Climate change poses new challenges to central banks, regulators and supervisors. This book reviews ways of addressing these new risks within central banks’ financial stability mandate.

The Eurosystem started its QE in March 2015.

2019 proved a strong year for US assets, with US equity markets recording the strongest annual total return since 2013 and the US aggregate bond index up almost 9.0%. In addition, the past decade proved the best ever for the S&P 500 index, which returned 256% overall, well above its historical average. 

The new European leadership (at the head of the European Commission and the ECB), combined with historically low real interest rates, provides a unique opportunity to rethink priorities in order to meet the challenges at hand (economic, financial, environmental and security challenges). In economic terms, strengthening Europe and improving its competitiveness means tackling all these challenges simultaneously.

At the level of economic policy, the link between monetary and fiscal policy must inevitably be rethought. But that's not enough. The expansionary policy mix must be accompanied by an improvement in the financial architecture.

We identify two pillars on which the European authorities shold be able to act significantly in 2020-21: the Capital Market Union and budgetary rules. This is a  prerequisite for dealing with the inevitable macrofinancial shocks that the future holds. Against this backdrop, the voices of Christine Lagarde and Ursula von Der Leyen (Presidents of the ECB and the Commission respectively) are eagerly awaited.

From the CPI data, in particular the HCPI, one would get the sense that inflation has decelerated and stabilised somewhat.

This research is an update of the study that we published last year (Bennani et al., 2018) and that explored the impact of ESG investing on asset pricing in the stock market.

• When we look fundamentally at the risks and rewards in equity markets for 2020, we find that value offers better opportunities than growth as implied expectations are lower and therefore more attractive for value at this point.