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ECB-Monetary developments in the euro area: December 2023
January 26, 2024--Annual growth rate of broad monetary aggregate M3 increased to 0.1% in December 2023 from -0.9% in November
Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, was -8.5% in December, compared with -9.5% in November
Annual growth rate of adjusted loans to households decreased to 0.3% in December from 0.5% in November
Annual growth rate of adjusted loans to non-financial corporations increased to 0.4% in December from 0.0% in November
Components of the broad monetary aggregate M3
The annual growth rate of the broad monetary aggregate M3 increased to 0.1% in December 2023 from -0.9% in November, averaging -0.6% in the three months up to December. The components of M3 showed the following developments. The annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, was -8.5% in December, compared with -9.5% in November.
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Source: ecb.europa.eu
ECB-Euro area economic and financial developments by institutional sector: third quarter of 2023
January 26, 2024--Euro area net saving increased to €734 billion in four quarters to third quarter of 2023, compared with €685 billion one quarter earlier
Household debt-to-income ratio decreased to 88.1% in third quarter of 2023 from 94.3% one year earlier
Non-financial corporations' debt-to-GDP ratio (consolidated measure) decreased to 68.1% in third quarter of 2023 from 73.7% one year earlier
Total euro area economy
Euro area net saving increased to €734 billion (6.5% of euro area net disposable income) in the four quarters to the third quarter of 2023, as compared with €685 billion in the four-quarter period ending in the second quarter. Euro area net non-financial investment decreased to €564 billion (5.0% of net disposable income), mainly due to decreased investment by non-financial corporations.
Euro area net lending to the rest of the world grew to €216 billion (from €87 billion in the previous quarter), reflecting increased net saving and decreased non-financial investment. Net lending of non-financial corporations grew to €213 billion (1.9% of net disposable income) from €161 billion, and that of financial corporations increased to €102 billion (0.9% of net disposable income) from €92 billion.
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Source: ecb.europa.eu
Bitcoin ETF fee war spreads to Europe
January 23, 2024--Invesco and WisdomTree reduce fees on European-listed ETPs by more than 60%
Invesco and WisdomTree have slashed fees by more than 60 per cent on European bitcoin products as an "unprecedented" number of new exchange traded funds have become available to US investors.
The US Securities and Exchange Commission approved spot bitcoin ETFs this month from the likes of BlackRock, Fidelity and Invesco.
This has led to an "unprecedented supply of new products" for US investors, said Gary Buxton, Invesco head of ETFs for Europe, the Middle East and Africa, and Asia Pacific.
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Source: ft.com
ECB-Meeting of 13-14 December 2023 Account of the monetary policy meeting of the Governing Council of the European Central Bank
January 18, 2024--Held in Frankfurt am Main on Wednesday and Thursday, 13-14 December 2023
1. Review of financial, economic and monetary developments and policy options
Financial market developments
Ms Schnabel noted that since the Governing Council's previous monetary policy meeting on 25-26 October 2023 the narrative in financial markets had entirely turned around, proving once again its high sensitivity to incoming data and central bank communication.
Markets had turned bullish, driven by expectations of quick and "immaculate" disinflation and an early and sharp monetary policy reversal. This repricing had supported risk asset prices, with equity markets soaring and sovereign and corporate credit spreads narrowing amid continued smooth market absorption. Buoyant risk asset markets and a stronger euro exchange rate were consistent with investors pricing in a bottoming-out rather than a deterioration in the euro area's economic growth momentum.
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Source: ecb.europa.eu
Monetary Policy Pass-Through to Interest Rates: Stylized Facts from 30 European Countries
January 12, 2024--Summary:
The extent to which changes in monetary policy rates lead to changes in loan and deposit rates for households and firms, referred to as 'pass-through', is an important ingredient of monetary policy transmission to output and prices.
