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Civil war declaration: On April 14th and 15th, 2012 Federal Republic of Germany "_urkenstaats"s parliament, Deutscher Bundestag, received a antifiscal written civil war declaration by Federal Republic of Germany "Rechtsstaat"s electronic resistance for human rights even though the "Widerstandsfall" according to article 20 paragraph 4 of the constitution, the "Grundgesetz", had been already declared in the years 2001-03. more
REDE
18. September 2025
Forschung und Finanzstabilität
Forschung ist zentral für die Wahrung der Finanzstabilität. Sie zeigt, wie Innovationen voranschreiten, die Wirtschaft verändern und welche potenziellen Risiken es gibt.
Rede von Präsidentin Lagarde
INTERVIEW
17. September 2025
Stabilität in unsicheren Zeiten
Letzte Woche haben wir die Leitzinsen unverändert belassen, so Vizepräsident de Guindos. Der Beschluss ist das Ergebnis unseres datengestützten Ansatzes. Die Einkommen steigen, und die Arbeitslosigkeit bleibt stabil. Der Konsum muss sich aber erst wieder erholen – was zeigt, dass die Haushalte mit Vorsicht in die Zukunft blicken.
Interview mit Die Welt
DER EZB-BLOG
22. September 2025
Banken als Vermittler von Staatsanleihen
Eine kleine Gruppe von Banken ist entscheidend dafür, dass die Märkte für Staatsanleihen funktionieren. Sie kaufen Anleihen von ausgebenden Ländern und verkaufen sie an die endgültigen Inhaber. Thema des Blogbeitrags sind mögliche Anzeichen für Probleme im Vermittlungsprozess.
Blogbeitrag- 24 September 2025
- PRESS RELEASE
- 23 September 2025
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 23 September 2025
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 18 September 2025
- BALANCE OF PAYMENTS (MONTHLY)
- 17 September 2025
- PRESS RELEASE
- 16 September 2025
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 16 September 2025
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 17 September 2025
- Keynote speech by Piero Cipollone, Member of the Executive Board of the ECB, at the Resilience Conference hosted by De Nederlandsche Bank
- 17 September 2025
- Slides by Piero Cipollone, Member of the Executive Board of the ECB, at ABI Executive Committee meeting
- 17 September 2025
- Welcome address by Christine Lagarde, President of the ECB, at 10th ECB Annual Research Conference joint with Stanford’s Hoover Institution on ‘The Next Financial Crisis?’
- 15 September 2025
- Speech by Christine Lagarde, President of the ECB, 'Conversations pour demain' on the occasion of the 25th anniversary of Institut Montaigne in Paris, France
- 15 September 2025
- Slides by Isabel Schnabel, Member of the Executive Board of the European Central Bank, at the European Investment Bank Chief Economists’ meeting
- 17 September 2025
- Interview with Luis de Guindos, Vice-President of the ECB, conducted by Anja Ettel and Holger Zschäpitz
- 3 September 2025
- Contribution by Philip R. Lane, Member of the Executive Board of the ECB, to IMF Finance & Development Magazine
- 28 August 2025
- Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Francesco Canepa and Balazs Koranyi on 28 August 2025
- 26 July 2025
- Interview with Piero Cipollone, conducted by Miha Jenko on 10 July 2025
- 11 July 2025
- Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by David Barwick and Marta Vilar on 9 July 2025
- 22 September 2025
- A small group of banks is crucial for the smooth functioning of euro area sovereign bond markets. They buy bonds from issuing governments and sell them on to final holders. To play this role, they need sufficient resources, especially capital. This blog examines potential signs of strain in the intermediation process.Details
- JEL Code
- E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
- 16 September 2025
- A field experiment indicates that direct communication with ECB visitors better anchors their inflation expectations. Visitors with little knowledge of monetary policy are particularly likely to align their expectations with the ECB’s inflation target after speaking to central bankers.Details
- JEL Code
- E69 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Other
- 1 September 2025
- Economic uncertainty has been elevated recently due to geopolitical conflicts and trade tensions. This blog post investigates whether, and how much, high economic uncertainty affects monetary policy transmission in the euro area.
- 27 August 2025
- Services are playing a growing role in global trade. The ECB Blog shows that this trend has been driven by a decline in non-tariff trade barriers. The euro area has benefited more than other regions and is highly competitive in the services sector.
