since the initial measures were extended and new ones have been implemented as the COVID-19 crisis has evolved, varying across countries and fiscal instruments.[1] For the euro area aggregate, as shown in Table 1, the...

Prepared by Gerrit Koester and Eduardo Gonçalves

The economic consequences of and policy responses to the pandemic pose challenges for interpreting wage developments. Aggregate wage growth is mostly assessed in terms of compensation per employee or compensation per hour worked.[1] The coronavirus (COVID-19) pandemic has led to a substantial divergence between compensation per employee and compensation per hour. The high number of workers on job retention schemes played a decisive role in these developments, especially via the implications for hours worked per person. Such schemes tend to have a downward effect on compensation per employee, as employees usually retain their employment status but, in most countries, face pay cuts when enrolling in these schemes. Moreover, the benefits of such schemes are not included in statistical measures of compensation where they are directly paid to employees.[2] At the same time, such schemes have an upward effect on...

Prepared by Maarten Dossche, Georgi Krustev and Stylianos Zlatanos

This box analyses the increase in euro area household savings since the start of the coronavirus (COVID-19) crisis. It provides an update of an earlier analysis of the drivers of the recent surge in savings and what they imply for the adjustment of savings and the recovery in private consumption as the pandemic is brought under control.[1] Since the pandemic has mainly affected euro area economic activity through restrictions imposed on several types of consumption, the nature of the recovery in this demand component will largely determine how fast overall economic activity recovers.

The propensity of euro area households to save has reached extraordinary levels since early 2020. The household saving rate, as derived from the euro area sectoral accounts (see Chart A), increased sharply in the first half of 2020. Since then it has fluctuated around a much higher level than before the pandemic,...

Prepared by Maria Grazia Attinasi, Alina Bobasu and Ana-Simona Manu

The coronavirus (COVID-19) pandemic has led to the accumulation of a large stock of household savings across advanced economies, significantly above what has historically been observed. Owing to their large size, the savings accumulated since early 2020 have the potential to shape the post-pandemic recovery. The central question is whether households will spend heavily once pandemic-related restrictions are lifted and consumer confidence returns, or whether other motives (e.g. precautionary, deleveraging) will keep households from spending their accumulated excess savings. In this box we consider a set of non-euro area economies and conclude that, on the balance of economic arguments, any reduction in the stock of excess savings as a result of higher consumption is likely to be limited in the medium term. However, given the considerable uncertainty surrounding this central scenario, this box also...

Frankfurt am Main, 29 June 2021

Thank you for inviting me to speak to you today.

The economist Rudi Dornbusch once said that “in economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”

That describes the situation we face today very well. The pandemic has accelerated pre-existing trends at a pace we could never have imagined. There are possibilities for our economy in 2022 which seemed at least a decade away in 2019.

Companies have digitised their activities 20 to 25 times faster than they had previously thought possible. One in every five workdays are expected to move to the home after the pandemic ends, compared with just one in every 20 before. And the call for greener lifestyles has become thunderous. Having accepted tough restrictions to fight the pandemic, 70% of Europeans are now in favour of stricter government measures to fight climate change.

Europe has long wanted...

Frankfurt am Main, 28 June 2021

I am delighted to take part once again in the Frankfurt Euro Finance Summit and very pleased to be able to attend in person. Today, I will focus on the banking sector and on financial system stability which is a necessary condition for the recovery from the pandemic crisis.

The ECB Macroprudential Bulletin provides insight into our ongoing work in the field of macroprudential policy. The aim of the Macroprudential Bulletin is to raise awareness of macroprudential policy issues in the euro area by bringing greater transparency to the ECB's ongoing work and thinking in this field, and to foster broader discussion on key macroprudential issues.

Transparency about our ongoing work is not an end in itself. It is also an opportunity for an exchange of views. We therefore invite you to share your views with us by sending an email with your feedback to ecb.macroprudential.bulletin@ecb.europa.eu. The same address can also be used if you want to receive notifications of future issues of the Macroprudential Bulletin.

17 June 2021

I am here with ECB Executive Board member and chief economist, Philip Lane. The ECB has, of course, only recently, last week, pledged to maintain an elevated base of bond-buying through the next quarter. So it's not ready to go anywhere near tapering or anything like that at the moment, but let's have a chat with Philip and find out what the next steps might be. A very good day to you. The Fed yesterday, brought a little bit of a surprise. Certainly, it's taken a step towards tapering, a baby step. Does that influence how fast the ECB might move in that direction?

I think it's very important to recall that, of course, the pandemic is global, but in the end, where the United States is today and where the euro area is are so different, both in terms of the stage in the pandemic recovery, in terms of the reopening of the economy, but also in terms of the wider inflation dynamic, and fundamentally – there's a few days' difference in these meetings. Last...

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16 June 2021

More than one year has passed since the outbreak of the COVID-19 pandemic. What challenges do you see for the European banking sector going forward? What are the main risks and vulnerabilities it faces?

European banks have demonstrated considerable resilience during the pandemic thanks to both the extraordinary coordinated public policy measures and the efforts to strengthen their fundamentals since the great financial crisis through regulatory reforms, including the creation of ECB Banking Supervision. Nevertheless, looking ahead, a few challenges remain. The two major ones are asset quality and persistently low profitability in the banking sector.

Regarding asset quality challenges, the upcoming gradual withdrawal of government support measures has the potential to lead to an increase in non-performing loans (NPLs). Therefore, it is important that banks recognise and manage credit risk proactively and that any deficiencies in this area be...

The ECB and the Federal Reserve Bank of Cleveland’s Center for Inflation Research will organise the Inflation: Drivers and Dynamics 2021 conference, to be held virtually on 7-8 October 2021. The conference will bring together top researchers from academia, central banks and other policy institutions to present research findings related to inflation.

Emi Nakamura (University of California-Berkeley) and Olivier Coibion (University of Texas-Austin) will be keynote speakers. Philip R. Lane and Isabel Schnabel, members of the ECB’s Executive Board, and Loretta J. Mester, president and chief executive officer of the Federal Reserve Bank of Cleveland, will provide remarks.

Some of the topics of interest include, but are not limited to:

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