Central banks

We develop an endogenous threshold VAR that addresses contemporaneous dependence between the threshold variable and reduced-form innovations— a pervasive issue when regime indicators are jointly determined with system dynamics. A regime-specific copula-based control function removes this dependence instrument-free, without parametric assumptions on the threshold’s marginal distribution, while preserving the linear regime-wise least-squares structure.

This paper explores the adoption of artificial intelligence (AI) technologies among euro area firms, using harmonised firm-level data from two dedicated modules of the Survey on the Access to Finance of Enterprises (SAFE) conducted in June and December 2025. Based on responses from around 6,000 firms across 12 euro area countries, the study examines AI adoption rates, drivers, barriers and economic implications. The findings suggest that AI diffusion among euro area firms is progressing rapidly but unevenly, with significant variation across countries and firm characteristics.

Monetary policy tightening generates valuation losses on banks’ securities portfolios, reducing the collateral available for interbank borrowing. Using detailed euro area data, we show that banks with larger securities losses during the 2022-23 monetary policy tightening cycle obtained less interbank funding and reduced lending to firms, even when losses did not affect regulatory capital. These effects were strongest for banks with limited liquidity buffers and high collateral utilisation.

Elevated repo rate specialness for German government bonds in 2016–17, and particularly in 2022-23, has often been linked to the absorption of these securities by the ECB’s asset purchase programmes. We provide the first evidence on how the debt management office mitigates these effects by jointly analyzing daily secondary-market trades and repo operations of the Deutsche Finanzagentur (DFA) alongside Eurosystem transactions in Bunds from 2015–2024.