The European Central Bank (ECB) manages the euro and frames and implements EU economic & monetary policy. Its main aim is to keep prices stable, thereby supporting economic growth and job creation.
What does the ECB do?
-Sets the interest rates at which it lends to commercial banks in the eurozone (also known as the euro area), thus controlling money supply and inflation
-Manages the eurozone's foreign currency reserves and the buying or selling of currencies to balance exchange rates
-Ensures that financial markets & institutions are well supervised by national authorities, and that payment systems work well
-Ensures the safety and soundness of the European banking system
-Authorises production of euro banknotes by eurozone countries
-Monitors price trends and assesses risks to price stability.
The ECB President represents the Bank at high-level EU and international meetings. The ECB has the 3 following decision-making bodies:
-Governing Council – the main decision-making body.
Consists of the Executive Board (see below) plus the governors of the national central banks from eurozone countries.
-Executive Board – handles the day-to-day running of the ECB.
Consists of the ECB President and Vice-President and 4 other members appointed for 8-year terms by the leaders of the eurozone countries.
-General Council – has more of an advisory & coordination role.
Consists of the ECB President and Vice-President and the governors of the central banks from all EU countries.
How does the ECB work?
The ECB works with the national central banks of all EU countries. Together they form the European System of Central Banks.