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This study evaluates the effectiveness of tax incentives, with a particular focus on incentives for research and development (R&D). It analyses different design options for tax incentives and shows that input-based R&D tax incentives appear to be the most effective in stimulating additional R&D investment. Taking into account the lessons learnt from empirical evaluations and the restrictions imposed by Pillar Two, refundable, volume-based tax credits with a broad scope remain a convincing way forward ...

The analysis explores the competitiveness of European banks compared to their US counterparts. It highlights structural differences between the two systems, particularly Europe’s reliance on traditional bank intermediation versus US’s market-based model. European banks generally lag in profitability and market valuations, but remain central to credit provision and financial inclusion across the EU. US banks have benefitted from more favourable macroeconomic scenarios. At the same time, recent improvements ...

This study analyses why European banks, despite improved cost efficiency, continue to trade at lower valuations than their United States (US) counterparts. The gap stems from limited growth potential due to market fragmentation and underdeveloped capital markets. To close this competitiveness divide, the study calls for accelerating the Savings and Investment Union (SIU), expanding investment banking capacity, and implementing smart banking regulation and supervision that reinforces market discipline ...

This paper provides an assessment of the EU banks’ competitiveness by using the US as a benchmark and looking at four interconnected dimensions: profitability, stability, ability to supply intermediation services and raise funds, product affordability for customers. Our results show that profitability, while being a key performance indicator in a market economy, does not measure the banks’ contribution to welfare more broadly and may even signal excessive market power.

This paper reviews a recent data on property markets and real estate-related bank loans in the euro area, looking at prices, mortgages, credit quality measures and some indicators of the costs faced by borrowers. It then takes a closer look at certain origination and monitoring practices adopted by significant institutions, as recently analysed by the ECB, which apparently show some room for improvement. Finally, it addresses property-related exposures held by non-bank financial institutions, with ...

This paper outlines the European Union’s institutional framework for defining and executing an active euro exchange rate policy, against the backdrop of a potential policy shift by the United States. It outlines the emerging US debate on linking exchange rate policy with trade and security objectives and provides a background on past currency interventions by US and other central banks such as the Plaza Accord. The final part opens a discussion over the functioning and limits of the EU’s legal framework ...

On 19 March 2025, the European Commission unveiled its strategy for a savings and investments union with the goal of directing EU households' savings towards productive investments. This policy includes a review of existing EU pension legislation to increase participation in supplementary pensions and recommendations for auto-enrolment pension frameworks. The pan-European pension product (PEPP), introduced in 2019 through a regulation that became applicable in 2022, has only been registered in four ...

O Banco Central Europeu (BCE) é a instituição central da União Económica e Monetária, sendo responsável pela política monetária na área do euro desde 1 de janeiro de 1999. O BCE e todos os bancos centrais nacionais da UE constituem o Sistema Europeu de Bancos Centrais (SEBC). O objetivo primordial do SEBC é a manutenção da estabilidade dos preços. Desde 2014 que foram cometidas ao BCE atribuições relativas à supervisão prudencial das instituições de crédito no âmbito do Mecanismo Único de Supervisão ...

This briefing has been prepared for the public hearing with the Chair of the Single Supervisory Mechanism (SSM), Claudia Buch, scheduled for 27 March 2025 in the ECON Committee. The previous hearing took place on 18 November 2024.

In this paper, we propose and analyse four scenarios of a second Trump administration’s economic policy and its impact on Europe, ranging all the way from moderate tariffs to full trade war, a full multilateral breakdown with the US leaving the IMF down to a more cooperative exchange rate realignment agreement. We assess two trade scenarios quantitatively and outline broader policy shocks and their economic consequences. Our findings highlight significant challenges for the ECB, requiring responses ...