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Evelien Vincent

  • La transmission du récent reserrement de la politique monétaire est-elle fragmentée ou non ?

    Thursday 16/11/2023
    Bruno De Backer / Sarah El Joueidi / Salima Ouerk / Evelien Vincent

    For the first ten years of its existence, the euro area was characterised by broadly comparable sovereign yields between Member States. However, the global financial crisis and the European sovereign debt crisis led to differences in these yields, particularly for peripheral countries, which to some extent can still be seen today.

     

    Against the backdrop of the most significant series of rate hikes in the history of the monetary union, this article takes a closer look at various indicators used to detect and measure the resurgence of transmission and fragmentation issues. It analyses transmission and fragmentation in both the upstream (money and sovereign bond markets) and downstream (corporate bond and retail banking markets) segments of the monetary policy transmission chain.

     

    These indicators show that the recent tightening of monetary policy has not, for the time being, revived transmission or fragmentation concerns on a large scale. Only sight deposit rates have shown some resistance to the ECB’s policy rate hikes, as commercial banks have been rebuilding their interest margins.

     

    While the resilience of monetary policy transmission probably reflects efforts made in recent years at various political levels, now is no time for complacency. For one thing, the ECB’s tightening phase might not be over yet. On the other hand, while a return to the virtually non-existent fragmentation seen in the early years of the monetary union may not be desirable, sovereign spreads between Member States are sometimes considerable. A more uniform and sustainable fiscal policy in the euro area could, along with other measures, help to limit fragmentation issues.

  • De monetairbeleidsreactie van de ECB op COVID-19

    Thursday 5/11/2020
    Jef Boeckx / Marjolein Deroose / Evelien Vincent
    Boekx / Deroose / Vincent

    In early 2020, COVID-19 sent financial markets into turmoil, while lockdown measures resulted in large and sudden economic losses. In response, governments, financial supervisors and central banks around the world quickly took unprecedented measures. This article focuses on the initial actions taken by the ECB. Sizeable asset purchases, including though a new Pandemic Emergency Purchase Programme, stabilised financial markets. The ECB also gave banks easier access to long-term central bank funding, while simultaneously easing its collateral requirements. That way, banks were able to satisfy euro area firms’ record demand for credit. However, the challenges ahead are manifold. While current conditions allow for a temporary shift towards expansionary fiscal policy, governments should be prepared for scenarios where borrowing costs rise. Otherwise, debt sustainability considerations will interfere with the conduct of monetary policy.

  • Does the EU convergence machine still work and how will the COVID19-crisis impact it?

    Wednesday 1/7/2020
    Patrick Bisciari / Dennis Essers / Evelien Vincent

    Economic convergence has been one of the explicit goals of the EU from its very beginning. The prospect of higher living standards has undeniably been a major attraction of EU membership. Conversely, economic divergence may undermine support for the European project and complicate the common monetary policy in the euro area. In this policy note, we first summarise the key findings of an analysis of national and regional convergence across the EU. In particular, we show that initially poorer European countries and regions have, in general and over the longer term, made progress in catching-up with the income levels of their richer peers, even though convergence has not been a smooth process. The relative performance of countries and regions in the EU is also illustrated. We then shed some light on the extent to which the Covid-19 crisis and the ensuing recovery might impact the functioning of the EU “convergence machine”, before drawing some implications in terms of economic policy.