- 12 August 2025
- Investors who sell off sovereign bonds in times of stress are commonly referred to as “vigilantes” as they punish governments for what they consider to be bad policy choices. This post finds that investment funds account for most net sales of sovereign bonds in such times.Details
- JEL Code
- F30 : International Economics→International Finance→General
F34 : International Economics→International Finance→International Lending and Debt Problems
- 24 September 2025
- LETTERS AND RESPONSES
- 24 September 2025
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 6, 2025Details
- Abstract
- Despite payment digitisation, euro banknote demand remains robust and has sharply intensified during crises. This article examines the role of cash as a safe haven and contingency instrument during four diverse crisis episodes in the euro area (the COVID-19 pandemic, Russia’s invasion of Ukraine, the April 2025 Iberian blackout and the Greek sovereign debt crisis), each differing in shock type (health, geopolitical, infrastructure, sovereign debt) and geographical scope (euro area-wide, regional and national). We combine descriptive analysis of monthly and daily currency data with Bayesian causal impact models using daily net issuance and automated teller machine (ATM) withdrawals. This allows us, for the first time in this context, to statistically attribute significant public demand surges to specific shocks. The results highlight that the unique attributes of cash – its tangibility, offline functionality and status as a direct central bank liability – become paramount during stress, across different types of crises and geographies, fulfilling specific roles in each case. We argue that, beyond individual utility, cash provides crucial system-wide benefits such as payment redundancy and decentralised liquidity. These findings underscore the importance of policies ensuring continued access to cash and recognising its fundamental contribution to economic stability and crisis preparedness.
- JEL Code
- E41 : Macroeconomics and Monetary Economics→Money and Interest Rates→Demand for Money
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
H12 : Public Economics→Structure and Scope of Government→Crisis Management
C54 : Mathematical and Quantitative Methods→Econometric Modeling→Quantitative Policy Modeling
- 24 September 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 6, 2025Details
- Abstract
- The level of attention paid to inflation affects people’s inflation expectations and, in turn, price and wage-setting decisions. This box puts forward a measure of inflation attention based on a substantial corpus of newspaper articles from the largest euro area countries. The measure is derived from the proportion of articles that contain inflation-related keywords. The indicator spiked during the recent high inflation period, reflecting an increased focus on price developments. Although inflation attention has eased since, this decrease has been more gradual than the decline in inflation itself, mirroring trends observed in consumers’ inflation perceptions. Attention remains relatively high, particularly with regard to food price developments, which could have implications for how future inflation shocks affect inflation expectations and propagate through the economy.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
C43 : Mathematical and Quantitative Methods→Econometric and Statistical Methods: Special Topics→Index Numbers and Aggregation
C82 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs→Methodology for Collecting, Estimating, and Organizing Macroeconomic Data, Data Access
- 23 September 2025
- WORKING PAPER SERIES - No. 3119Details
- Abstract
- This paper introduces the European Central Bank’s Multi Country model (ECB-MC), a coherent macroeconomic framework designed to support economic forecasting and policy analysis within the Eurosystem. The ECB-MC captures the economic dynamics of the five major economies in the euro area – Germany, France, Italy, Spain, and the Netherlands – which account for more than 80 percent of the euro area total GDP. By incorporating detailed structural features and data-driven insights, the model provides the main reference for the ECB’s staff macroeconomic projections, acting as a disciplined tool for forecasting, enabling scenario, risk and sensitivity analyses, and giving a framework to understand the transmission channels of various economic shocks. The paper offers a detailed account of the structure, the estimation and the model properties, and provides a primer on the potential uses of the ECB-MC in the Eurosystem macroeconomic projections.
- JEL Code
- C3 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables
C5 : Mathematical and Quantitative Methods→Econometric Modeling
E5 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit
E6 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- 23 September 2025
- WORKING PAPER SERIES - No. 3118Details
- Abstract
- This paper examines whether firm-specific cyclical and idiosyncratic risk profiles influence corporate bond spreads and the transmission of monetary policy. I extend the standard excess bond premium (EBP) framework of Gilchrist & Zakrajšek (2012) to allow investors’ required compensation for default risk to vary with firm-level risks. Incorporating these effects reveals that a significantly larger share of a monetary policy shock’s impact on credit spreads is driven by changes in default risk compensation (as opposed to the EBP). In particular, for firms with more cyclical risk, up to one-fourth of the additional spread widening following a contractionary monetary policy shock reflects higher expected default compensation, substantially more than implied by the traditional EBP. By contrast, firms with high idiosyncratic risk show no strong differential response to monetary policy shocks relative to other firms.
