Europe
Is the ECB taking the right policy path?
Facing an energy supply shock, analysts ponder whether sharp rate increases and QT alone will serve to bring inflation back to target while avoiding a major recession
Pandemic and Ukraine have altered Europe’s inflation dynamics – IMF
Fund stresses policy-makers face tough trade-offs from high inflation and recession risks
Most central banks plan no new banknotes in near future
Fewer than a quarter of banks plan new notes in next five years
ECB delays launch of new RTGS system and T2 consolidation
Launch had been scheduled for November but is now expected in March 2023
DNB advises pension funds to boost liquidity – report
Following UK crisis, Dutch central bank asks funds to monitor stress signals and review liquidity rules
Nominal interest rates strongly affect savings – ECB paper
Simple models based on real rates do not accord with eurozone data, researchers find
Eurozone sovereign downgrades increased corporate risk – ECB paper
Ratings changes for “core” eurozone countries had largest effects on corporate bonds
IMF publishes sober outlook for 2023
“Worst is yet to come”, says chief economist
ECB needs at least two ‘significant steps’ in coming meetings – Knot
DNB financial stability report warns high inflation and weak growth will test banks
ECB and PBoC extend currency swap deal for three years
Central banks keep the size of the swap line unchanged
Eurozone governments must tackle energy crisis, says ECB
Philip Lane backed 75bp raise against opposition from some dovish members in most recent meeting
ECB paper looks at Covid-19 emergency supervisory measures
Relaxation of CET1 requirements positively affected lending, but change to Pillar 2 guidance did not
ECB should raise rates to neutral ‘without hesitation’ – Villeroy de Galhau
Banque de France governor expects energy prices to have peaked in September
Share of reserve managers investing in green and social bonds declines
Share of portfolios allocated to these assets grow modestly
Ukraine: the challenges for central banks
Rules on the weaponisation of money would help to protect a ‘public good’ amid geopolitical splits in a testing environment for central banks, write Gavin Bingham, Paul Fisher and Andrew Large
Average central bank equity allocations at 11.9%
Despite higher volatility, high income central banks increase their investments in equities
Asset diversification and staff training main goals for external contracts
All non-high income central banks aim to offer training to staff, high income jurisdictions focused on diversification and market intelligence
Most central banks expect sanctions on Russia to have a long-term effect
Trend is weaker in Europe than in the Americas, Asia-Pacific and Africa
Eurozone inflation reaches new record level
Energy prices are still main driver but eurozone’s core goods inflation also rose
Over 90% of central banks trim duration as protection against inflation
Fewer institutions increased US Treasuries (18.75%), reduced exposure to unconventional assets (6.25%)
Central banks’ coverage ratio drops by 23%
Reserves buffers to cover monthly imports decline to 6.9 months
ECB will not consider QT until rates back to normal – Lagarde
Central bank holds close to €5 trillion in eurozone securities, over €4.2 trillion in public assets
Governments should raise taxes to support energy bills – ECB’s Lane
Firms must stop trying to make large profits or face tougher policy, ECB chief economist warns
Staff salaries at reserves departments increased 17.6% from last year
Total staff numbers declined by 10% to 27