Business, Legal & Accounting Glossary
European Central Bank (ECB) is a central bank which regulates the monetary system of the European Union. It is a regulatory authority for the Euro and its monetary policy affects all 13 member nations of Eurozone.
The ECB, or European Central Bank, is the central bank of the Eurozone states that use the Euro as their common currency. The main goal of the ECB is to promote price stability within the Eurozone. The ECB focuses on controlling inflation via interest rate policy. Critics of the ECB have suggested that this is too narrow a policy objective, as the ECB appears to neglect exchange rates and employment levels in its policymaking. The ECB is a member of the European Union’s European System of Central Banks, and it was modelled upon the German Bundesbank. The ECB has a board of directors, which is headed by the President of the ECB, and a board of governors, which includes the members of the ECB board of directors plus a representative from each of the other central banks in the European System of Central Banks.
ECB was established in 1998 in Germany and was formed out of the Maastricht Treaty. The European Economic and Monetary Union and Euro were also established by the same treaty. The EU adopted the Euro currency on January 1, 1999. The ECB is modelled on the German Landesbanken and Bundesbank.
ECB works in conjunction with nationalized banks of all EU members. The main aim of ECB is the maintenance of price stability in the EU via the appropriate formulation of monetary policy. Apart from this, ECB conducts foreign exchange dealings, holds currency reserves and also authorizes the issuance of banknotes. A prime objective of the ECB is the maintenance of the purchasing power of the Euro. The ECB strives to promote inflation|non-inflationary growth and sustained employment in the Eurozone. The ECB also works towards the promotion of seamless payment system operations. The ECB derives its revenue from interest income earned on investments made in the following assets:
As per conditions laid out in the ESCB statute and treaty the ECB periodically releases official publications. The ECB also produces what is known as convergence reports. Convergence reports provide information about the activities of member states (lying outside euro) towards the attainment of convergence criteria, as defined in the Maastricht Treaty. ECB publications also include brochures and other types of information. Information on security issues of euro coins and banknotes are also provided in ECB publications. The European Central Bank also takes the help of communication channels like press releases, public speeches, press conferences and interviews.
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This glossary post was last updated: 26th March, 2020 | 4 Views.