- JEL Code
- D22 : Microeconomics→Production and Organizations→Firm Behavior: Empirical Analysis
E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest Rates: Determination, Term Structure, and Effects
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
- 23 September 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 6, 2025Details
- Abstract
- This box examines the vulnerability of the euro area to China’s export restrictions on rare earth elements. Rare earth elements are essential for industries such as defence, electric vehicles, energy and electronics. Disruption to their supply poses significant risks because of their extensive use in manufacturing. A significant share of the rare earth supplies to the euro area is also indirectly sourced through intermediaries, particularly US firms, which themselves depend heavily on Chinese producers. Recent export restrictions have already disrupted European industries, with the automotive sector experiencing production halts caused by critically low stock. Such dependencies expose the euro area to vulnerabilities from future supply shocks, with potential ripple effects on industrial output and inflation.
- JEL Code
- F12 : International Economics→Trade→Models of Trade with Imperfect Competition and Scale Economies, Fragmentation
F13 : International Economics→Trade→Trade Policy, International Trade Organizations
F14 : International Economics→Trade→Empirical Studies of Trade
F23 : International Economics→International Factor Movements and International Business→Multinational Firms, International Business
L14 : Industrial Organization→Market Structure, Firm Strategy, and Market Performance→Transactional Relationships, Contracts and Reputation, Networks
- 22 September 2025
- WORKING PAPER SERIES - No. 3117Details
- Abstract
- This paper examines the macroeconomic impact of substantial tariffs imposed by the second Trump administration on imports from China and the euro area and their transmission through direct and indirect channels. Using the ECB-Global 3.0 semi-structural model, we show that tariffs raise US import prices and lead to tighter US monetary policy, with the managed float of the renminbi partly offsetting adverse effects in China, while appreciation of the dollar undermines US export competitiveness. In the euro area, euro depreciation provides limited output support but intensifies imported inflation and triggers additional policy tightening. We assess the sensitivity of these results to key assumptions, such as the global amplification of inflation via dominant US dollar invoicing, partial trade diversion, and alternative monetary policy frameworks that attenuate monetary tightening and output contraction. Quantitative assessments of tariffs enacted up to 26 May 2025 and of an escalation scenario indicate significant global output losses and heightened inflationary pressures, requiring widespread policy rate increases. Further escalation of the trade conflict magnifies these effects. These findings quantify the economic cost of tariff related trade disputes and highlight the challenges central banks face in navigating the trade off between price stability and growth.
- JEL Code
- F12 : International Economics→Trade→Models of Trade with Imperfect Competition and Scale Economies, Fragmentation
F41 : International Economics→Macroeconomic Aspects of International Trade and Finance→Open Economy Macroeconomics
F42 : International Economics→Macroeconomic Aspects of International Trade and Finance→International Policy Coordination and Transmission
- 22 September 2025
- WORKING PAPER SERIES - No. 3116Details
- Abstract
- Europe’s lack of energy independence raises concerns about its vulnerability to external energy shocks, such as Russia’s 2022 invasion of Ukraine. This paper examines how energy shocks impact firm-level investment, comparing European and US firm responses. Using global oil supply news shocks, S&P’s Compustat data, and a local projections approach, the study reveals that European firms significantly cut capital and R&D expenditures after an oil shock, unlike US firms. The disparity is primarily driven by financially constrained firms in energy-intensive sectors. Additionally, differences in capital market structures play a role, as European firms relying more on market-based financing reduce investment by less. Lastly, our analysis confirms that the US shale revolution was a contributing factor in shaping Europe’s relative vulnerability. These findings highlight the need for national and EU policies to securethe energy supply, lower prices, and deepen capital markets, enhancing resilience and future competitiveness amid energy volatility.
- JEL Code
- D22 : Microeconomics→Production and Organizations→Firm Behavior: Empirical Analysis
E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
F15 : International Economics→Trade→Economic Integration
Q43 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Energy→Energy and the Macroeconomy
- 22 September 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 6, 2025Details
- Abstract
- Since the pandemic, working from home has become more common. According to 2025 data, around 20% of employees in the euro area have a hybrid working pattern, i.e. they work from home between two and four days per week. Although a substantial share of workers (44%) work from home at least one day per week, most workers would not be willing to accept a pay cut in exchange for hybrid working possibilities. However, those employees who value being able to work from home would be willing to forgo up to 8.7% of their wages for this option. This suggests that remote working flexibility can play a role in attracting and retaining workers, especially when labour markets are tight.
