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This briefing provides a summary of all scrutiny activities of the European Parliament related to euro area monetary policy in the period between the September and November , along with a recap of the key monetary policy decisions taken by the European Central Bank’s (ECB’s) Governing Council in that period. These kind of summaries are published regularly after each Monetary Dialogue with the ECB.

This note is prepared in view of a public hearing with the Chair of the ECB Supervisory Board, Andrea Enria, scheduled for 1 December 2022.

While greater inflation may have led to some positive “first-round” effects for banks, several negative “second-round” impacts may occur, including: i) an increase in credit risk, affecting both families and companies, especially “heavy energy users”; ii) a drop in the value of fixed-rate assets held by lenders, including sovereign bonds; iii) liquidity pressures due to the ECB’s recent decision to increase the cost of its outstanding 3-year facilities and to greater competition for retail deposits ...

Geopolitical risk will increasingly confront EU banks and their supervisors in the coming years. This paper assesses four specific manifestations of this type of risk and the related banking vulnerabilities and proposes new or modified priorities for European Central Bank banking supervision.

The euro area’s current high inflation rate is due to both internally generated demand pressures and external shocks that have raised food and energy prices. This paper argues that the latter element is more important than the former. Central banks need to tighten monetary policy to address high inflation but, with central banks around the world under pressure to restore their anti-inflationary credentials, it is possible that there is going to be too much tightening of global financial conditions ...

According to its price stability mandate, the European Central Bank (ECB) conducts a single monetary policy by targeting the aggregate euro area inflation rate. Even though monetary policy is not geared towards addressing inflation dispersion between Member States, wide inflation differentials have implications for monetary policy. At the moment of extreme volatility and high energy prices, Member States experience very high levels of headline and core inflation dispersion, affecting monetary policy ...

The credibility to implement bail-in procedures to retail investors seems limited. ECB statistics suggest that Italy, Germany, France, and Austria have large retail investors’ exposure to bank securities. Several policy options to deal with the retail challenge are discussed, including prohibiting banks’ debt securities held by retail investors from being used to meet MREL, a ban on the distribution of complex capital instruments to retail investors, and more stringent MREL requirements for banks ...

This paper was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 26 September 2022.

This paper was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 26 September 2022.

Central banks are important actors in the transition towards net zero for three reasons. First, they can manage risks to the financial system and the economy as a whole that arise because of climate change. Second, central banks have themselves become market actors and can help to channel funds into sustainable investments in order to finance the green transformation. Third, they share their expertise to encourage behavioural changes. Measures undertaken by central banks to address these issues are ...