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This paper provides an overview of current initiatives and actions aiming at reinforcing the anti-money laundering (AML) supervisory and regulatory framework in the EU, in particular from a Banking Union perspective. This briefing first outlines the EU framework for fighting money laundering, which includes legislation (most notably the 5th AML Directive) and a number of Commission and Council Action Plans. Secondly, an overview of AML prevention relevant authorities, at both the EU and national ...

This in-depth analysis provides evidence on differences in the practice of supervising large banks in the UK and in the euro area. It identifies the diverging institutional architecture (partially supranationalised vs. national oversight) as a pivotal determinant for a higher effectiveness of supervisory decision making in the UK. The ECB is likely to take a more stringent stance in prudential supervision than UK authorities. The setting of risk weights and the design of macroprudential stress test ...

Several central banks, including the European Central Bank since 2014, have added negative policy rates to their toolboxes after exhausting conventional easing measures. It is essential to understand the effects on the economy of prolonged negative rates. This paper explores the potential effects (and side effects) of negative rates in theory and examines the evidence to determine what these effects have been in practice in the euro area. This paper was provided by the Policy Department for Economic ...

Negative interest rate policies (NIRP) have become an established monetary policy instrument in the toolkit of the ECB. We discuss NIRP in the euro area based on theoretical considerations and available empirical evidence. We find that NIRP had some positive impact on loan growth and investment in the euro area, but that the room to further loosen monetary policy via NIRP may be small. NIRP is discussed also in the context of the general monetary policy environment. This paper was provided by ...

Policy rate cuts in negative territory have increased credit supply and improved the macroeconomic environment similar to cuts in positive territory. Dreaded disruptions to the monetary policy transmission channels as well as adverse side effects on bank profitability have so far largely failed to materialise. Thus, the evidence available today shows that the negative interest rate policy is an effective policy tool. However, systemic risks, including in the non-bank sector, should be closely monitored ...

This note is prepared in view of a regular public hearing with the Chair of the Supervisory Board of the European Central Bank (ECB), Andrea Enria, which will take place on 1 July 2021. The briefing addresses (i) the ECB’s TRIM Project Report, (ii) data on significant banks’ holdings of sovereign debt, (iii) the ECB’s publication on banks’ recovery plans, (iv) the ECB’s Supervisory banking statistics for the fourth quarter of 2020, (v) the ECB consultation on revised “fit & proper” guidance, (vi ...

This paper shows that larger banks and better capitalised banks invest more in computer software. These findings could reflect that larger banks can attain greater benefits from computer software and that better capitalised banks have more resources to make larger software investments. All the same, smaller and less capitalised banks will also have to make substantial software investments to maintain sustainable businesses, something that supervisors will need to point that out to these banks.

Low IT spending by banks: Reason for concern?

Részletes elemzés 24-06-2021

We collect data on IT spending as reported by banks directly supervised by the ECB in their 2020 annual reports. Slightly more than 50% of these banks report their IT spending. Our analysis, using data for those banks that do report IT expenditure, suggests that the distribution of IT expenses as share of operating income, operating expenses or total assets is uneven. We identify banks that score low on one or more of these ratios. It turns out that this group is very diverse. We argue that these ...

We present a review of the channels through which the US fiscal and monetary post-pandemic policies may affect the euro area. US spillovers will likely be relevant and worth considering while setting the policy stance in the euro area, at a crossroad between economic global recovery and global overheating. A key role is going to be played by global financial markets, their appetite for open-ended stimulative policies and fears of hard disinflation scenarios affecting central banks' ability to keep ...

The US has undertaken much larger discretionary fiscal packages than euro area governments, particularly in 2021. The large 2021 US fiscal package is likely to provide a welcome boost to the euro area economy. There is a risk, however, that US fiscal policy could lead to overheating of the US economy and a possible monetary tightening from the Fed which could trigger a recession. This paper argues this scenario is unlikely to occur but discusses the implications for the ECB if it did. This paper ...