Using data on seven different bank interest rates in 30 European countries, different approaches, and the full sample as well as a subsample of euro area countries, we show that a) the pass-through in the post-pandemic hiking cycle has been heterogenous across countries and types of interest rates; b) the pass-through has generally been weaker and slower, except for rates of non-financial corporation loans and time deposits in euro area countries; c) differences in pass-through over time and across countries for most deposit rates are correlated with financial sector concentration, liquidity, and loan opportunities, and d) the effects of pass-through to outstanding mortgage rates on monetary transmission on prices and output are heterogenous across countries.
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Source: imf.org
Households and non-financial corporations in the euro area: third quarter of 2023
January 11, 2024--Households' financial investment increased at annual rate of 1.9% in third quarter of 2023, after 2.1% in previous quarter
Non-financial corporations' financing grew at broadly unchanged rate of 0.7%
Non-financial corporations' gross operating surplus increased at annual rate of 2.2%, after 5.9% in previous quarter
Households
Household gross disposable income increased in the third quarter of 2023 at a lower annual rate of 6.4% (after 8.3% in the second quarter), as the main components grew at lower rates: compensation of employees increased at a rate of 6.6% (after 7.0%), and gross operating surplus and mixed income of the self-employed grew at a rate of 6.2% (after 7.4%). Household consumption expenditure increased at a lower rate of 5.0% (after 6.9%).
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Source: ECB
ESMA publishes latest edition of its newsletter
January 11, 2024--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, has today published its latest edition of the Spotlight on Markets Newsletter.
Your one-stop-shop in the world of EU financial markets focused in December on the European Securities and Markets Authority (ESMA) latest report on Cost and Performance of retail products. In this annual report, ESMA finds that the average costs of investing in key EU retail financial products has declined by the end of 2022. However, cost heterogeneity persisted across EU Member States.
In addition, ESMA is expected to launch its first Common Supervisory Action on ESG disclosures for Benchmarks Administrators. It is the first CSA for ESMA in its role as a direct supervisor of Benchmarks Administrators.
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Source: ESMA
ESMA explores risk exposures to real estate in EU securities markets and investment funds
January 10, 2024--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, is publishing its first analysis of the exposures the EU securities and markets and asset management sector have to real estate.
The analysis suggests that:
Debt levels in the real estate sector are elevated with wider risk implications from non-bank financial market players.
Interlinkages with the banking system are important and arise through entity exposures and activities. Through these, sector shocks may get transmitted across the EU financial system.
Going forward, interest rate risk can be expected to continue to shape real estate market exposures. Credit risk indicators for real estate companies have started to show signs of deterioration and liquidity mismatches remain a key vulnerability for real estate investment funds.
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Source: ESMA
Euro area inflation rises less than expected in December
January 5, 2024--Eurozone inflation in December rose by 2.9% year-on-year, less than the 3% expected, ending a seven-month decline streak. Monthly, the inflation rate increased by 0.2%. Core inflation, excluding energy and food, hit 3.4%.
November's PPI fell by 0.3%, with a significant yearly drop of 8.8%.
Annual inflation in the Eurozone rose again in December after seven consecutive months of declines, albeit at a slower rate than anticipated.
According to the latest flash estimates released Friday by Eurostat, the harmonised consumer price index (HICP) in the Euro area recorded a year-on-year increase of 2.9% in December.
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Source: euronews.com
ECB-Euro area bank interest rate statistics: November 2023
January 5, 2024--Composite cost-of-borrowing indicator for new loans to corporations decreased by 4 basis points to 5.23%; indicator for new loans to households for house purchase increased by 10 basis points to 4.01%, both driven by interest rate effect
Composite interest rate for new deposits with agreed maturity from corporations and for overnight deposits from corporations broadly unchanged at 3.71% and 0.83%, respectively
Composite interest rate for new deposits with agreed maturity from households increased by 6 basis points to 3.33%, driven by interest rate effect; interest rate for overnight deposits from households broadly unchanged at 0.36%
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Source: ECB
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