Blog | US tech giants are increasingly tapping the euro area bond market to fund their investments. The ECB Blog investigates the consequences for this market and the potential for these developments to reshape it.

The infrastructure for artificial intelligence (AI) requires huge investments. Think of the gigantic data centres and the massive electricity consumption to power them. US tech giants, including Google, Amazon and Microsoft, operate massive cloud and AI infrastructure. That is why these companies, known as hyperscalers[1], are tapping into all corners of global financial markets to fund their expansion. And increasingly they are turning to the euro area corporate bond market for some of that funding.
The growing presence of hyperscalers in the euro area corporate bond market has several consequences. For one, it could increase concentration and raise investor exposure to the technology sector and the US economy, similar to trends already felt in equity markets, where hyperscalers have become dominant. Furthermore, the surge in big tech borrowing could make it harder for other companies and other economic sectors to access finance by reshaping investors’ asset allocations. It also raises a key market-functioning question: can euro area financial markets smoothly handle such large and concentrated debt inflows?
The AI investment boom has reached euro area credit markets
Hyperscalers are projected to need more than USD 1 trillion for capital expenditure in total by 2028.[2] That equals a stunning 3% of current annual US GDP. Planned investments are becoming too large to be financed solely through internally generated cash flows. Consequently, big tech companies are shifting away from self-funding towards external sources of finance, including bond issuance.
First, hyperscalers tapped the US dollar corporate bond market and then increasingly other credit markets, not least in the euro area. This is not an unusual strategy in finance. Funding in global credit markets is the bread and butter of global firms, which have an incentive to move beyond their domestic credit market for several reasons. They may be seeking to lower their borrowing costs,[3] diversify funding sources, broaden their investor base or match expenditures in foreign currencies. Big European companies with global activities do this as well.
The large funding needs of US hyperscalers led them to follow this playbook and increase their reliance on “reverse Yankees” (bonds issued by US firms in foreign currency). In their first big wave of issuance outside the United States, hyperscalers picked the euro as the most beneficial currency for foreign funding. The euro accounts for close to 10% of the outstanding stock of bonds issued by these firms.
What volumes are we talking about? These issuers currently account for slightly over 1% of benchmark indices for euro-denominated corporate bonds, with around €40 billion of bonds outstanding. Their share in euro-denominated “reverse Yankee”issuance almost doubled between 2025 and 2026.[4] US big tech companies now represent just shy of 10% of the gross new issuance of euro-denominated bond debt attributable to non-financial corporations (Chart 1, panel a). This year alone, Amazon and Alphabet have been the largest issuers in the euro area non-financial corporate bond market, with the Amazon transaction setting an all-time size record.

Chart 1
Big tech’s rising weight in the euro area corporate bond market

Sources: Dealogic, Bloomberg Finance L.P. and ECB calculations.
Notes: Only euro-denominated tranches issued by non-financial corporations identified using Dealogic data. Excluding private placements and convertible bonds.
Panel a: The share of issuance is the share in total euro-denominated investment-grade issuance by financial and non-financial corporations. The share of outstanding is the share in the ICE-BofA euro investment-grade corporate index. The latest observations are for 20 August 2026.
Panel b: QE stands for quantitative easing, and here specifically to the period during which the Eurosystem bought corporate securities under its corporate sector purchase programme (CSPP) and/or under Pandemic Emergency Purchase Programme (PEPP). The latest observations are for 20 August 2026.

The arrival of US big tech is shaking up old beliefs in the euro area credit market. In an economy known for being historically bank-based, euro area corporate bond markets were often perceived by issuers and investors as not having the breadth and depth to support large issuances. During the period of quantitative easing when central banks bought sovereign and corporate bonds, this started to gradually change. The euro area corporate bond market broadened its network of issuers and became a more reliable stage for funding larger investment needs.[5] Issuance of this scale signals that the euro area can absorb very large corporate bond deals on its own (Chart 1, panel b).
US big tech can broaden euro area corporate bond markets
Hyperscalers are expanding the scope of the euro area corporate bond market by introducing longer maturities, greater exposure to the technology sector and higher-rated debt. First, US big tech issues significantly longer-dated maturities than other economic sectors do. This helps build the long end of the yield curve (Chart 2, panel a), which domestic corporate issuers use less often. Second, the growing presence of hyperscalers in primary markets – and their inclusion in benchmark indices – gives bond investors greater exposure to the technology sector. This is particularly relevant in Europe. The weight of the technology sector in euro area benchmarks remains around three times lower than in comparable US indices.
Finally, hyperscalers have brought higher-rated debt to the euro area corporate bond market (Chart 2, panel b). With the current wave of debt issuance still in its early stages, these firms exhibit strong balance sheets, which translate into favourable assessments by credit rating agencies (e.g. often AA- or higher). This range complements the euro area landscape where most corporate issuers fall in the A to BBB class. As AI is a new sector, however, the way rating agencies approach this sector may be based on assumptions on future revenue growth and leverage which may not stand the test of time, heightening the vulnerability to mispricing of credit risk.

Chart 2
How the US tech sector is diversifying the euro-denominated corporate bond market

Sources: Bloomberg Finance L.P. and ECB calculations.
Notes: Panel a: Distribution of outstanding amount of debt for hyperscalers, as well as for euro area and non-hyperscaler US constituents of the Bloomberg EUR IG credit index within the technology sector, as of 20 August 2026. Panel b: Distribution of outstanding amount of debt for US and euro area constituents of the Bloomberg EUR IG credit index by rating, as of 20 August 2026. Issuers are grouped by country of incorporation of the ultimate parent. The y-axis shows which percentage of the overall debt issued by a specific category of issuer falls in the different maturity buckets. Issuers are grouped by the region of the country of incorporation.

