Category: Research

US digital asset strategy and the European response

IN-DEPTH ANALYSIS
Requested by the ECON committee Monetary Dialogue Papers, June 2025

Available here >>

AUTHORS

 Ignazio ANGELONI, Cédric TILLE 

Abstract

We discuss the possible effects of the US administration’s Digital Assets Strategy (DAS), on the US and Europe. If pursued consistently over time, DAS would tend to weaken the Fed’s payments oversight and monetary control mechanisms, with possible adverse consequences including for the dollar’s international role. Europe’s monetary sovereignty is unlikely to be affected. To ensure that it is indeed the case, the EU crypto markets regulation (MiCA) and the euro’s legal tender status may need strengthening. While wholesale CBDCs would benefit the cross-border payment infrastructure, the digital euro in itself would not contribute significantly to protecting Europe’s monetary sovereignty.

This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 23 June 2025.

Unpredictable Tariffs by the US: Implications for the euro area and its monetary policy

STUDY
Requested by the ECON committee
Monetary Dialogue Papers, March 2025

AUTHORS

Cinzia ALCIDI (CEPS), Ignazio ANGELONI (IEP Bocconi and SAFE), Cédric TILLE (Geneva Graduate Institute of International and Development Studies)

Abstract

Were the US to impose large and lasting tariffs on its imports from the EU, the effect on the euro area (EA) would be substantial and far-reaching. We expect the direct impact to be inflationary in the US and contractionary on EA aggregate demand and output. The indirect impact through an appreciation of the dollar (partly already occurred) tends to transfer inflation from the US to Europe. The ECB should be mindful that both deflationary and inflationary influences may ensue, and be ready to adjust monetary policy promptly if necessary to maintain price stability. This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 20 March 2025.

CEPS_IA_US Protectionism – FINALDownload

Assessing the ECB’s monetary policy stance by comparing tightening cycles

Prepared for the European Parliament’s Committee on Economic and Monetary Affairs.

IN-DEPTH ANALYSIS

Requested by the ECON committee

Monetary Dialogue Papers, November 2024

In this paper, the ECB monetary policy stance is assessed by comparing the recent tightening cycle (2022-today) with the two preceding ones, which took place in 2000-2001 and in 2006-2008. Interest rates, quantitative indicators and monetary conditions indices (MCIs) are used for this purpose. The main finding is that at the peak of the latest tightening cycle, the ECB monetary policy stance was no more restrictive than it was at the peak of the two preceding ones; actually, probably less. This contrasts with the fact that in the more recent case inflation was higher and more persistent than in the two earlier episodes.

Assessing the ECB monetary policy stance by comparing tightening cycles – Ignazio ANGELONI

Can Banking Union foster market integration, and what lessons does that hold for capital markets union?

Requested by the ECON committee

In-Depth Analysis 

Requested by the ECON committee

Ignazio ANGELONI , Rainer HASELMANN , Florian HEIDER , Loriana PELIZZON, Jonas SCHLEGEL , Tobias H. TRÖGER

Over the past decade, Banking Union (BU) regulators focused on making banks safer, resulting in stronger banks but limited euro area cross-border integration. To attain the strong and integrated financial system Europe needs going forward, BU authorities must now broaden their focus, promoting cross-border banking by removing legislative barriers that prevent or discourage it. That goal requires reducing overbanking and limiting the national authorities’ regulatory power further. It also necessitates a Capital Markets Union (CMU) under a unified supervisory control. We argue that BU and CMU are complements in a strong and integrated European financial system, and that a successful launch of CMU presupposes progress towards an integrated BU.

Available here >>

The Next Goal: euro area banking integration

Prepared for the European Parliament’s Committee on Economic and Monetary Affairs.

In-Depth Analysis

Prepared for the European Parliament’s Committee on Economic and Monetary Affairs.

In its first ten years (2014-2023), the banking union was successful in its prudential agenda but failed spectacularly in its underlying objective: establishing a single banking market in the euro area. This goal is now more important than ever, and easier to attain than at any time in the last decade. To make progress, crossborder banks should receive a specific treatment within general banking union legislation. Suggestions are made on how to make such regulatory carve-out effective and legally sound.

Available here >>

Banks, economic performance and inequality across US counties

Harvard Kennedy School

M-RCBG Associate Working Paper No. 221

Available here: Harvard Kennedy School

Ignazio Angeloni
Johannes Kasinger
Chantawit Tantasith

Abstract

Using a novel set of data on banking characteristics across US counties, we present evidence on the relationship between banking, local economic performance, and inequality in the US over the last 30 years. Clear links emerge between bank performance, as measured by bank penetration and competition, profitability, risk, asset quality and business models, and local economic performance. Our estimates suggest that banks may have played a role in the recent increase in spatial inequality across US regions. More in detail, bank penetration helps economic performance but is broadly neutral with regard to inequality. The presence of community banks helps reduce spatial and personal inequality. More profitable and less risky banks improve economic performance, but their effect on inequality (spatial and personal) is more nuanced. There is evidence that the increase in bank profitability, prior to the GFC and again recently, may have contributed to higher spatial inequality. By contrast, in the GFC years, banks seem to have mitigated the increase in spatial inequality due to other factors. These results, especially if corroborated by other analyses, suggest that banking regulation may be part of a menu of space-based policies designed to mitigate inequality in the US.