I study the transmission of monetary policy to deposit rates in the euro area with a focus on asymmetries and the role of banking sector concentration. Using a local projections framework with 2003–2023 country-level and bank-level data for thirteen euro area member states, I find that deposit rates respond symmetrically to an unexpected tightening or easing of monetary policy. However, more concentrated domestic banking sectors do pass-on unexpected monetary tightening (easing) more slowly (quickly) than less concentrated banking sectors, which contributes to a temporary divergence of deposit rates across the euro area. These results suggest that heterogeneity in the degree of banking sector concentration matters for the transmission of monetary policy to deposit rates, which in turn may affect banking sector profitability.

Exploiting the recalibration of ECB’s outstanding central bank funding in 2022, we show that a sharp reabsorption of bank liquidity induces a tightening impact on credit supply, as intended when centralbanks reduce their balance sheets. The tightening originates from the sudden relative convenience for banks accustomed to large liquidity holdings to more rapidly adapt to the new environment. Moreover, we show that the associated reduction in credit supply has real economic effects.

This report has been jointly produced by the Eurosystem work stream on the price stability objective comprising staff from the European Central Bank (ECB) and the national central banks (NCBs) of those countries that have adopted the euro. The report fed into the Governing Council’s deliberations on the monetary policy strategy review for 2020-21.

Europa is mede door de grote rol van de dollar gevoelig voor politieke en economische ontwikkelingen in de Verenigde ­Staten. Tegen die achtergrond klinkt een roep om het internationale gebruik van de euro te stimuleren. Ligt hier een taak voor de ­centrale bank?

In maart legde de coronacrisis het economische verkeer lam. Hoe greep de Europese Centrale Bank (ECB) sindsdien in, en was dat succesvol? Een tussenstand.

Nieuwe microdata laten zien dat banken in het eurogebied in de afgelopen tien jaar minder gebruik zijn gaan maken van ­obligatiefinanciering. Deze is gesubstitueerd door ­traditionele deposito’s en langlopende centralebankleningen, zoals de TLTRO’s. Langdurige afhankelijkheid van de centrale bank ligt hierdoor op de loer.