Central banks

Monetary policy transmission by securitising banks

09/22/2026 European Central Bank Central banks

This paper studies whether securitisation affects monetary policy transmission via banks. Using granular loan-level data from the euro area, we show that banks actively engaged in securitisation adjust credit supply more strongly in response to monetary policy shocks than a matched sample of non-securitising banks. This is because securitisation expands banks’ lending capacity, but by increasing reliance on investors whose required returns and risk appetite are more sensitive to monetary policy conditions.

Artificial intelligence and financial markets

09/22/2026 European Central Bank Central banks

Artificial intelligence is transforming financial markets by enabling investors and intermediaries to extract more information from increasingly abundant data through advances in algorithms and computing power. We discuss how AI changes information production and decision-making, labor demand, and financial intermediation, with a particular emphasis on securities markets. We then survey the implications of this transformation for market efficiency, competition, informational frictions, and financial stability.

Artificial intelligence and financial markets

09/22/2026 European Central Bank Central banks

Artificial intelligence is transforming financial markets by enabling investors and intermediaries to extract more information from increasingly abundant data through advances in algorithms and computing power. We discuss how AI changes information production and decision-making, labor demand, and financial intermediation, with a particular emphasis on securities markets. We then survey the implications of this transformation for market efficiency, competition, informational frictions, and financial stability.

Monetary policy transmission by securitising banks

09/22/2026 European Central Bank Central banks

This paper studies whether securitisation affects monetary policy transmission via banks. Using granular loan-level data from the euro area, we show that banks actively engaged in securitisation adjust credit supply more strongly in response to monetary policy shocks than a matched sample of non-securitising banks. This is because securitisation expands banks’ lending capacity, but by increasing reliance on investors whose required returns and risk appetite are more sensitive to monetary policy conditions.

US equity market developments during the AI boom

09/22/2026 European Central Bank Central banks

This box analyses developments in US equity markets during the recent AI boom and highlights recent signs of heightened price differentiation within the broader equity market rally. It shows that, over the past years, US equity valuations have been bolstered by strong realised and expected earnings tied to the AI boom. Risk appetite in US equity markets has been strong, with compensation for equity risk falling to relatively low levels during this period.

FEDS Paper: Beyond Financial Conditions: Measuring Structural Vulnerabilities in the U.S. Financial System

09/21/2026 Federal Reserve Central banks

Michele Modugno, Benjamin Roscoe, Sarah ZoiWe introduce the Financial Vulnerability Index (FVI), a novel indicator of financial vulnerabilities in the U.S. Unlike financial condition indices, which measure current credit market conditions and spike during periods of financial turmoil, the FVI displays the gradual build-up of structural financial weaknesses and declines as such episodes materialize.

Navigating uncertainty: how the Middle East conflict is shaping expectations and coping strategies of firms

09/21/2026 European Central Bank Central banks

In the Survey on the Access to Financing of Enterprises (SAFE) for the second quarter of 2026, firms were asked about their exposure to the conflict in the Middle East, how the conflict has influenced their expectations, and what coping strategies they have adopted. It found that exposure to the conflict is higher for small and medium-sized enterprises, for exporters and in the trade sector. The conflict has primarily affected firms’ expectations for nominal variables and demand, while the impact on expectations for other real variables is small.

The impact of macroprudential policy fragmentation on corporate lending – evidence from a novel indicator

09/21/2026 European Central Bank Central banks

We construct a novel bank-level index that quantifies fragmentation in the capital buffer framework faced by euro area banks. Defined at quarterly frequency, it measures fragmentation by looking at the number of simultaneously active buffers, their geographical dispersion, and the frequency of buffer rate changes within the preceding year. The index is orthogonalised with respect to the level of capital requirements, bank size, and the financial cycle, thus controlling for these factors when measuring fragmentation as defined above.

Pages

Subscribe to Central banks