Central banks

The debate on the desirability of a digital euro, issued by the European Central Bank, has been growing in recent weeks. Today, at a seminar organised by the European Banking Federation, Pablo Urbiola, from BBVA's Digital Regulation team, said that "the ECB should rely on public-private cooperation, leveraging the strengths of all players."

The spread of coronavirus to several countries has led to a very charged reaction in the markets. The World Health Organization’s declaration of a global COVID-19 pandemic led to a number of immediate actions from the central banks and, concretely, the European Central Bank (ECB), as well as governments and other authorities in Europe. In a note, BBVA Research indicates that “the adoption of these measures is positive.” However, it feels that the monetary policy measures should be accompanied by a coordinated fiscal response from the European Union, which has already begun to materialize in Europe with similar stimulus plans between different countries.

Last summer, European institutions greenlighted the latest major banking reform package (CRR2 or, as it was also known, the risk reduction package, or banking package). The announcement was well received in the market, as a clear indication that, after almost 10 years of regulatory reform, the definitive framework for credit institutions was finally starting to take shape.

The reform of the reference rates in the euro area to adapt to new regulations, promoted by the European Central Bank (ECB) along with other authorities, is taking shape. On October 2, the ECB began publishing a new overnight rate: the €STR.

The European Central Bank’s statement and press conference, following the monetary policy meeting held on Thursday, July 25, was one of those examples of pre-announcement of upcoming measures. “It seems quite clear now that a depo cut will be decided soon (we expect it for September now),” says BBVA Research in its latest ECB Watch report.

Continuous innovation and the gradual decline of the use of cash are giving way to a new digital monetary system. According to José Manuel González-Páramo, executive director and head of global economics and public affairs at BBVA, central banks must define the new role they will play coming out of this transformation.

The European Central Bank (ECB) announced at yesterday’s meeting its future guidance on rates, which will remain on hold at least until the first half of 2020. As noted by BBVA Research in its ECB Watch report, the ECB is open to adopting further measures if necessary.  The ECB also announced the conditions of its TLTRO-III liquidity line.

Mario Draghi reiterated this week that the ECB could tentatively delay the planned rate hike until next year. At a conference in Frankfurt, Draghi responded to banks’ concerns by saying negative rates could impact bank profitability, although it “is not an inevitable consequence.” Given these statements, we asked Olga Gouveia, Lead Economist for Financial Systems at BBVA Research, what is the impact of the decision to keep negative interest rates. In her opinion, it is reasonable the precautionary tone of the ECB, provided that there is a planned hike on the horizon.

All eyes were on the possibility yesterday that the European Central Bank (ECB) could make changes in the forward guidance on rate and on a potential announcement of new liquidity measures. And Mario Draghi didn’t disappoint: he answered both questions. He announced that the ECB will keep interest rates on hold until at least the end of this year and another series of auctions of long-term liquidity. BBVA Research has just released an ECB Watch report covering and assessing the measures announced by Draghi.

The Eurozone finance ministers recently approved the appointment of Ireland’s Central Bank Governor,  Philip Lane, as the next chief economist at the European Central Bank (ECB). Alongside the central bank’s president and the members of the Executive Board, which will also see new appointments this year, the chief economist plays a key role on the institution’s Governing Council. According to BBVA Research, this year’s scheduled turnover at the bank, may result in changes to the ECB’s current stance on monetary policy.

José Manuel González-Páramo called for Europe to move forward now, not “just when there’s a crisis”, and to conclude the banking union, the capital markets union and the fiscal union to have a “much more robust and genuine euro.” Speaking at the Círculo de Economía in Barcelona, he stressed the role that the ECB played in Europe’s recovery. However, the bank must now go back to its original purpose of “contributing to financial stability and separating supervision from monetary policy.”

The expiration of ECB Vice-President Vítor Constancio's term in June and the subsequent appointment of Luis de Guindos as his successor marked the beginning of the European Central Bank’s senior management renewal. But, how are ECB executive board members appointed?

As widely expected, the ECB concluded its monetary policy meeting yesterday without making any changes to its monetary policy stance. As BBVA Research’s ECB Watch report notes, there were other key takeaways that came out of the meeting, such as the end of the Asset Purchase Programming, and the confirmation that the bank is in no rush to hike interest rates. From an economic standpoint, the institution affirmed its inflation outlook but slightly lowered its growth expectations for the euro zone.

The Central Bank of the Republic of Turkey (CRBT) decided today to raise the official interest rate by 625 basis points from 17.75 percent to 24 percent. As a BBVA Research report points out, the hike came in above market expectations (21 percent according to Bloomberg consensus estimates), and BBVA Research's own forecast (22.75 percent). BBVA Research welcomes the move and believes it should be backed up by a medium-term coherent and detailed fiscal plan.