Is there a risk of crowding-out?
Investors active in investment-grade corporate bonds denominated in euro are playing a prominent role in the financing of US hyperscalers’ capital expenditures. But does this mean that there is substantially less interest in bonds issued by euro area companies? Data analysis and market intelligence suggest that this has not been the case during this first issuance wave and that adaptation has helped.
Investors continued to show strong demand for euro-denominated hyperscaler bonds until mid-2026. Support subsequently weakened, and cover ratios − a measure of investor demand relative to the supply of a new bond − started to edge down. But this likely reflected a normalisation, as investors re-evaluated their risk compensation in light of the prospect for continuous flows of long-maturity issuance. By contrast, cover ratios for euro area issuers have remained strong and little changed throughout 2026. Some European issuers reportedly timed their issuance to avoid days when hyperscalers tapped the market, supposedly with a view to avoiding direct competition and preserving investor demand.
Investors also started to adapt, demanding greater compensation for the risks associated with hyperscaler debt. Hyperscalers’ credit spreads have started to increase on news of higher expected AI-related capital expenditure and more issuance announcements. Across all maturity segments, investors are demanding a rising risk premium to absorb the supply and deal with the greater uncertainty over the medium-term earnings outlook (Chart 3).[6]

Chart 3
Hyperscaler euro spreads edge up even as spreads of other issuers remain stable

Average credit spread of hyperscaler euro-denominated bonds across maturities and range between average spread of AA- and BBB-rated corporate issuers excluding hyperscalers
basis points

Sources: Bloomberg Finance L.P. and ECB calculations.
Notes: Asset swap spreads of corporate bond issuers for constituents of the Bloomberg EUR IG corporate index excluding financials. The shaded area represents the range between the index-weighted average spread of AA-rated and BBB-rated issuers, excluding hyperscalers. The curve reflects the index-weighted average of credit spreads of Alphabet, Amazon, and Microsoft, which are AA- and AAA-rated. The vertical dashed lines mark the announcement dates of Amazon Alphabet and Amazon euro-denominated issuance. The latest observations are for 20 August 2026.

Despite this reassuring initial assessment, US big tech companies could push up borrowing costs for all sectors as they accumulate debt and account for a growing share of bond markets, with a potential spillover to the sovereign and supranational segment of the bond market. This would depend in part on whether the investor “pie” is fixed, with big tech taking a larger slice, or whether it can expand to absorb the additional issuance. Spillover effects could happen through three main channels.
First, supply matters. The scale of big tech supply of new bonds may strain investor appetite. That could force hyperscalers − and similarly rated peers − to offer bonds at lower prices with wider yield spreads. The expectation of even greater bond supply in the future amplifies this effect, because investors might be reluctant to accept a current spread level if they expect even higher spreads in the future.
Second, investors have finite balance sheets and portfolio limits. They may reduce holdings of other bonds to make room for large hyperscaler deals. That could create a crowding-out effect that raises costs even for issuers from unrelated industries. Euro area investor exposure to hyperscaler debt remains relatively small for now, but is growing rapidly. Hyperscalers accounted for 15% of the increase in domestic euro-denominated corporate bond holdings in the year to March 2026, with strong demand from pension funds and insurers. For these investors looking for high-quality, long-maturity assets, hyperscaler debt may look like a possible alternative to some safe-haven style securities.
Third, bond index mechanics can amplify the effect. As hyperscalers gain weight in bond indices, passive, benchmark-tracking investors may mechanically rebalance towards them, intensifying the pressure on other bonds and further influencing spreads.
Conclusion
The rising presence of hyperscalers can bring diversification and growth to the euro area corporate bond market. For the time being, spillovers to other corporate issuers’ access to market-based funding remain limited, and the impact on investor portfolios is not substantial. In the United States, AI-driven demand for long-dated funding has reportedly contributed to the recent rise in long-term real yields. No such spillovers are evident in the euro area so far, reflecting smaller big tech issuance and resilient sovereign bond markets.
However, this could be merely the start of a financing wave of unprecedented proportions which could demonstrably reshape bond markets, including in the euro area, prompting issuers, intermediaries and investors to adapt.
While the dynamics of this adaptation are uncertain, the sheer scale of hyperscalers’ future borrowing needs, coupled with expectations of sustained strong yet uncertain earnings, warrants close monitoring. Potential international spillovers, fast-rising leverage (especially if other, less transparent, debt markets start being tapped) and broader implications for the functioning of euro area financial markets all demand close attention.
The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.

Hyperscalers are cloud providers that manage extensive networks of data centres, elastically delivering infrastructure, platform, and software services at a very large scale. In this blog, the term “hyperscalers” refers to five US tech companies: Alphabet, Amazon, Meta Platforms, Microsoft and Oracle.

Lower bound of credit analysts’ estimates.

For more details, see Domenech Palacios, M., Jančoková, M. and Tomov, T. (2025), “Reverse Yankee bonds”, The international role of the euro, ECB, June.

For more on euro-denominated bond issuance in 2025, see Section 1.3 in “The international role of the euro”, ECB, June 2026.

See Arce, Ó., Mayordomo, S. and Gimeno, R. (2021), “Making Room for the Needy: The Credit-Reallocation Effects of the ECB’s Corporate QE”, Review of Finance, Vol. 25, Issue 1, February, pp. 43-84, and Darmouni, O. and Papoutsi, M. (2022), “Non-bank lending to mid-size firms in Europe: evidence from corporate securities”, Working Paper Series, No 2663, ECB, revised March 2025.

This premium is significantly higher at the long end, but this is influenced by the longer maturity of hyperscaler bonds compared with other firms.

