Central banks

Monetary policy without an anchor

04/13/2026 European Central Bank Central banks

Policymakers often cite the risk that inflation expectations might “de-anchor” as a key reason for responding forcefully to inflationary shocks. We develop a model to analyze this trade-off and to quantify the benefits of stable long-run inflation expectations. In our framework, households and firms are imperfectly informed about the central bank’s objective and learn from its policy choices. Recognizing this interaction, the central bank raises interest rates more aggressively after adverse supply shocks and accepts short-run output costs to secure more stable inflation expectations.

Monetary policy under multiple financing constraints

04/09/2026 European Central Bank Central banks

We revisit the credit channel of monetary policy when firms face multiple financing constraints, a common feature of corporate financing we document empirically. Our theory shows that the multiplicity of constraints dampens the transmission of expansionary policy to firm borrowing and investment notably but amplifies the transmission of policy tightening. This asymmetry arises because, when policy tightens (eases), the most (least) responsive constraint binds. Using U.S.

Dynamic credit constraints: theory and evidence from credit lines

04/08/2026 European Central Bank Central banks

We use a comprehensive Swedish credit register to document that firms across the size distribution have access to substantial borrowing capacity via credit lines. However, most firms choose not to use all available credit, even though interest rates are low compared to their return on equity. The low utilization of credit is consistent with a theoretical model in which utilization rates decrease with both real and financial uncertainty.

Who owns crypto in the euro area? Drivers of crypto adoption, payment use, and its interaction with fiat cash

04/07/2026 European Central Bank Central banks

Using a survey of 39,507 adults in 17 euro-area countries, I find that crypto-asset owners and the niche subgroup of payers have distinct profiles. Owners – typically younger, male, and financially active – exhibit mixed preferences, valuing both cash-like privacy and card-like speed. Crypto payers display a cash-centric profile, seeking to replicate physical cash’s privacy and ease of use in digital form.

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