The reform of the reference rates in the eurozone to adapt to the new regulations, driven by the European Central Bank (ECB) along with other authorities, is taking shape. Today the ECB has announced a proposal for a new intraday rate as an alternative to the Eonia: the ESTER.

BBVA has requested arbitration procedures through the complementary mechanism of the ICSID - the International Center for Settlement of Investment Disputes – within the framework of the Reciprocal Investment Promotion and Protection Agreements between Spain and Bolivia with respect to the transfer of BBVA Previsión AFP (Pension Fund Administrator) to the Government of Bolivia.

The European Central Bank in 2018 began the turnover process in a number of key posts on its Executive Board. The crux will be the end of Mario Draghi’s term in office in October 2019 amid doubts about whether his departure will coincide with a hike in interest rates expected between the summer and the fall of next year.

The European Central Bank on Thursday announced it is maintaining its monetary policy unchanged. Interest rates will remain at current levels until the summer of 2019 or “as long as necessary”, as announced in its June meeting. In doing so, ECB President Mario Draghi gave no further clarification on the next steps in the bank’s roadmap and intoned the mantra of prudence and patience.

Answering this question is not easy. Academics and financial industry representatives met to discuss whether it would be appropriate for central banks to issue digital currencies. In the forum, BBVA executive board member, José Manuel González-Páramo, indicated that he believes it is probable that central banks will issue cryptocurrencies in the years ahead.  Future advances in blockchain technology will open the way to its use by financial authorities.

In 2015, the ECB launched its Bank’s Integrated Reporting Dictionary, or BIRD, a project ultimately intended to organize the data that it gathers from EU financial institutions for its statistical area. This project is part of a broader strategic approach aimed at improving the system that banks and other players use to report statistics to the European supervisor, known as IReF (Integrated Reporting Framework). BIRD is one of the pivotal milestones in the list of achievements by the Statistical area of the ECB. And just as the rest of the organization, BIRD is celebrating its anniversary.

After the bare minimum agreement on the banking union achieved at the recently held European Council, the debate about the future of Europe continues unabated. With this agreement still fresh, the Bank of Finland invited scholars, representatives of the financial sector and regulators talk about the future of the Old Continent. The experts gathered in Helsinki called for advancing towards a greater banking and capital markets union. The next date in the calendar: The European Council meeting in December.

At its meeting on June 14, the European Central Bank (ECB) set an expiry date for the asset purchase program: December of this year. The program, which started in March 2015, is now approaching its end. It forms part of the non-standard measures that Mario Draghi's institution implemented during the toughest years of the economic crisis. What do they consist of?

As the European Central Bank celebrates its 20th anniversary, we take a look back at some of its defining milestones. Not in vain, the ECB has been the guarantor of the euro’s survival and, since 2014, the central axis of the euro area’s financial system. Since the onset of the 2008 financial crisis, the ECB took on a role that was pivotal for a huge part of the recovery. However, “it cannot act alone”: “further strengthening of Europe´s institutional and legal framework is necessary to construct a more united and resilient Europe to face future challenges.”

Every time Mario Draghi speaks at the news conference after the European Central Bank’s (ECB) monthly monetary policy meeting, the markets hold their breath. And after he finishes, they react. In the wake of the 2008 crisis, the expectations created by the bank’s message have taken on added relevance. BBVA Research is aware of the importance of being able to gauge if the ECB’s message adequately reflects its policy and has used big data techniques to this end.

As expected, the European Central Bank left interest rates and its asset-purchasing program, or quantitative easing (QE), unchanged. After its policy meeting, Mario Draghi instead stressed concerns about the global risks posed by protectionism as well as the need to focus on inflation.

BBVA backed Garanti Bank, in cooperation with Turkish Central Bank and TUBITAK, the Scientific and Technological Research Council of Turkey, has sponsored the first Blockchain Workshop in Turkey.

As we expected, the FOMC increased the Fed funds rate to 1.5%-1.75%, confirming that newly appointed Chairman is committed to maintaining continuity with his predecessor. The language in the statement underpinned the committee’s shift from a defensive to potentially offensive mindset, with strong labor market signals, increased business investment and firmer actual inflation readings.

As expected the European Central Bank (ECB) yesterday took a further step toward the normalization of its monetary policy. That is BBVA Research’s reading of the situation in its ECB Watch report. The institution headed by Mario Draghi left interest rates unchanged and will continue with its asset-purchasing program, commonly known in English as quantitative easing (QE). The main development that emerged from the policy meeting was the dropping of the “explicit reference” to the possibility of increasing the size of the program. And that already represents a change.