Green notice 2026/02
Green notices cover significant and/or significant proposals for Bank of England reporting. If any of these proposals are finalised and are to be implemented, they will appear in a statistical notice.
Financial frictions across the production network and the transmission of monetary policy
We show that monetary policy transmission is shaped not only by a sector’s own financial frictions but also by those prevailing in the broader production network. The latter, indirect frictions amplify the output and price effects of monetary policy and empirically dominate the direct ones. The amplification results from a downstream demand channel, as customers respond to tighter policy by purchasing fewer inputs. This is partly offset by an upstream cost channel, reflecting that suppliers raise prices to protect margins when financing costs rise.
Financial frictions across the production network and the transmission of monetary policy
We show that monetary policy transmission is shaped not only by a sector’s own financial frictions but also by those prevailing in the broader production network. The latter, indirect frictions amplify the output and price effects of monetary policy and empirically dominate the direct ones. The amplification results from a downstream demand channel, as customers respond to tighter policy by purchasing fewer inputs. This is partly offset by an upstream cost channel, reflecting that suppliers raise prices to protect margins when financing costs rise.
Macro-at-Risk in the euro area Expert Group on Macro-at-Risk Time-Series Workstream
This paper introduces reduced-form macroeconometric tools, emphasising quantile regression models, to identify key risk drivers for the euro area economy and assess risks around the baseline ECB/Eurosystem staff macroeconomic projections for the euro area inflation and growth. The analysis uses a large number of risk factors, going beyond the usual financial factors, employing a sequential selection approach with robustness checks.
Youth employment amidst cooling labour demand
Have labour market prospects deteriorated more for young workers than for the aggregate labour market? This box analyses labour market developments across age and skill groups in relation to economic activity. It shows that in recent quarters young workers have indeed faced a more difficult job market.
Assessing the scope for compensatory fiscal measures in response to the recent energy shock
This box assesses the scope for euro area governments to adopt compensatory fiscal measures against the backdrop of the recent energy shock. It examines the available fiscal space, reviews the discretionary fiscal support provided so far, and assesses whether the current inflation environment has generated additional revenues that could partially finance current and future measures.
Capturing inflation expectations (de-)anchoring and what survey-based metrics are telling us
This box assesses the anchoring of longer-term inflation expectations following the recent energy price shock using level, higher-moment and shock-sensitivity measures from surveys of consumers, firms and professional forecasters. A holistic approach reflecting the structurally different expectation patterns, uncertainty levels and biases of these different agents yields three main findings.
The ECB-BIG index: tracking credit conditions in the euro area
This box introduces the European Central Bank Broad Intermediation Gauge (ECB-BIG) index, a new indicator designed to provide a timely assessment of intermediation conditions in the euro area. The ECB-BIG index summarises information from a large set of variables covering bank and non-bank credit conditions, and complements indicators of more narrowly defined financial conditions. It also provides insights into the transmission of monetary policy to the real economy by measuring the impact of credit shocks on investment.
An insider once in charge of failing banks lifts the lid on banking
Hunters Race/UnsplashHarrison Young has had a long and distinguished international career in banking and finance. He started in senior executive roles in major United States banks, then became a US financial regulator, with responsibility for the resolution of failing banks. He was also a director of the Commonwealth Bank of Australia for ten years, and was on the court of directors of the Bank of England.
The idea of the ‘company man’ was forged decades ago. Its problems still haunt leaders today
I AM WORK.
This handwritten phrase was found among the papers of industrialist Essington Lewis after his death in 1961. It captured the mindset shared by many Australian executives of his era.
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