 
 
 
Compliments of the European Central Bank The post ECB | Big Tech, Big Debt: When US Tech Giants Tap the Euro Area Bond Market first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The Council today gave its final approval for an ambitious overhaul of the EU customs framework – the most comprehensive reform of its kind in decades.
The updated legislation gives the Union a more modern toolbox and innovative new instruments to better facilitate global trade, especially in e-commerce, collect customs duties more efficiently and tighten controls on non-compliant, dangerous or unsafe goods.
Managing the rise of e-commerce 
The updated union customs code clarifies that non-EU e-commerce platforms will be considered the goods’ importer when selling into the EU and are therefore responsible for ensuring that all customs formalities and duty payments are handled, rather than the final EU consumer.
The legislation also features a new system of penalties for e-commerce operators that fail to fulfil their customs obligations, such as making sure that EU standards are upheld and appropriate duty paid. The most serious cases of non-compliance may incur fines of up to 6% of the company’s annual import value of goods in the preceding year, the removal of certain customs privileges and even access restrictions to online platforms.
Finally, to help cover rising costs from monitoring the growing number of small parcels entering the EU via e-commerce, an EU-wide handling fee on small parcels will be introduced by 1 November 2026. The Commission will set the level of the fee before it starts being applied by EU member states.
The handling fee is separate from the earlier Council decision to remove the historical customs duty exemption for imports valued at less than €150.
The EU customs authority
The text establishes a new decentralised EU agency for customs to coordinate governance of the customs union.
Specifically, the EU customs authority will analyse the constantly updated import and export data contained in a new, state-of-the-art, EU customs data hub – one central platform for importers and exporters to interact with customs in the EU. This will help member states to identify the riskiest cargo that should be prioritised for inspection.
The authority will also help establish priority control areas and risk criteria, and coordinate EU-level crisis management for customs. It will be located in Lille, France and begin operations in 2027.
Support for the most reliable traders
The new legislation creates a new category of the most transparent businesses – trust and check traders.
Under this scheme, companies providing comprehensive information on the movement and compliance of their goods, along with other stringent criteria, will enjoy simplified customs procedures, saving them time and money.
The most reliable companies will be able to release their goods into circulation in the EU without any active customs intervention at all.
Next steps 
The European Parliament is expected to approve the final text later in September, ahead of its signature and publication in the EU’s official journal. Use of the new data hub to record imports to and exports from the EU will become mandatory for e-commerce businesses on 1 July 2028 and for all traders from 1 March 2034.
Background
For over 50 years, the EU customs union has been operating efficiently across national borders, managed by national customs offices working together. As one of the world’s largest trading blocs, the EU customs union manages trade worth over €4.3 trillion, accounting for around 14% of global trade.
In 2025, 2,200 customs offices and 84,000 customs officials collected almost €31 billion in customs duties and managed the import, export and transit of around 6 billion e-commerce parcels and more than 1.5 billion items in traditional trade. Over 90% of e-commerce parcels arrived in the EU from China.
 
 
Compliments of the European Council The post European Council | EU Customs: Council Greenlights Landmark Reform first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Today, the Commission has designated ChatGPT as a Very Large Online Search Engine (VLOSE), as well as Reddit and Roblox as Very Large Online Platforms (VLOPs), under the Digital Services Act (DSA). These services declared that they reach at least 45 million average monthly users in the EU and thus meet the threshold for designation.
Following the notification of the designations, these services have four months, i.e. by January 2027, to comply with the additional DSA obligations for VLOPs and VLOSEs, such as assessing and mitigating the systemic risks stemming from their service and algorithmic systems related to the dissemination of illegal content, the negative effects on minors, users’ physical and mental well-being, fundamental rights, electoral processes and public security.
With these designations, the Commission will gain investigative powers to assess the functionalities behind these services and, where applicable, any related system. The Commission will be competent to supervise compliance with the DSA, in cooperation with Coimisiún na Meán for ChatGPT, and the Authority for Consumers and Markets (ACM) for Reddit and Roblox. These entities serve as the Digital Services Coordinators respectively for Ireland and for the Netherlands, where the designated services are established.
ChatGPT is an Artificial Intelligence (AI) system that can engage with and respond to users’ prompts and queries, including by searching the web. Hence, ChatGPT is a hybrid service that qualifies as an online search engine under the DSA.
Reddit is a discussion-based platform that enables users to create, share, and interact with content within topic-based communities. Roblox is an immersive gaming and creation platform that enables users to create, publish, and play games developed by other users. As these services enable users to disseminate third-party content to the public, they qualify as online platforms under the DSA.
Roblox, Reddit and ChatGPT are already subject to the general obligations applicable to online platforms and search engines under the DSA, respectively.
Background
The Commission has now designated 28 very large online platforms and search engines under the DSA.
The supervision and enforcement of the DSA is shared between the Commission and Digital Services Coordinators, which are responsible for the enforcement and supervision of the Digital Services Act in the Member States.
Quote(s)
 ” These new designations mean that ChatGPT, Reddit and Roblox will now be held to a higher standard of scrutiny and accountability in the European Union, in line with their large impact on our citizens and society. We continue to watch the digital landscape closely and will not hesitate to designate any platform that meets the threshold for enhanced supervision under the Digital Services Act.”  –Henna Virkkunen, Executive Vice-President for Tech Sovereignty, Security and Democracy

Compliments of the European CommissionThe post European Commission | Commission Designates ChatGPT, Reddit, Roblox Under Digital Services Act first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

