In-Depth Analysis – What Are the Effects of the ECB’s Negative Interest Rate Policy? – 02-07-2021

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, 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 21 June 2021.

Source : © European Union, 2021 – EP

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In-Depth Analysis – NIRP, Bank Profitability and Risk-Taking: Much Ado About 50 Basis Points – 01-06-2021

A widespread concern about negative policy rates is that they might depress bank profits and encourage risk-taking. We find that the impact of negative rates per se is limited. Other policy measures (TLTROs, tiered deposits) have largely neutralised the impact of NIRP on bank profits. Asset purchases might have been more important by compressing the yield curve. Any small positive impact of negative rates on lending and aggregate demand may have been swamped by the negative impact of low rates on productivity.
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 21 June 2021.

Source : © European Union, 2021 – EP

Highlights – Recovery and Resilience Dialogue: committee debate – Committee on Budgets – Committee on Economic and Monetary Affairs

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The Committee on Budgets and the Committee on Economic and Monetary Affair will hold their second Recovery and Resilience Dialogue with Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, and Economy Commissioner Paolo Gentiloni, on 14 July. The debate is expected to focus on the Commission’s assessment of national recovery and resilience plans submitted by Member States.

Source : © European Union, 2021 – EP

Highlights – Financial services cooperation with the Biden Administration: hearing – Committee on Economic and Monetary Affairs

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ECON – Financial services cooperation with the Biden Administration: hearing – 13.07.21 – NEW
The Committee on Economic and Monetary Affairs will hold a public hearing with experts in order to acquire insight on recent developments in the US in the field of banking and financial services, on 13 July. The hearing will also touch upon the prospects for future cooperation in this field, including in the context of international institutions and fora.

Source : © European Union, 2021 – EP

In-Depth Analysis – Euro Area fiscal policies and capacity in post-pandemic times – 23-07-2021

The Covid-19 pandemic has created huge challenges for policymakers in the whole world. These challenges have to do with both the short run and the long run. In addition, in the euro area, these challenges have dimensions that are peculiar to the fact that the euro area is a monetary union with one monetary authority and nineteen separate budgetary authorities. In this policy brief, the author provides some answer to two questions: • Which policy mix (national/supranational) supports smooth recovery, sustainability of public finances and resilience of the euro area? • Which EMU governance reforms should be prioritised so as to improve the functioning of the euro area?

Source : © European Union, 2021 – EP

Study – Guidelines for foresight-based policy analysis – 26-07-2021

Policy analysis examines and assesses problems to determine possible courses for policy action (policy options). In highly complex or controversial contexts, evidence-based policy options might not be socially acceptable. Here, policy analysis can benefit from a foresight-based approach, which helps investigate the issue holistically and assess considered evidence-based policy options against societal concerns. This is especially important in a parliamentary setting, as it enables analysts to consider stakeholder views and geographical concerns/differences when assessing policy options. This manual establishes the methodology for the foresight process and foresight-informed policy analysis. It offers a conceptual clarification of foresight and foresight-based technology assessment, helps enhance the transparency of foresight processes and the quality of policy analyses, offers four general guidelines for conducting trustworthy policy analysis, and, finally, provides a practical framework with six basic components for foresight-based policy analysis.

Source : © European Union, 2021 – EP

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