We study whether it is desirable for the central bank to supply reserves abundantly, i.e. beyond the level that satisfies financial institutions' aggregate liquidity needs. Using a theoretical framework, we demonstrate that abundant reserves would help fulfil the private sector's demand for safe...

Transaction cost shocks in financial markets are known to affect asset prices. This paper analyses how changes in transaction costs may affect the value of assets that banks use to collateralise borrowings in monetary policy operations. Based on a simple asset pricing model and employing a...

To ensure that means of payments are readily interchangeable at face value - i.e. fungible - for retail payments, three elements are required: (1) settlement finality; (2) interoperability; and (3) seamless convertibility of the means of payment into the "ultimate" or quasi-ultimate means of...

The management report is an integral part of the ECB's Annual Accounts and is designed to provide readers with contextual information related to the financial statements. Given that the ECB's activities and operations are undertaken in support of its policy objectives, the ECB's financial...

At the start of 2022, the COVID-19 pandemic continued to affect the daily operations of the ECB, as staff attendance at its premises was still impacted by travel restrictions, social distancing requirements and remote working practices. From May onwards, the restrictions and security...

At the start of 2022, the COVID-19 pandemic continued to affect the daily operations of the ECB, as staff attendance at its premises was still impacted by travel restrictions, social distancing requirements and remote working practices. From May onwards, the restrictions and security...

This paper investigates the impact of reforms altering legal central bank independence (CBI) on monetary policy discipline and credibility, two key mechanisms shaping price stability. Using a sample of 155 countries over more than 50 years (1972-2023), we show that reforms improving CBI...

The Eurosystem's exploratory work on new technologies for wholesale central bank money (CeBM) settlement, carried out in conjunction with financial market stakeholders, began in May 2024 and was successfully completed in November 2024. The exploratory work consisted of (i) trials, with actual...