Research Brief
This publication by the Bundesbank Research Centre provides regular news about recent studies and discussion papers by Bundesbank research economists.
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© Arlekart / Adobe StockHow do energy prices influence inflation expectations? Research Brief | 62nd edition – November 2023
A new research paper shows that German households increase their inflation expectations following increases in their energy prices. This effect is, however, absent for high-income and well-informed households as well as for firms. Higher inflation expectations can influence saving and consumption decisions and thus aggregate demand.
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© Nls ThiesTransmission of interest rate hikes depends on the level of central bank reserves held by banks Research Brief | 61st edition – October 2023
Banks with substantial central bank reserves are earning income from their reserve holdings in the European Central Bank’s (ECB) recent rate hiking cycle. This could make their credit supply less sensitive to the monetary policy tightening compared to other banks. This hypothesis is examined in a new study (Fricke, Greppmair, Paludkiewicz, 2023) using the new AnaCredit dataset – a credit register harmonised across the euro area.
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© Robert Herhold/AdobeStockRent or buy? How equity requirements for households influence decisions on home financing Research Brief | 60th edition – August 2023
Some households contribute only a small amount of equity when buying property financed by a loan. If they then default on the loan, lenders may incur losses. Should the problem affect a large number of lenders, this could potentially jeopardise financial stability. Minimum requirements for the own funds households need to provide can limit losses that may arise. However, this would mean that some households can no longer obtain loans in the desired amount. A Bundesbank study shows that a large proportion of the households interested in buying which would be affected by this are then willing to buy a cheaper property or to save more in order to buy at a later date. The impact on homeownership is therefore likely to be smaller in the medium than in the short term.
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© Nils ThiesBanks’ internal credit risk models: incentives for implementation and impact on risk management Research Brief | 59th edition – July 2023
Internal risk models play an important role in ensuring capital adequacy at banks. Banking supervisors keep a particularly close eye on them, as banks have some degrees of freedom when it comes to model design. A new study examines the incentives for banks to implement internal risk models, analyses their impact on risk management and explains possible consequences of a new regulatory proposal regarding application of such models.
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© Pixabay.comHow the US dollar, as a reserve currency, restricts US trade policy Research Brief | 58th edition – May 2023
The trade dispute between the United States and China in 2018 and 2019 increased trade policy uncertainty, leading to a marked appreciation of the US dollar (USD). The obvious explanation for this is the special role played by USD investments in the global financial system as a safe haven for investors in times of high uncertainty. The USD appreciation triggered in this way in 2018 and 2019 enabled Chinese exporters to lower their prices in US dollars. As a result, the impact of the additional import tariffs imposed at the time by the United States on Chinese products was significantly reduced.
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© jozsitoeroe / stock.adobe.comThe effectiveness of green collateral policy as an instrument of climate policy Research Brief | 57th edition – April 2023
The debate surrounding climate change mitigation measures has lately also extended to central bank instruments. One of the points under discussion is the preferential treatment of green bonds in central bank monetary policy operations. This would improve the financing conditions of firms with low emissions and thus create an incentive for green investment. Using a novel model, we analyse the climate policy and macroeconomic implications of a green-tilted collateral policy and are able to identify only minor effects on green investment.
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© Frank RumpenhorstNegative interest rate policy led to negative interest rates on corporate deposits and higher fees Research Brief | 56th edition – March 2023
The Eurosystem’s negative interest rate policy (NIRP) incentivised banks to also charge their customers negative deposit rates. My analysis shows that German banks did actually charge negative interest rates on corporate deposits at times. However, the banks that did so were primarily those which relied heavily on household deposits as a source of funding. These banks were very reluctant to apply negative interest rates to household deposits as well, and thus probably faced particularly high margin pressure. It was primarily these banks that also charged higher fees in order to ease this pressure.
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© Nils ThiesLower TARGET2 payment flows due to EU sanctions against Russia Research Brief | 55th edition – February 2023
In recent years, the European Union has imposed various types of financial sanctions against Russian banks. A new study examines whether these measures have affected payment flows in TARGET2.
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© Deutsche BundesbankThe exchange rate regime is key for the effects of the Bundesbank’s monetary policy on European countries from 1974 to 1998 Research Brief | 54th edition – December 2022
Record inflation in the euro area has led the ECB Governing Council to start raising its key interest rates. The effects on the domestic economy and spillover effects on foreign countries may primarily depend on whether exchange rates are floating or fixed. A new empirical study shows that, during the time of the Deutschmark, the Bundesbank’s monetary policy was transmitted to a significantly greater degree to neighbouring European countries with fixed exchange rates to the Deutschmark than to those with floating exchange rates to the Deutschmark.
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© Ragnar Schmuck / Getty ImagesIndividuals in Germany have suffered financial losses during the pandemic Research Brief | 53rd edition – September 2022
A Bundesbank survey shows that individuals living in Germany suffered different types of financial losses during the pandemic. Primarily individuals with lower incomes reported losses in wages and salaries which persisted much longer than other financial losses, such as falling securities prices. The latter were frequently reported at the start of the pandemic, but were subsequently offset at least partly, according to the respondents. It was mainly the more persistent wage and salary losses that changed households’ consumption and saving decisions. Altered saving and consumption behaviour can, in turn, affect the transmission of monetary policy measures.