G20 merchandise trade accelerated in Q2 2026. Measured in current US dollars, quarter-on-quarter import growth rose markedly to 6.7%, from the 5.2% growth recorded in the previous quarter, reflecting strong increases in a number of G20 economies. G20 merchandise exports growth remained broadly flat at 5.9%. Preliminary estimates also point to an acceleration in services trade, with exports rising by 3.4% and imports by 2.5%, as compared to 2.0% and 1.5% respectively in Q1 2026 (Figures 1 and 3).1
In North America, merchandise import growth for the United States increased to 7.8% in Q2 2026, up from 6.0% in the previous quarter, partly reflecting higher purchases of computers and computer accessories, while export growth slowed to 3.9%, despite higher energy prices boosting exports in crude and petroleum. By contrast, Canada’s exports surged by 13.5%, supported by energy products and motor vehicles, while import growth slowed. In Mexico, both exports and imports accelerated, with growth reaching 12.2%, and 7.7% respectively. In East Asia, China’s trade slowed markedly from the high growth for both exports and imports in Q1 2026 (13.4% and 16.9% respectively), but with Q2 2026 exports still growing by 4.7% and imports by 8.9%, both supported by mechanical and electrical products and high-technology goods. Japan’s trade also slowed, despite higher petroleum imports. By contrast, Korea’s imports surged by 11.6%, reflecting higher purchases of energy products and semiconductor equipment, while export growth continued to remain strong at 19.3%, supported by sales of semiconductors. In Europe, higher purchases of energy products boosted import growth to 4.2%, 4.2% and 4.1% in Germany, France and Italy, respectively, while exports grew by 2.1%, 1.8% and 1.8%. In the United Kingdom, higher trade in machinery and transport equipment and in fuels explained a rebound in exports to 6.6% and in imports to 5.7%. Merchandise trade also accelerated in India, where exports surged by 20.4%, with increases across the board, and imports rose by 8.7%, partly driven by purchases of petroleum and of electronic goods.
Strong international services trade growth was recorded in Q2 2026 in East Asia. Services trade accelerated markedly in China, with exports soaring by 16.6%, boosted by sales of transport, travel and ICT services. After growing by 3.3% in Q1 2026, China’s imports rose by 7.5% in Q2 2026, on higher spending for transport, insurance, and other business services. In Japan, exports grew by 7.8%, after negative growth in the previous quarter, supported by sales of intellectual property, ICT and other business services. Imports, however, fell by 2.0%, on lower spending on travel and insurance services. In Korea, import growth recovered to 3.9% in Q2 2026 from negative growth in Q1 2026, as higher transport payments more than offset lower travel expenditure. Export growth slowed but remained solid at 5.6%, reflecting higher transport and travel receipts. Services trade also accelerated in the United States, exports rose by 1.2% after 0.9% in Q1 2026, mainly supported by higher receipts from intellectual property and ICT. Imports grew by 1.5% in Q2 2026, driven by transport and insurance services, following no growth in the two previous quarters. No clear pattern was observed in the G20 European economies in Q2 2026. While exports accelerated in France, reflecting strong transport and travel receipts, they decelerated in Germany and Italy. In the same vein, services imports decreased in France while they increased in Germany and Italy, reflecting essentially higher transport and travel payments.
Click here to access the interactive charts.
 
 
Compliments of the Organisation for Economic Co-operation and DevelopmentThe post OECD | G20 Trade Accelerated in Q2 2026, Boosted Primarily by Merchandise Imports and Services Trade first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

 Asheville, N.C., United States: International Monetary Fund Managing Director Kristalina Georgieva delivered the following remarks at the G20 Finance Ministers and Central Bank Governors Meeting in Asheville, North Carolina:
“I would like to thank the Government of the United States for hosting this week’s G20 meeting, and Secretary Bessent and Chairman Warsh for their leadership in delivering a focused discussion on key global economic priorities.
During our discussions, there was a strong convergence of views around the importance of lifting potential growth everywhere. In a shock-prone and uncertain world, structural reforms and sound fiscal and monetary policies are essential to creating the foundation for stronger and better-balanced global growth. Beyond domestic responsibilities of policymakers, the G20 reminds us that international cooperation has a crucial role to play, especially in helping countries manage debt challenges, limit spillovers, and address global imbalances.
Global Economic Outlook
Since April, the global growth outlook for 2026 has firmed at around 3 percent. The global economy has absorbed the impact of the energy supply shock better than expected, through the use of oil and gas reserves, new sources of energy, and demand management measures. Surging AI investment—including in power projects to satisfy energy needs—is driving growth, in the US in particular, and in other economies integrated into the AI value chain, such as Korea.
But behind the averages there is significant divergence in economic fortunes and risks to the outlook remain high.
First, the energy shock is not over. The Strait of Hormuz remains largely closed, strategic oil and gas reserves will need restocking, AI drives up energy demand, and in the northern hemisphere winter is coming.
Second, public debt—at almost 100 percent of GDP worldwide—now exceeds its post-World War II highs and is set to climb further. Looking back, the debt trajectory resembles a staircase: big vertical steps when shocks occur, little or no reduction afterward.
Third, the disinflation process has stalled in many countries. Mounting fiscal pressures are pushing core bond yields upward and the interplay between fiscal and monetary policy worries markets.
Last, but not least, the future impact of AI on productivity and financial stability is dogged by unknowns.
The policy priorities are clear. Central banks must focus on their price stability mandate. Fiscal authorities must hammer out credible medium-term consolidation plans. Structural policies should concentrate on cutting red tape and removing self-inflicted barriers to growth—because stronger potential growth would help address the fiscal problem, and addressing the fiscal problem would help lift growth prospects.
Debt Challenges in Developing Countries
The sovereign debt landscape for emerging and low-income countries has gradually improved in recent years, thanks to domestic policy efforts and international cooperation. But progress has been uneven, and persistent risks and uncertainty in the global economy, including spillovers from the significant increase in yields in advanced economies, call for policy discipline and underscore the importance of building buffers.
The increase in global interest rates is of particular concern. As key advanced economy yields rise to multi-year highs, they lift most of the world’s yield curves up with them. In some emerging markets this more than fully offsets hard-won spread compression.
High refinancing needs and rising debt-service costs are constraining many developing economies, in particular low‑income countries, limiting their capacity to finance critical spending on infrastructure, health, and education, which undermines growth and, in turn, debt sustainability.
These challenges are compounded by a sharp decline in net external financing, including cuts in official development assistance, and a marked reduction in new inflows from non‑Paris Club creditors.
Helping countries create fiscal space to support growth-enhancing spending is even more pressing in the current conjuncture.
Addressing these challenges requires a collective effort along three dimensions:

First, decisive action is needed in countries where debt is unsustainable, supported by further improvements in restructuring processes. Important progress has already been achieved, particularly under the G20 Common Framework. The G20 MOU template agreed this year is part of this effort. The Global Sovereign Debt Roundtable has also advanced its work, with the publication in April of an updated “Restructuring Playbook” and important clarifications to facilitate implementation of comparability of treatment and inter-creditor group coordination. These efforts should continue, including developing solutions for countries not eligible to the Common Framework. We will continue to remain strongly engaged, including through greater use of our “good offices” and work under the GSDR.
Second, accelerating the implementation of the IMF-World Bank Three-Pillar Approach to support countries with sustainable debt and pursuing strong growth-enhancing reforms is a key priority. Together with the World Bank, we have strengthened support for countries on reform implementation and domestic resource mobilization and continue to work on ways to encourage effective liability management operations, including to incentivize higher private sector inflows at lower cost. This has worked well in countries such as Ecuador or Pakistan. Securing strong support from other partners, including bilateral creditors, is essential. We count on the G20 to take leadership in this collective support to growth and investment.
Third, there is no substitute for sound economic fundamentals. Helping countries build resilience and prevent unsustainable debt build-up is critical, including through strengthening debt transparency, debt management capacity, and debtor–investor relations.