- JEL Code
- J28 : Labor and Demographic Economics→Demand and Supply of Labor→Safety, Job Satisfaction, Related Public Policy
J33 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→Compensation Packages, Payment Methods
- 22 September 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 6, 2025Details
- Abstract
- Recent trade tensions and tariff announcements are significantly influencing the behaviour and expectations of European consumers. As revealed by the June 2025 Consumer Expectations Survey, consumers expect tariffs to drive up inflation, weaken household finances and dampen economic growth. In response, consumers are reducing overall spending or switching away from US products. While lower-income households are likely to cut back on spending, high-income households are more likely to substitute goods. These findings highlight the tangible impact of trade tensions and uncertainty introduced by tariffs on inflation and growth expectations, consumer behaviour and, possibly, broader economic developments.
- JEL Code
- D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
D84 : Microeconomics→Information, Knowledge, and Uncertainty→Expectations, Speculations
F14 : International Economics→Trade→Empirical Studies of Trade
- 18 September 2025
- WORKING PAPER SERIES - No. 3115Details
- Abstract
- In this paper, we empirically investigate how suitability concerns detected by the SSM in the fitness and propriety of management body appointees impact the performance of European banks in the period 2014-2023. We provide evidence that management body appointees where the assessment of the supervisory authorities raised concerns, had a negative impact on the bank’s future performance. The negative effect can be attributed to appointees where the supervisory assessment revealed such severe concerns that ancillary measures were imposed. These results outline the importance of the SSM’s work for safeguarding the quality of bank’s corporate governance and suggest that the Supervisors seem to be effective in pointing out those appointees that exhibit severe concerns. In addition, we find that the designation of female appointees by supervised entities increased the bank’s performance sustainably. This result indicates that stimulating diversity, in terms of gender, in the management bodies of banks positively contributed to bank performance.
- JEL Code
- G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
G30 : Financial Economics→Corporate Finance and Governance→General
M14 : Business Administration and Business Economics, Marketing, Accounting→Business Administration→Corporate Culture, Diversity, Social Responsibility
- 17 September 2025
- WORKING PAPER SERIES - No. 3114Details
- Abstract
- This paper investigates the effects of monetary policy on banks and non-bank financial institutions (NBFIs), with particular attention to the role of financial stress. We use high-frequency identified monetary policy shocks and state-dependent local projections to capture non-linear responses across financial sectors. Drawing on aggregated balance sheet data, including total assets, debt securities, and loans, we find that monetary tightening leads to broad-based contractions in total assets and debt holdings, with particularly pronounced effects for banks and investment funds. Loan responses are more heterogeneous, but money market funds and pension funds exhibit notable declines in loan exposures, especially under high-stress conditions. Importantly, we find that financial stress significantly amplifies the contractionary effects of monetary policy across all sectors and asset classes. Our results highlight the differentiated roles and vulnerabilities of financial intermediaries in the transmission of monetary policy and underline the importance of financial conditions in determining its overall effectiveness.
- JEL Code
- E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors - Network
- Challenges for Monetary Policy Transmission in a Changing World Network (ChaMP)
- 17 September 2025
- WORKING PAPER SERIES - No. 3113Details
- Abstract
- Using the secured transactions recorded within the Money Markets Statistical Reporting database of the European Central Bank, we test several stylized facts regarding the interbank market of the 47-largest banks in the eurozone. We observe that the surge in the volume of traded evergreen repurchase agreements followed the introduction of the LCR regulation and we measure a rate of collateral re-use consistent with the literature. Regarding the topology of the interbank network, we confirm the high level of network stability but observe a higher density and a higher in– and out–degree symmetry than what is reported for unsecured markets.
- JEL Code
- E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
- 16 September 2025
- WORKING PAPER SERIES - No. 3112Details
- Abstract
- Using a granular database of variable rate euro area loans and analysing their defaults between 2014 and 2019, we show that the effect of interest rate changes on mortgage defaults is highly non-linear. First, we find that the risk associated with higher contemporaneous interest rates is concentrated among borrowers who got the loan at ultra-low interest rates, their default probability being 2.6 times higher than our sample average. Second, we show that the effect of interest rate changes on the default probability is asymmetric: interest rate cuts have rather small effects, whereas increases significantly raise default probabilities. Finally, we show that the magnitude of the effect of an interest rate increase depends on the history of net interest rate changes, with a consecutive interest rate increase having a 3 times stronger impact on the default probability than an increase following an interest rate decrease.
