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  • Maandag 14/11/2022

    In this article, we look back at the origin of the inflation that led the main central banks to drastically increase their key rates this year. The article then illustrates the initial effects of these rate hikes on the economy and financial markets. Finally, it questions the need for central banks to continue these rate hikes, distinguishing between the situation in the United States and in the Eurozone.

  • Dinsdag 8/2/2022

    20 years ago, as Commissioner-General for the euro commission, Jan Smets was responsible for the introduction of the single currency in Belgium.  The first part of this article is a reproduction of the blog published on the website of the NBB on 29 December 2021 in which the Honorary Governor gives a personal analysis at the occasion of the 20th anniversary of the euro. The second part, based on an NBB press release of 28 December 2021, offers an overview of 20 years of the euro on the basis of 20 striking figures.

    Het was een heel spannend moment, op oudejaar 20 jaar geleden, toen de eurobiljetten en -muntstukken voor het eerst in omloop kwamen. De “changeover”, zoals de operatie werd genoemd, was minutieus voorbereid door het commissariaat-generaal voor de euro en de Nationale Bank. De productie van de euro’s, de bevoorrading vooraf (of zogenaamde frontloading) van banken, warenhuizen, handelaars en tot slot ook de burgers (met starterkits), de terugtrekking van het Belgische geld… alles moest heel zorgvuldig worden gepland én uitgevoerd. Dat lukte aardig, mede dankzij de medewerking van alle stakeholders (banken, handel, overheid…) maar vooral ook omdat de Belgen hun nieuwe munt omarmden. Half januari 2002 al was de Belgische frank vrijwel uit het betalingsverkeer verdwenen.

  • Maandag 11/10/2021
    National Bank of Belgium

    Since the outbreak and global spread of COVID-19, central banks and governments worldwide have provided massive stimulus to the economy. Looking ahead, however, the question rises whether monetary policy by central banks and fiscal policy by governments will be able to respond with the same vigour and effectiveness to future crises, given structurally low interest rates and higher government debt. This article takes a closer look at the different options to build back fiscal buffers. Do countries need forceful consolidation, can countries grow out of debt or should central banks simply cancel the debts? The analysis is two-fold. The first part empirically assesses the potential of some traditional avenues to bring public debt dynamics in Belgium under control. The second part is more conceptual, critically evaluating the rather heterodox proposal of cancelling government debt on the central bank balance sheet.

  • Woensdag 10/3/2021
    Pierre Wunsch

    Interview avec Pierre Wunsch, Gouverneur de la Banque Nationale de Belgique.

  • Donderdag 14/1/2021
    Bartsch, Boivin & Hildebrand

    The macroeconomic policy revolution accelerated by Covid-19 implies that central bank policy rates and nominal bonds yields will be less responsive to rising inflation pressures over the medium-term. The potential for higher consumer price inflation over the medium-term is still underappreciated, we think, because the new central bank policy frameworks and global cost pressures are not fully reflected in private sector inflation expectations. Neither is the shift towards a closer coordination between monetary and fiscal policy. Combined with the fact that bond yields remain close to their effective lower bound and that authorities need to rely to a greater extent on fiscal policy, the role of government bonds in investment portfolios as a hedge against risk-off events such as the one in March 2020 is increasingly challenged. In contrast to past inflation episodes, less-responsive nominal interest rates and bonds yields mean that government bonds are also becoming less effective as store of value. 

  • Dinsdag 1/12/2020
    Vincent Juvyns

    Despite the pandemic, the long-term paths of slow growth and low inflation remain intact, albeit with greater uncertainty around inflation. The pandemic has triggered even easier monetary policy, although fiscal policy is likely to take the leading role in promoting economic growth in the decade ahead. 
    Strong returns from equities and high-quality bonds through the pandemic have left valuations stretched. A traditional 60/40 portfolio of global stocks and U.S. bonds presents a very subdued frontier of potential returns.  However, many other asset classes shine above this low horizon, including European and Emerging markets equities, high-yield and emerging market debt and an assortment of alternative investments. In addition, active management should be able to take advantage of distortions in relative valuations that have been created by years of central bank intervention and momentum investing. 

  • Donderdag 5/11/2020
    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.

  • Woensdag 26/8/2020
    Wie zal de coronacrisis betalen?

    We show that in the current macroeconomic environment, in which nominal interest rates are expected to remain below the sum of real GDP growth and inflation for some time, the rise in government debt due to the Covid-19 recession and fiscal policy responses is feasible without ever having to raise taxes. Specifically, a rise in public debt due to a temporal increase in the deficit automatically vanishes over time. Even when Covid-19 leads to a permanent rise in the government deficit, a permanent (moderate) decline in real GDP growth and persistent (moderate) deflation, the debt-to-GDP ratio will stabilize in the long run without a later increase in taxes, even though the level of stabilization will be at a higher level. Our purpose is not to argue for more public debt and an unlimited stimulus, since interest rates may not be lower forever, but to have a richer discussion of the fiscal policy response to the crisis than is currently the case.