ECB bonds

The Capital Plans The ECB Will Require Banks Due To The War In Ukraine is not To Harm Dividends

Renta 4 | The ECB plans to require banks to include the effects of the war in Ukraine in the internal capital adequacy assessment process as it is dragging on longer than expected. The ECB wants banks to include analyses of various scenarios on the impact of second-round derivatives as a result of the war, such as downward revision of economic growth. Opinion: We consider the ECB’s request to be…

Climate changes risks

No European Bank Meets The ECB’s Expectations On Climate Risk Reporting

Fernando Rodríguez | “Although there have been improvements since the first assessment at the end of 2020, no bank fully meets supervisory expectations” on environmental and climate risk reporting, according to the latest report of the European Central Bank (ECB) with data analyzed as of November 2021 on 109 entities under direct supervision. Although more than 70% of banks provide information on how their boards of directors monitor these risks…


Talking Down Inflation

Juan Pedro Marín-Arrese | Christine Lagarde is trying to convince the markets of the ECB’s strong determination to tame the current inflationary bout. To avoid having its reputation as caretaker of price stability tarnished, the ECB has to reverse the benign neglect shown up to now. Yet, Lagarde is conscious of the narrow scope monetary policy has when dealing with supply-side cost hikes. Thus, rather than taking the pivotal action…

Christine Lagarde IMF director

ECB: The Eurozone Is Not The US And The Output Gap Is Still Closing

Annalisa Piazza (MFS IM) | Despite no changes in the policy stance, the tone of the press conference was clearly more hawkish than anticipated. Lagarde noted that risks around inflation are skewed to the upside, especially in the short-term and the March projections on inflation will set the stage for future policy moves. Recent inflation developments are a reason of concern across the Governing Council as second round effects from…


BCE | Policy Was Left Unchanged At Today’s Meeting

Allen Goves (MFS Investment Management) | Policy was left unchanged at today’s meeting, as widely expected, yet despite rising inflation. This is because of the ECB’s stress that the current rise in inflation is likely to be transitory. Growth is still considered strong but is moderating and risks are broadly balanced. This meeting was perhaps characterized by its emphasis on inflation drivers. Importantly, the ECB continues to stress that many…

euro digital currency

The ECB Chooses Three Executives From BBVA, CaixaBank And Bizum For Its ‘Council Of Wise Men’ On The Digital Euro

The council is composed of 30 members (23 men and seven women), all of whom come from the business community. BBVA will be represented by Antonio Macías Vecino, who has been in charge of payments policy at the bank since June 2020.Caixabank by Fanny Solano, head of market regulation, digital and retail banking, and Bizum by Fernando Rodríguez Ferrer, who has been responsible for business development since January 2017.

ECB bonds

ECB Members Show Their Concern About Inflation

Francisco Vidal (Intermoney) | For yet another day, the spotlight is on the words of ECB members. They give their views on their particular vision of the course of inflation, with the consequent impact on the markets. And the latter react by interpreting the statements in terms of the central bank’s speed in withdrawing its stimuli. On Thursday, the Financial Times reported Philip Lane had said privately that they expect…


Will Lagarde Dare To Move In Earnest?

JP Marín-Arrese | All was quiet on the ECB front for too long. Suddenly, last week it announced its intention to scale down the emergency asset-buying programme starting next month. While falling short of the tapering heralded weeks ago by Jerome Powell, it represents indeed a shift in the dull do-nothing approach followed for months and years. Once embracing quantitative easing, much later than other central banks, it proved unable…

ECB's president Christine Lagarde

ECB ‘recalibrates’ PEPP for Q4 – December is now key for APP and TLTROs

Annalisa Piazza (MFS) | ECB “recalibrates policy”: Nothing else has changed. Indeed, the rest of the policy announcement was a carbon copy of what we heard back in July. Forward guidance on both rates and QE was confirmed, along with the re-investment programmes. The slower pace of PEPP had been widely flagged by ECB officials over the past few weeks so the announcement was hardly a surprise. That said, the…

European banks

Ban On Bank Dividends: A Strange Remedy With Severe Side Effects

Scander Bentchikou (Lazard Frères Gestion) | The restrictions on bank dividends, which have been in force since March 2020, ended on Friday. For banks and their shareholders, this is a relief. The measure, supposed to protect banks from the crisis, has done more harm than good. Technically, the banking sector’s dividends made a big comeback in spring 2021. However, the amounts paid remained well below their 2019 levels, given the still numerous restrictions. The return to normal will have to wait for the results of the banking stress tests, published on 31 July by the European Banking Authority.