https://www.esm.europa.eu/blog/commercial-real-estate-and-financial-stability-time-its-different Commercial real estate markets are under pressure in Europe and beyond as prices fall and activity has stalled in many countries. The commercial real estate sector poses risks to euro area banks and financial stability. More than a decade ago, the European Stability Mechanism was called in to rescue...

https://www.esm.europa.eu/blog/fast-and-furious-tameable-lessons-recent-banking-turmoil-eu Healthy banks are critical to safeguarding financial stability. The recent collapse of three US banks and one in Switzerland has sent shockwaves through global financial markets, with tremors continuing to this day. The speed with which these entities folded, and the strength of the market reaction...

https://www.esm.europa.eu/blog/firms-profits-cure-or-curse Despite record surge in expenses, firms saw increased profits Since the outbreak of the pandemic, disruptions in global supply chains and the extraordinary surge in energy prices led to a sharp increase in firms’ input costs. Corporates can react to higher input costs in two ways. First, they can...

https://www.esm.europa.eu/blog/how-wholesale-digital-euro-can-strengthen-europes-capital-markets This exciting prospect also prompted the ESM to issue a discussion paper Wholesale central bank digital currency – the safe way to debt capital markets and to co-host a seminar with the International Capital Market Association in April,[1] where speakers highlighted, among numerous topics, the fact...

https://www.esm.europa.eu/blog/financial-stability-and-risks-growth-euro-area-where-do-we-stand Financial conditions in the euro area, favourable before the war in Ukraine… Favourable financial conditions, including sufficient access to loans for businesses and households, are crucial for the growth and maintenance of a healthy economy. However, cheap credit may lead to higher debt levels and...

https://www.esm.europa.eu/blog/last-year-unexpected-revenue-boon-explained-inflation Why it matters Inflation boosts public revenue. How to spend it may become a delicate issue, especially when it is unexpected and driven by an energy crisis and a geopolitical conflict, as is currently the case by Russia’s war against Ukraine. There is more money in the public purse (almost)...

https://www.esm.europa.eu/blog/how-euro-area-overcame-fragmentation-during-pandemic How the ECB helped to contain fragmentation, a key challenge for the euro area, during the pandemic and what lessons can be drawn upon for the future are explored in a recent ESM working paper. Sometimes a shock is so sudden and severe that financial markets need immediate large-scale intervention...

https://www.esm.europa.eu/blog/croatia-makes-euro-20-nations-strong Prudent build-up to membership The currency union has nearly doubled since its launch in 1999 with 11 countries. Croatia’s inclusion as the 20th member demonstrates the union’s continued growth despite the pandemic, conflict in nearby Ukraine, energy crisis, and the strict criteria for inclusion...

https://www.esm.europa.eu/blog/placing-new-value-efsf-bond-prices Since the inception of the ESM as a permanent successor, the EFSF no longer lends to euro area countries. But it continues to issue as part of its roll-over of existing loans made to some euro area countries during the financial crisis a decade ago, some of which will continue to be repaid until...

https://www.esm.europa.eu/blog/stability-fund-enhance-europes-fiscal-framework In this blog, we argue that the review of the EU economic governance presents an opportunity to design an economically sound and politically realistic fiscal stabilisation capacity, possibly with the ESM’s involvement, to complement an appropriate fiscal framework.[1] A politically opportune moment...

https://www.esm.europa.eu/blog/navigating-euro-area-through-slowing-global-economy The ESM, as it was the case in the past, took an active role in these meetings. Here are our six takeaways: Cost-of-living crisis Record high inflation in most countries across the globe is taking a toll on real income as well as growth and forces monetary policy to tighten. This was the focus of...

https://www.esm.europa.eu/blog/why-europe-needs-strong-market-making Since the 2008 global financial crisis, market makers, have undergone major regulatory changes that improved the measurement and control of risks. But these changes have also put pressure on banks to rethink their business model, particularly in capital-intensive activities such as market making...

https://www.esm.europa.eu/blog/cold-winter-ahead-implications-russian-gas-cut-euro-area As the war in Ukraine continues, gas flows from Russia have been partially reduced or even fully stopped in some European countries. The temporary closure of the Nord Stream 1 pipeline from Russia to Germany in early-July for maintenance exacerbated the risk of longer-term delivery impairment for...

https://www.esm.europa.eu/blog/vision-debt-capital-markets This digital upgrade is also vital for Europe’s ambitions to advance capital markets union. Getting legal fragmentation out of the way will allow for faster adoption of digitalisation and the harmonisation and scaling up of European debt markets – as well as make them more competitive...

https://www.esm.europa.eu/blog/would-quality-life-considerations-improve-financial-assistance-evaluations Post-programme evaluations of financial assistance are an important element in improving crisis responses. So far, EFSF and ESM evaluations have, in line with the ESM’s mandate, focused on how financial assistance affects economic growth and resilience. However, the consequences for citizens’ lives...

https://www.esm.europa.eu/blog/unlocking-banks-capacity-fund-recovery Credit crunch averted Europe’s unprecedented policy effort helped avert a credit crunch and led to increased private sector lending. The timely and concerted support measures implemented by EU and national institutions ensured that banks continued providing new lending to the economy during the...

https://www.esm.europa.eu/blog/regional-perspectives-economic-impact-double-shock-asia-europe-latin-america Since the pandemic hit two years ago, unprecedented measures have been taken to address the initial shock waves. While some economies bounced back fairly quickly, the ability of countries to withstand the economic damage and control the disease varies widely – as does the speed of the economic...

https://www.esm.europa.eu/blog/outside-box-esm-stepping-its-game-esg The ESM is also active in this substantial new asset class, as a significant ESG bond investor, a borrower with the means to issue social bonds, and a newly added observer at the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). The NGFS, born at the Paris “One...

https://www.esm.europa.eu/blog/euronomics-current-terms-trade-shock-and-loss-wealth-are-we-heading-back-1970s The current increase in oil, gas, grain, and metal prices translates to major changes in terms of trade for countries around the world.[1] Over the past year, the price of energy and other commodities the euro area imports has increased faster than the price of its exports, disadvantaging its...

https://www.esm.europa.eu/blog/two-years-esm-blog With this in mind, we started the ESM Blog two years ago, on 12 February 2020. The first contributions came out just as the pandemic crisis began to reach Europe. We explained the EU’s policy response to Covid-19 as well as the ESM’s contribution, and how the reform of institutions can better help...