Global Imbalances
Our latest External Sector Report shows that excess global imbalances—those not explained by fundamentals—widened further in 2025, by 0.7% of GDP, the largest increase in the past decade. This widening was broad-based, with major contributions coming from the two largest economies.
Excess imbalances in major economies can signal uneven growth patterns and macro-financial vulnerabilities. They can result in cross-border spillovers, trade tensions, and economic fragmentation. And this is what we have seen: the widening of excess global imbalances in recent years has taken place against a backdrop of ongoing trade tensions and shifts in the configuration of trade relationships across countries.
The message from Fund research is clear: since macroeconomic factors are the main drivers of imbalances, sustained rebalancing requires policy action in both surplus and deficit countries. In surplus economies, market-oriented structural reforms can boost domestic consumption, promote investment, and lift growth prospects. In deficit economies, appropriate fiscal consolidation can increase savings and help rebuild fiscal buffers. Simultaneous—mutually reinforcing—policies across major economies would yield the best outcomes, including for growth.
At the IMF we recognize our responsibility to support members in addressing imbalances.

We are working with member countries and other international organizations to improve cross-country data and external sector statistics.
We are continuing to refine our EBA methodology that underlines our assessment of excess imbalances. We have extended our analytical framework to better understand the linkages between trade and industrial policies and current account imbalances. We are advancing complementary work on capital flow and stock imbalances.
Our Comprehensive Surveillance Review aims to deliver a more comprehensive and forward-looking assessment of external sector issues at the country level, as well as cross-country spillovers. The goal is to move from diagnosis to action.

The Fund is strongly committed to engaging with our members to address global imbalances. The G20 offers a unique platform to advance this dialogue, and we will continue to support our membership going forward.”
 
 
Compliments of the International Monetary Fund The post IMF | Managing Director Kristalina Georgieva’s Statement at the Conclusion of the G20 Finance Ministers and Central Bank Governors Meeting in Asheville, North Carolina first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Blog | In a world of frequent shocks, central bank communications should anchor expectations by explaining how policy responds to changing conditions, rather than committing to a fixed path.
In a world of frequent and faster-moving shocks, where uncertainty is high and markets react instantly, central banks face a fundamental communications challenge: how to help the public understand monetary policy objectives while explaining how policy may evolve as economic conditions change. In this regard, explaining the policy framework, the reaction function of the central bank, and the way in which economic uncertainty and risks play into alternative scenarios have become the foundation of the central banker’s communications playbook.
As central banks adapt their policy frameworks and tools to a more uncertain and shock-prone world, it is only natural that they are also reassessing how best to communicate policy frameworks and talk about the conjuncture. A new IMF note explores these questions and sets out principles for effective monetary policy communication.
Perils of commitment
During the low-inflation era that followed the global financial crisis, communication was dominated by forward guidance, centered on precommitting to a likely future path of the policy rates. Such an approach can be effective when policy is stuck at the lower bound and inflation expectations are drifting down. But commitments may become costly when circumstances change. Supply shocks, inflation surprises, or abrupt shifts in the balance of risks may require policymakers to adjust course.
As a result, central bank communication has shifted toward explaining how policy will respond as economic conditions evolve and new data become available.
Understanding reaction functions
A central task has therefore been communicating the reaction function: how policymakers interpret incoming data, weigh risks, and navigate tradeoffs between key central bank objectives. The strength of underlying inflation, the evolution of inflation expectations, and the nature of monetary policy transmission are the key inputs to the reaction function. “Data dependence” has featured prominently: central banks emphasize what data matter, how data shape decisions, and what future contingencies may mean. The goal is to help the public understand the logic that guides a central bank’s decision-making.
Explaining Risks and Uncertainty
Central banks convey their views on the economic outlook through forecasts and scenarios. This is crucial because policy decisions are based on where the macroeconomy is expected to go.
But forecasts are not promises. In a shock-prone world, they are subject to tremendous uncertainty. If forecasts are communicated too precisely, or policy-rate projections are interpreted as commitments, revisions can be misinterpreted as policy reversals. In this context, scenarios can help illustrate how policy might respond under different economic outcomes, while reinforcing that future decisions will depend on incoming data and evolving conditions.
Communication for a shock-prone world
Forecasts should be accompanied by a clear explanation of risks. Effectively communicating the reaction function can help the public better understand how policy may respond under alternative economic outcomes. By contrast, rate-path commitments should be exceptional and conditional, with clear escape clauses so that any conditional promise is clearly subordinate to the price-stability mandate.
More isn’t always better
Clear communication can anchor expectations and support accountability. But more communication is not always better. Social media, automated news analysis, and artificial intelligence mean that central bank communications are parsed in real time. Too much detail can lead markets to focus excessively on decoding the central bank rather than assessing fundamentals. Hence conditionality relative to the evolving outlook is foundational.
Volatility’s value
The goal of central bank communication is not to eliminate volatility. Rather, it is to reduce uncertainty about how the central bank will respond, limiting surprises around policy decisions.
Volatility is not, in and of itself, undesirable. When asset prices move in response to new information about incoming macroeconomic data that shape the inflation and growth outlook, markets are performing their essential price-discovery function. Such volatility is fostering the information content of expectations and can in turn provide information to policymakers.
Speaking with humility
Successful communication therefore depends on fostering a better understanding of the policy framework. That means being clear about central bank objectives, the reaction function, and forecasts. Given the high degree of uncertainty globally, central banks need to be explicit about risks, with the goal of reflecting the degree of underlying macroeconomic uncertainty accurately.
 
