Financial conditions in the Eurozone: A tightening temporarily tempered by credit volumes
Since June 2026, the ECB has been publishing[1] a new indicator that helps to assess the transmission of its monetary policy to the economy: the Broad Intermediation Gauge[2] (ECB-BIG). This new tool has revealed that, thus far, strong credit growth has limited the restrictive impact of tightening financial conditions caused by rising interest rates in the Eurozone. However, this offsetting effect is beginning to fade.
The ECB-BIG: A new indicator for a broader view of financial conditions
The ECB-BIG complements the range of indicators used by the European Central Bank (ECB) to assess the effective transmission of its monetary policy. This new tool provides a comprehensive view of how restrictive (or expansive) financial conditions are in the Eurozone. It stands out for its approach that focuses more specifically on intermediation conditions. Therefore, the ECB-BIG provides a more comprehensive view than most other financial condition indicators of financial conditions. In fact, it covers variables relating to the volume of bank lending to households and businesses (the ‘volume’ component). Traditionally, this type of indicator tends to focus more on market variables (primarily interest and exchange rates), share prices and corporate spreads. In addition, the ‘price’ component of the ECB-BIG is extended to include the cost of bank loans, which is another new feature.
Author
BNP Paribas Team
BNP Paribas
BNP Paribas Economic Research Department is a worldwide function, part of Corporate and Investment Banking, at the service of both the Bank and its customers.
