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Confronted with a historic inflation surge, the ECB steps on the brake(s). While interest rate hikes are its primary tool, unconventional tools are also adjusted to strengthen the brake intensity. Quantitative tightening will reduce the stock of bonds in a slow process. The change from a scarce to an abundant reserve system will prevail. In contrast to previous monetary tightening cycles, in an abundant reserve system huge interest expenses result in central bank losses and fiscal costs for the coming ...

The euro is the second most important global currency after the US dollar. However, its international role has not increased since its inception in 1999. The private sector prefers using the US dollar rather than the euro because the financial market for US dollar-denominated assets is larger and deeper; network externalities and inertia also play a role. Increasing the attractiveness of the euro outside the euro area requires, among others, a proactive role for the European Central Bank and completing ...

This paper summarises recent trends in the international use of the euro and potential benefits and drawbacks of acquiring the status of an international currency, with a focus on implications for monetary policy. The benefits of international currency status are found to likely be limited and the effects on monetary policy to be ambiguous. The international role of the euro could be strengthened by policy initiatives in specific markets or as a by-product of improvements in the soundness of euro ...

This note provides a critical overview on the current status and recent trends related to the euro’s international standing over the last decade and reflects on the opportunities and risks for the role of the euro going forward, including the post-COVID-19 international trade and political order. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs.

Kazakhstan, Central Asia's largest economy, is an upper-middle-income country aiming to join the world's 30 most developed countries by 2050. Russia's economic slowdown, a weakened domestic demand after the devaluation of the national currency, the tenge, and adverse developments in the terms of trade, have pushed economic growth down to 4.3% in 2014 from 6% in 2013, and will continue to do so in 2015. On a more optimistic note, Kazakhstan's newly acquired WTO membership will further strengthen its ...

At this summer's summit held in Fortaleza, Brazil, the five countries which form the BRICS – Brazil, Russia, India, China and South Africa – agreed on the establishment of their own financial institutions: the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). The New Development Bank is to lend for infrastructure and sustainable-development purposes, both in BRICS countries and other developing and emerging economies. In this context, developing countries are looking for a ...