- JEL Code
- E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G51 : Financial Economics
- 16 September 2025
- WORKING PAPER SERIES - No. 3111Details
- Abstract
- To ensure that means of payments are readily interchangeable at face value – i.e. fungible – for retail payments, three elements are required: (1) settlement finality; (2) interoperability; and (3) seamless convertibility of the means of payment into the “ultimate” or quasi-ultimate means of payment. This paper argues that stablecoins issued by different issuers on different blockchains can be fungible to the same extent as commercial bank deposits from different banks provided that (i) payment and settlement technologies are interoperable, (ii) payments are transacted on ledgers that offer settlement finality, and (iii) that central bank money acts as the anchor to the monetary system (assuming that the central bank money is itself underscored by a homogenous unit of account). On this basis, this paper asserts that tokenised funds and off-chain collateralised stablecoins are fungible means of payments under some conditions, and that on-chain collateralised stablecoins can be prima facie classified as fungible means of payments, so long as the identical preconditions associated with accomplishing means of payment fungibility for tokenised funds/off-chain collateralised stablecoins can be fulfilled, and on the premise that the on-chain collateral can be readily converted into higher level money. Finally, it is determined that algorithmic stablecoins are not fungible means of payments.
- JEL Code
- B26 : History of Economic Thought, Methodology, and Heterodox Approaches→History of Economic Thought since 1925→Financial Economics
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
- 15 September 2025
- WORKING PAPER SERIES - No. 3110Details
- Abstract
- Announcing a large fiscal stimulus may signal the government’s pessimism about the severity of a recession to the private sector, impairing the stabilizing effects of the policy. Using a theoretical model, we show that these signaling effects occur when the stimulus exceeds expectations and are more noticeable during periods of high economic uncertainty. Analysis of a new dataset of daily stock prices and fiscal news in Japan supports these predictions. We introduce a method to identify fiscal news with different degrees of signaling effects and find that such effects weaken or, in extreme cases, even completely undermine the stabilizing impact of the announcements.
- JEL Code
- E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
D83 : Microeconomics→Information, Knowledge, and Uncertainty→Search, Learning, Information and Knowledge, Communication, Belief
- 15 September 2025
- WORKING PAPER SERIES - No. 3109Details
- Abstract
- This paper examines how structural change in labor markets affects household credit outcomes. Using a Shift-Share instrumental variable approach, we find that occupational shifts negatively influence mortgage holding for households facing fa-vorable job market conditions, such as stable employment and income growth. Our results, robust to alternative specifications, suggest that when both individual and economy-wide career prospects are favorable, the opportunity costs of settling down grow accordingly.
- JEL Code
- G51 : Financial Economics
J24 : Labor and Demographic Economics→Demand and Supply of Labor→Human Capital, Skills, Occupational Choice, Labor Productivity
D84 : Microeconomics→Information, Knowledge, and Uncertainty→Expectations, Speculations
O15 : Economic Development, Technological Change, and Growth→Economic Development→Human Resources, Human Development, Income Distribution, Migration
- 15 September 2025
- LEGAL ACTEnglishOTHER LANGUAGES (16) +
- 15 September 2025
- SURVEY OF MONETARY ANALYSTS - AGGREGATE RESULTS
- 12 September 2025
- WORKING PAPER SERIES - No. 3108Details
- Abstract
- In contrast to the conventional Fisherian view that inflation reduces real debt positions, we show that significant increases in inflation are strongly associated with financial crises. In the spirit of Jordà et al. (2020), countries with free and fixed ex-change rates can be compared to difference out the confounding reaction of monetary policy. Across a dataset of 18 advanced economies over 151 years, we show that the impact of inflation extends beyond its indirect effect via monetary policy. To further corroborate causality, we instrument inflation with oil supply shocks, finding that a 1pp rise in inflation doubles the probability of financial crisis from its sample average. We give evidence for the redistribution channel, where inflationary shocks directly cut real incomes, as a possible mechanism. In conjunction with recent literature on the dangers of rapidly tightening monetary policy, our results point to a difficult trade-off for central banks once inflation has risen.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
G01 : Financial Economics→General→Financial Crises
Zinssätze
| Einlagefazilität | 2,00 % |
| Hauptrefinanzierungsgeschäfte (fester Zinssatz) | 2,15 % |
| Spitzenrefinanzierungsfazilität | 2,40 % |
Inflationsrate
Mehr zur InflationWechselkurse
| USD | US dollar | 1.1756 | |
| JPY | Japanese yen | 174.51 | |
| GBP | Pound sterling | 0.87310 | |
| CHF | Swiss franc | 0.9335 |
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