 
Compliments of the International Monetary Fund The post IMF | Rethinking Central Bank Communications in an Uncertain World first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Once I was elected President of the European Council, I decided to visit each member state every year, to meet bilaterally with each European leader. These exchanges are first and foremost an opportunity to listen: to remain closely attuned to the concerns, priorities and expectations of the members of the European Council, and of the citizens they represent. They also allow me to share my perspective on the challenges and opportunities ahead for our union. These visits take place at the beginning of the political season, provide a unique 360-degree view of the state of our union and help to ensure that the work of the European Council remains firmly anchored in the realities, priorities and aspirations across Europe. 
One of the defining features of European integration is that its most tangible benefits often go unnoticed precisely because they have become part of our everyday lives. We cross borders with ease. We share a single currency from Lisbon to Helsinki and from Dublin to Athens. We benefit from common standards that protect our environment, our health and our quality of life. We support one another in responding to natural disasters – as we have done during this summer’s devastating forest fires –, public health emergencies and other common challenges. And when we travel across Europe, we stay connected with family and friends without giving a second thought to mobile roaming charges. What has become ordinary in our daily lives is, in fact, the result of decades of a shared European endeavour.
This provides a strong foundation on which to continue to build Europe. In today’s geopolitical reality, a stronger, more resilient and more autonomous Europe is more important than ever.
That is why we are building the Europe of defence: to strengthen our ability to deter threats, protect our citizens and, ultimately, restore peace on our continent. A peace that has been shattered by Russia’s ongoing aggression against Ukraine. The EU has set itself the objective of decisively ramping up Europe’s defence readiness by 2030 by strengthening the European defence industry, reducing strategic dependencies and jointly developing priority military capabilities. What is crucial is that Europe’s necessary rearmament is pursued collaboratively, avoiding duplication and waste and, above all, ensuring that this historic effort strengthens the collective security and defence of Europe as a whole.
Building Europe’s strategic autonomy also requires a more competitive economy. That is why the European Union is making it easier to do business by cutting red tape, mobilising private investment to help businesses scale up and innovate, completing the single market, strengthening supply chains and diversifying trade relations, while ensuring access to critical raw materials and to affordable, clean and home-grown energy sources. In all these areas, the ‘One Europe, One Market’ agenda agreed by the European Council sets out concrete objectives to be delivered from now until the end of 2027. Beyond the geopolitical imperative, this is ultimately about making life more affordable for citizens, creating the conditions for more high-quality jobs and improving the resilience of Europe’s social market economy.
Defence and competitiveness, together with EU enlargement and our ongoing support for Ukraine, will be high on the agenda as I meet the European leaders during this year’s tour of capitals.
But among the key decisions before us this year, one stands above all others: reaching, by the end of the year, an agreement on the EU’s next multiannual financial framework – our long-term budget for 2028-2034.
Why must that agreement be reached before the end of 2026? Because we will then need about a year to put in place the necessary legislative and administrative framework – in Brussels and in the member states – to ensure the uninterrupted implementation of the next EU budget. This is simply sound planning. Otherwise, we risk disrupting funding for farmers, businesses, students, researchers and innovators.
For decades, the EU budget has supported sustainable and inclusive growth across our continent through investments in agriculture, our regions, research, and the green and digital transitions. It will continue to do so. At the same time, the budget must also reflect Europe’s evolving priorities, including defence, security and competitiveness.
Like national budgets, the EU budget must deliver on its priorities within the limits of finite resources. Most of it is financed through member states’ national contributions. We need to keep those contributions within reasonable limits. That is why a balanced and ambitious package of new common resources will be an essential part of an overall agreement.
I have been encouraged by the constructive spirit of discussions among leaders on the multiannual budget so far. I am confident that, in the end, we will find the right balance for our union, our citizens and our future. Because it is our shared responsibility to do so.
 
 
Compliments of the European Council The post European Council | Listening to Europe, Building its Future – Op-Ed Article by President Costa first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

GDP (Gross Domestic Product) growth in the OECD area increased slightly to 0.5% in Q2 2026, up from 0.4% in the previous quarter, according to provisional estimates (Figure 1). This reflected a mixed picture across the 30 OECD countries for which data were available. In Q2 2026, 27 countries recorded growth, but at varying rates, while 3 saw no change in GDP.
GDP growth in the G7 slowed to 0.3% in Q2 2026, down from 0.4% in Q1, reflecting slower growth in five G7 countries: Germany, from 0.4% to 0.2%; Italy, from 0.3% to 0.2%; Japan, from 0.5% to 0.3%; the United Kingdom, from 0.6% to 0.4%; and the United States, from 0.5% to 0.4%. In Japan, the slowdown mainly reflected stagnant private consumption, destocking and a decline in investment. In the United Kingdom, weaker private consumption and a decline in government consumption weighed on economic activity. In the United States, slower growth mainly reflected weaker export growth, destocking and a decrease in government consumption. By contrast, growth in Canada accelerated from zero in Q1 to 0.8% in Q2. In France, GDP returned to growth (0.2%) in Q2, following a contraction of 0.1% in Q1.
Among other OECD countries for which data were available, Ireland recorded the highest quarter-on-quarter GDP growth in Q2, at 3.9%, followed by Israel, at 3.6%. At the other end of the spectrum, GDP was unchanged in Austria, Belgium and Chile.
Year-on-year GDP growth in the OECD area increased to 2.3% in Q2 2026, up from 1.7% in Q1 (Table 2). Among G7 economies, the United States recorded the highest annual GDP growth, at 2.1%, while Japan recorded the lowest, at 0.5%.
Click here to access the interactive chart.
 
