Help and FAQs

Frequently asked questions and help

Monetary policy

Stable prices allow consumers to plan their purchases and encourage businesses to invest. They also help to maintain confidence in the euro by stabilising the quantity of goods and services that can be bought with a given amount of money.

The goods included in consumer price indexes (CPIs) and methods used to calculate them can vary significantly from one country to another, making them difficult to compare. As a result, the Member States of the European Union created a Harmonised Index of Consumer Prices or HICP: this price index is “harmonised” in that all EU Member States use the same methodology, so data can be compared across countries.

The HICP is calculated by Eurostat and each country’s national statistics bureau, using standardised statistical methods. It takes into account expenditure by households, regardless of their nationality and residential status in the reporting country, on goods and services that directly satisfy a need.

The central bank purchases assets such as government or corporate bonds when there is a risk that inflation will remain too low. In doing so, it supports the economy by encouraging consumption and investment, which in turn puts upward pressure on prices and helps push inflation up towards the 2% target.

Climate disruption has adverse consequences for economic growth, inflation and the transmission of monetary policy to households and businesses. This undermines price stability, which is the ECB’s principal objective. This is why the ECB has included climate considerations in its monetary policy framework.

M3 includes cash (banknotes and coins in circulation) and cashless money (money stored in the form of digits in overnight deposits) that can be used immediately by means of payment instruments, remunerated deposits – which are considered to be liquid – and financial instruments with a maturity of up to two years issued by financial institutions and subscribed by savers and investors.

The past few years have seen the emergence of so-called alternative payment methods, which allow transactions to be carried out in units other than legal tender. These include crypto-assets, which do not constitute payment instruments in the legal sense.
 
A crypto-asset is a digital asset created using cryptographic technologies. They are so named because they resemble financial assets and are created and used by means of encryption technologies. Crypto-assets are sometimes incorrectly referred to as cryptocurrencies, but they should not be regarded as a currency.
 
There are several types of crypto-asset. First-generation crypto-assets, such as Bitcoin and Ethereum, are not legal tender and have no intrinsic value. They are therefore speculative and highly risky assets. More recently, "stablecoin" projects (such as DIEM) have been trying to overcome these limitations by aiming to have a more stable value. To achieve this, their price is supposedly linked to that of a benchmark asset (gold, the euro, the dollar, a group of currencies, etc.), which anchors their movement to the real economy and reduces the amount the fluctuate – hence their name. Stablecoins can be regarded as the second generation of crypto-assets.

In the absence of international regulation of crypto-asset services, a number of initiatives have been launched in recent years in various countries. France is at the forefront of jurisdictions that have very quickly provided responses to players in this segment. The PACTE Law (Law No. 2019-486 of 22 May 2019 on the growth and transformation of companies) introduced the status of digital asset service provider (DASP), which covers the following activities: custody of digital assets on behalf of third parties, purchase/sale of digital assets in exchange for legal tender (or other digital assets), operation of a digital asset trading platform, reception and transmission of orders on behalf of third parties, portfolio management on behalf of third parties – as well as other complementary services (consultancy, underwriting, guaranteed and non-guaranteed investment). The custody of digital assets on behalf of third parties and the purchase/sale of digital assets in exchange for legal tender must be registered with the Autorité des marchés financiers (AMF – Financial Markets Authority). DASPs wishing to do so may also apply for an optional licence from this institution.

To provide a European solution to these issues, in 2020 the European Commission published a draft regulation on markets in crypto-assets (MiCA), which introduces a pilot scheme for market infrastructures wishing to trade and settle transactions in financial instruments in the form of crypto-assets.

The term "Big Tech" refers to the companies that dominate the information and communication technology sector. These include the US GAFAM corporations (Google, Apple, Facebook, Amazon and Microsoft), but also the Chinese companies known by the acronym BATX (Baidu, Alibaba, Tencent and Xiaomi).

Although present across a wide range of activities, from e-commerce to electronic equipment, these companies are increasingly investing in financial services. They are capitalising on the data collected in the course of their activities, and taking advantage of their position as an interface to offer payment services to their customers. At present, their main segment of activity in the payment sphere is digital wallets.

Digital or electronic wallets allow you to entrust your payment card or bank details to a trusted third party.

These days, most major e-commerce retailers allow customers to register their payment card details to make it easier to make payments, which amounts to creating a number of so-called merchant wallets (not linked to the card issuer). In addition, the digital giants have taken advantage of the growing use of smartphones to provide the same digital wallet model for so-called "proximity" payments, i.e. in physical shops on an electronic payment terminal. These apps allow customers to digitise their payment card so that it can be stored on a phone, thereby turning the smartphone into a payment card. The cards are "tokenised": the card number is turned into a token, with the list of payment card numbers and corresponding tokens held by a service provider. The token is stored in a secure environment on the smartphone, either physically (in a secure element) or in software (host card emulation). These security features make it more difficult to use the payment card without the user's knowledge. In addition to tokenisation, mobile digital wallets are based on the development of contactless technology for card payments and the equipping of smartphones with NFC (near field communication) technology.

Other mobile payment apps have been developed by new players or commercial banks. These apps generally provide a digital wallet and a person-to-person payment solution. The latter utilises users' telephone numbers to replace bank details for credit transfers (proxies). While several solutions of this type have met with moderate success in France (Paylib, Lydia, etc.), they have the potential to be very widely adopted by users. In Sweden, Swish is used by 70% of the country's citizens. In the Netherlands, the iDEAL solution is used by 10 million people. Blik (in Poland) and Bizum (in Spain) are also highly successful.