ECB Paper Builds Index Showing Declining Perception of Non-Bank Financial Intermediaries in Speeches

What the ECB paper examines

The European Central Bank (ECB) has published a paper titled "ECB perception of non-banks: a machine learning-based approach." It studies how the ECB views non-bank financial intermediaries (NBFIs) and how that view is communicated publicly.

The authors construct a perception index from ECB speeches over the period 1998–2025. Sentiment in references to non-banks is classified by a large language model, which the authors fine-tuned on a hand-labeled dataset built for this purpose.

Key findings

The resulting index shows a predominantly negative and declining perception over time, particularly since the Global Financial Crisis. Negative sentiment is mainly tied to concerns about financial stability and regulatory needs. Positive sentiment, by contrast, reflects the role non-banks play in fostering financial innovation and supporting market functioning.

The index has been made publicly available so that it can be used in future research.

Notes for EA trading

This is a research paper rather than a policy decision, but central bank communications can sometimes coincide with periods of heightened market activity. Traders running EAs may wish to be aware of volatile hours and possible spread widening around major releases. Considering a temporary pause of automated strategies around such events is a general risk-management option.