 
Compliments of the Organisation for Economic Co-operation and DevelopmentThe post OECD | GDP Growth in OECD Area Picks up Slightly in the Second Quarter of 2026 first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

€3.9 bn surplus for EU

Euro area
The first estimates of euro area balance showed a €8.6 bn surplus in trade in goods with the rest of the world in June 2026, compared with + €4.8 bn in June 2025.
The euro area exports of goods to the rest of the world in June 2026 were €272.5 billion, an increase of 14.4% compared with June 2025 (€238.2 bn).
Imports from the rest of the world stood at €264.0 bn, a rise of 13.1% compared with June 2025 (€233.4 bn).

In June 2026, the euro area balance registered a surplus of €8.6 bn, following a deficit of €9.0 bn in May 2026. Compared with June 2025, when the balance stood at a surplus of €4.8 bn, the latest figure represented an improvement of €3.8 bn. In the presence of a larger energy deficit, this increase was primarily driven by a higher surplus in chemicals and related products, and by surpluses in other manufactured goods as well as in food and drink. The surplus of machinery and vehicles also slightly improved.

€3.9 bn surplus for EU

In January to June 2026, the euro area recorded a surplus of €9.8 bn, compared with €82.2 bn in January-June 2025.
The euro area exports of goods to the rest of the world fell to €1 487.2 bn (a decrease of 0.2% compared with January-June 2025), and imports rose to €1 477.4 bn (an increase of 4.9% compared with January-June 2025).
Intra-euro area trade rose to €1 408.2 bn in January-June 2026, up by 4.7% compared with January-June 2025.
European Union
The EU balance showed a €3.9 bn surplus in trade in goods with the rest of the world in June 2026, compared with +€5.2 bn in June 2025.
The extra-EU exports of goods in June 2026 were €241.5 billion, up by 12.5% compared with June 2025 (€214.7 bn).
Imports from the rest of the world stood at €237.7 bn, up by 13.5% compared with June 2025 (€209.5 bn).

In June 2026, the EU balance registered a surplus of €3.9 bn, following a deficit of €13.9 bn in May 2026. Compared with June 2025, when the balance stood at a surplus of €5.2 bn, the latest figure represented a deterioration of €1.3 bn. This deterioration was primarily driven by a larger energy deficit, partly offset by a wider surplus in chemicals and related products.

In January to June 2026, the EU recorded a deficit of €14.9 bn, compared with €74.1 bn in January-June 2025.
The extra-EU exports of goods fell to €1 317.0 bn (a decrease of 2.1% compared with January-June 2025), and imports rose to €1 331.9 bn (an increase of 4.7% compared with January-June 2025).
Intra-EU trade rose to €2 200.6 bn in January-June 2026, +5.7% compared with January-June 2025.
Annex – Seasonally adjusted data
In June 2026 compared with May 2026, euro area seasonally adjusted exports increased by 0.9%, while imports decreased by 2.1%. The seasonally adjusted balance was €1.8 bn, an increase compared with May (€-6.1 bn).
In June 2026 compared with May 2026, EU seasonally adjusted exports increased by 0.4%, while imports decreased by 2.1%. The seasonally adjusted balance was €-4.9 bn, a narrowing compared with May (€-10.8 bn).
In April-June 2026, euro area exports rose by 5.6%, while imports rose by 8.6%. Intra-EA trade rose by 3.9%.During the same period, EU exports increased by 5.4%, while imports rose by 9.9%. Intra-EU trade increased by 4.0%
Click here to access the interactive charts and tables.

Compliments of EurostatThe post Eurostat | Euro Area International Trade in Goods Surplus €8.6 bn first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Blog | The rise of AI has driven a blistering rally in the tech sector, bringing stock market valuations to levels last seen during the dot-com bubble. Although AI is reshaping the economy, do today’s high valuations bear the risk of an abrupt and painful setback in the euro area?
Valuations on the US stock market, as measured by the CAPE ratio, are currently close to their historical peak.[1] Euro area equity valuations have also risen, albeit to a lesser extent (Chart 1). Markets on both sides of the Atlantic reflect investors’ enthusiasm about artificial intelligence (AI) shaping the economy and driving profits. The extremely optimistic valuations raise questions: do today’s stock market prices reflect a rational bet on the transformative technology? Or are we seeing a remake of the dot-com bubble? We argue that economic research on past technological revolutions points to a worrisome conclusion: a correction of current stock market valuations is likely.
A sharp stock market correction would have severe consequences for the euro area, through two channels. One is euro area investors’ direct exposure to the Magnificent Seven stocks (hereafter Mag7) and the other is the degree of overexuberance in euro area stock markets themselves.[2] This post explains why a correction should be expected even if current valuations are rational, why that matters not only to the shareholders who would take the direct hit, and what it implies for the euro area specifically.
Chart 1
US and euro area stock market valuations

a) S&P 500 Index (cyclically adjusted price-to-earnings ratio)

b) Euro area Market Equity Index (cyclically adjusted price-to-earnings ratio)

(Index)

(Index)

Source: Datastream
Notes: Price-earnings ratio (monthly) from 1980 to 2026. Numerator: real (inflation-corrected) S&P Composite Stock Price Index (panel a) and Euro Stoxx 50 Price Index (panel b). Denominator: moving average over preceding ten years of real S&P Composite (panel a) and Market Equity (panel b) earnings.

