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In 2021 ECB Banking Supervision will primarily focus its supervisory efforts on four priority areas materially affected by the coronavirus (COVID-19) pandemic: credit risk management, capital strength, business model sustainability and governance.

We will also carry out further structural activities looking beyond the impact of the pandemic in 2021, particularly in relation to banks’ alignment with the expectations set out in the ECB Guide on climate-related and environmental risks and their preparedness for the final stages of the implementation of Basel III. Depending on how the crisis develops, specific supervisory activities may be adjusted and tailored according to banks’ specific risk profiles.

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You can add location information to your Tweets, such as your city or precise location, from the web and via third-party applications. You always have the option to delete your Tweet location history. Learn more

You can add location information to your Tweets, such as your city or precise location, from the web and via third-party applications. You always have the option to delete your Tweet location history. Learn more

You can add location information to your Tweets, such as your city or precise location, from the web and via third-party applications. You always have the option to delete your Tweet location history. Learn more

You can add location information to your Tweets, such as your city or precise location, from the web and via third-party applications. You always have the option to delete your Tweet location history. Learn more

Frankfurt am Main, 18 March 2021

Jump to a shorter version of this blog post, which also appeared in several euro area newspapers

Climate change is one of the greatest challenges facing humankind this century. If left unchecked, it is likely to result in more frequent and more severe climate events, causing widespread devastation and economic disruption. Substantial changes in our production, consumption and living habits are required if the world is to avert catastrophic climate change. However, the changes required may themselves disrupt the economy and the financial system.

While the primary responsibility for combating climate change lies with governments, central banks can play an important contributory role. They can help ensure that the financial system is resilient to the transition to a low-carbon economy, by providing more and better information to market participants on the risks from climate change. Stress tests can be an important tool here,...

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26 April 2021

Economic and financial statistics play a central role in guiding monetary policy decisions: central banks constitute an important user group for the output of statistical agencies, while also helping to collect the data underpinning many macro-financial statistical series. Events such as the European Statistical Forum provide a welcome opportunity to bring together the producers and users of statistics.

In my remarks today, I will discuss two main topics: the first topic is the globalisation-related measurement challenges for macroeconomic statistics, with a focus on external and national accounts; the second topic is the data needs exposed by the pandemic crisis.[1],[2] I will highlight some of the ongoing initiatives to address these measurement challenges, and outline some ideas to enhance further the quality of official statistics.

Frankfurt am Main, 26 April 2021

Thank you very much for the opportunity to speak at this conference on spillovers in a “post-pandemic, low-for-long” world.[1]

Over the last decade, globalisation has called into question central banks’ ability to achieve domestic objectives. According to some[2], close economic and financial ties across borders make inflation more of a global phenomenon than a domestic one. And spillovers would leave central banks less able to control domestic financing conditions.

Today, these views are being put to the test.

US authorities are engaging in unprecedented fiscal and monetary expansion, which will show whether forceful policy stimulus can still raise inflation. The associated improvement in the US and global economic outlook has generated upward pressures on sovereign bond yields, which central banks whose economies are less advanced in the recovery are striving to resist. Whether they succeed will reveal the scope...

International trade and financial globalisation have made economies more interdependent and more exposed to each other’s domestic shocks. Economic theory suggests that globalisation affects the transmission mechanism of monetary policy and that its spillovers could strengthen the international dimension of monetary policy.[2] When monetary policy actions spill over abroad, this might at times complement policy choices in other countries and thus be a welcome externality. But at other times this might confront these countries with unfavourable policy choices. For example, they may find it harder to reconcile macroeconomic and financial stability without resorting to an enlarged set of policy tools. Only by exploring data can we shine a light on the extent to which monetary policy has acquired a global dimension.

Comparing spillovers originating from different central banks based on previous research is difficult. In past approaches, the estimation methodology,...

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Prepared by Margherita Giuzio, Michael Grill, Dominika Kryczka and Christian Weistroffer

Large differences between the liquidity of investment funds’ assets and liabilities (i.e. liquidity mismatches) can create vulnerabilities in the financial system and expose funds to a risk of large outflows and sudden drops in market liquidity. From a macroprudential perspective, the current regulatory framework may not sufficiently address the risks stemming from liquidity mismatches in investment funds. By modelling the liquidity management of an open-ended fund, this article provides theoretical justification for pre-emptive policy measures such as cash buffers that enhance financial stability by helping to increase the resilience of investment funds.