Why do technological revolutions so often end in a boom and bust?
The current excitement surrounding AI has many historical precedents. To name just a few: the railway boom of the 19th century, the expansion of electricity and radio in the 1920s and the surge of the internet, or the “dot-com era”, in the 1990s. In each case, a genuinely transformative technology attracted investment, and the stock market valuations of firms that adopted it rose strongly before falling sharply. Economic research offers two complementary explanations.
First, the rational view argues that high valuations can be justified by extreme uncertainty about a new technology’s productivity.[3] Why has Nvidia’s share price risen 20-fold since 2022? Because investors rationally perceived that the company would become the next Google – with a highly uncertain and potentially large upside. In the worst case in such a scenario, investors lose their investment. But in the best case, the gains are large and genuinely hard to bound. This “option value” increases the stock valuations of early adopters, causing their price-to-earnings ratios to rise sharply.
Even if the technology succeeds, stock prices may eventually fall. Why? The nature of uncertainty shifts from a “single sector” to the “entire” economy. Initially, the new technology is like a small-scale experiment. If it fails, it’s unfortunate for that company, but the rest of the economy is unaffected. The risk can be diversified away. As adoption spreads, the same uncertainty becomes economy wide. If something then goes wrong with that technology, the whole economy suffers. This risk cannot be diversified, so investors demand a higher risk premium. However, this does not necessarily mean that profits will fall. Adoption itself is good news for cash flows, but the rising risk premium has the opposite effect and tends to prevail historically (Chart 2, blue line), unless profit growth is strong enough to compensate for that (Chart 2, yellow line). The exact timing is unknowable in advance. These boom-bust patterns are only identifiable with hindsight.
The second explanation for technology-driven boom and bust is the behavioural view. It holds that overconfident, overoptimistic investors bid up prices beyond fundamentals (see Chart 2, red line).[4] When overconfidence fades, prices can fall even more sharply than in the rational scenario.
Both views imply a boom followed by a correction, or a pullback from wherever valuations have risen, at some point in the future. This does not mean that today’s prices represent a ceiling. If AI proves to be transformative enough, valuations could still be much higher in the future, even after a correction. As mentioned previously, it is impossible to know in advance where we stand on this path. Furthermore, the case for expecting a correction is not dependent on whether today’s prices are rational or irrational. We should be aware of that and prepare. The rest of this blog post considers two ways in which such a correction might affect the euro area – wealth effects for euro area investors in US stocks and contagion to euro area stock markets.

Chart 2
Stylised boom-bust scenarios

(Index)

How exposed is the euro area to a fall in Mag7 prices?
The dominance of the Mag7 on widely held global indices (e.g. MSCI World) carries significant risks for euro area investors. Panel a) of Chart 3 shows that most euro area exposures to the Mag7 are via investment funds – mutual funds and exchange traded funds (ETFs) – rather than direct holdings. Using data on the underlying mutual fund investors, we can identify which euro area investors carry the greatest exposure to US technology equities (Chart 3, panel b). Euro area households, which are increasingly channelling funds into low-cost ETFs, have around €440 billion of exposures to US technology equities without necessarily being aware of the associated concentration risk. Insurance companies and pension funds also hold significant exposures to the Mag7.
This fund-based structure is itself a transmission channel. A sharp correction can force funds to sell assets to meet redemptions – first, liquid holdings and then, if the correction persists, distressed assets – pushing valuations down further and triggering more redemptions. This is why a Mag7 correction is a question of financial stability for the euro area, rather than just a private one. The more severe scenario is not the equity correction on its own but a correction that coincides with broader market instability that policymakers cannot easily calm: unlike in the dot-com episode, today’s starting point leaves markedly less room to cut interest rates or use fiscal policy to cushion the fallout.
Chart 3
Euro area investors’ Mag7 exposures

a) Direct exposures

b) Indirect exposures

(EUR billions)

(EUR billions)

Sources: ECB (SHSS and SHS-Look-through) and authors’ calculations.
Note: Holding amounts of the five largest investors in the euro area (market values, Q3 2025).

Is there overexuberance in euro area stock markets?
Beyond this exposure to the Mag7, is there also a risk of a home-grown correction? While euro area equity prices have risen substantially in recent years (Chart 1, panel b), valuation metrics such as price-to-earnings ratios remain considerably lower than in the United States (Chart 1, panel a). The euro area macroeconomic environment in the information and communication technology sector currently appears resilient compared with the times of the dot-com bubble. Productivity and markups in the sector are rising, the business climate in euro area digital services does not seem exuberant and euro area firms’ AI adoption is rising notably, only a few years after the launch of ChatGPT in 2022. The global AI boom has also sparked an ongoing and profound digital transformation across the euro area. The overall increase in digital investment in the euro area over the past decade was more than three times the cumulative growth in GDP over that period.
In sum, the euro area AI transformation is proceeding at a steady if unspectacular pace. On the one hand, euro area stock markets are dominated by “old economy” stocks, which show little of the AI excitement that we see in the US Mag7, reducing the risk of a future correction. On the other hand, euro area and US stock markets have historically been very highly correlated, meaning that a US correction will not leave the euro area unaffected.
Conclusion
Historical experience suggests that technological revolutions carry risks of a boom-bust cycle in asset prices, and this risk does not depend on today’s valuations being rational or irrational. The euro area’s smaller, less richly valued tech sector limits the risk of a home-grown crash. But this offers little reassurance: households, insurers and pension funds have significant exposures through global index trackers, and US equity stress has historically also had an impact on euro area stock markets. The effects of a US correction could extend beyond financial markets to euro area sentiment, financing conditions and hiring. A US AI fallout would not remain a US problem.
The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.

The CAPE (cyclically adjusted price-to-earnings) ratio was developed by Robert Shiller. The S&P 500 CAPE is a measure of stock market valuations that compares share prices of the leading 500 US-listed companies with average inflation adjusted earnings over the previous ten years.

The Magnificent Seven stocks are a group of high-performing and influential companies in the US stock market: Alphabet, Amazon, Apple, Tesla, Meta Platforms, Microsoft and NVIDIA.

See Pástor, Ľ. and Veronesi, P. (2009), “Technological revolutions and stock prices”, American Economic Review, 99(4), pp. 1451-1483.

See, for example, Scheinkman, J. A. (2014), Speculation, trading, and bubbles, Columbia University Press, and Hong, H. and Stein, J. C. (2007), Disagreement and the stock market, Journal of Economic Perspectives, 21(2), pp.109-128.

 
 
Compliments of the European Central Bank The post ECB | The AI Boom: Rational Enthusiasm or the Next Dot-Com Bubble? first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.