The European Central Bank (ECB) in Frankfurt am Main, Germany is the central bank of the eurozone, in charge of monetary policy since 1 January 1999 the European Central Bank (ECB) has been responsible for conducting monetary policy for the euro area - the 12 countries that use the new euro currency

Institutional status

Although performing a policy function under the EC Treaty the ECB is not a Community institution in the proper meaning of the term. It is not referred to in Article 7 of the EC Treaty which establishes the five institutions of the Community: the European Parliament, the Council, the European Commission, the Court of Justice and the Court of Auditors. These institutions are entrusted with the broad mandate of carrying out the tasks of the Community within the limits of the powers conferred upon them by the Treaty. Instead,

Organization

The ECB is governed by a board of directors, headed by a President, and a board of governors, consisting of the members of the board of directors and representatives of the other central banks in the ESCB. The legal basis for the single monetary policy is the Treaty establishing the European Community and the Statute of the European System of Central Banks and of the European Central Bank. The Statute established both the ECB and the European System of Central Banks (ESCB) as from 1 June 1998. The ECB was established as the core of the Eurosystem and the ESCB. The ECB and the national central banks together perform the tasks they have been entrusted with. The ECB has legal personality under public international law. The ESCB comprises the ECB and the national central banks (NCBs) of all EU Member States (Article 107.1 of the Treaty) whether they have adopted the euro or not. The Eurosystem comprises the ECB and the NCBs of those countries that have adopted the euro. The Eurosystem and the ESCB will co-exist as long as there are EU Member States outside the euro area.

Goals and instruments

The main goal of the ECB is to focus on price stability. Therefore, it is designated by mandate to keep a low inflation profile for the eurozone. Currently this must not exceed more than 2% in the eurozone. In order to keep prices stable, the ECB may cut or raise interest rates. We at the European Central Bank are committed to performing all central bank tasks entrusted to us effectively. In so doing, we strive for the highest level of integrity, competence, efficiency and transparency.

The ECB`s role in the Eurosystem

Under Article 9.2 of the Statute of the ESCB, the ECB ensures that the tasks of the Eurosystem are carried out either by its own activities or through the NCBs. In line with this statutory role, the ECB exercises several specific functions. In particular, it:

• is the decision-making centre of the ESCB and the Eurosystem;

• ensures consistent implementation of ECB policies;

• exercises regulatory powers and the right to impose sanctions;

• initiates Community legislation and advises the Community institutions and EU Member States on draft legislation;

• monitors compliance with the provisions of Articles 101 and 102 of the Treaty;

• carries out those tasks of the former EMI which still need to be performed in Stage Three of EMU because not all EU countries participate in EMU.

The decision-making bodies of the ECB

The Eurosystem and the ESCB are governed by the two main decision-making bodies of the ECB: the Governing Council and the Executive Board (Article 9.3 of the Statute). A third decision-making body, the General Council, will exist as long as some EU Member States have not adopted the euro (Article 45 of the Statute). The functioning of these decision-making bodies is governed by the Treaty, the Statute of the ESCB and the relevant Rules of Procedure.

The decision-making bodies of the ECB have a double function: i) to govern the ECB itself, and ii) to govern the Eurosystem and the ESCB. This section focuses on the latter function; Chapter 6 looks at how the decision-making bodies govern the ECB.

The ECB’s decision-making bodies are specifically tailored to the requirements of monetary policy decision-making in a single currency area. The two-layer approach with the Governing Council and the Executive Board, both of which are endowed with genuine decision-making powers within their respective fields of competence, ensures the ECB’s capacity to respond promptly to market developments.

Governing Council

The Governing Council is the main decision-making body of the ECB and is entitled to take the most important and strategically significant decisions for the Eurosystem. It comprises the six members of the Executive Board and the governors of the NCBs of the Member States that have adopted the euro (currently 12 governors).

Executive Board

The Executive Board is the operational decision-making body of the ECB. It is responsible for all the decisions that have to be taken on a day-to-day basis. It has six members – the President, the Vice-President and four other members. Appointments are made by common accord of the governments of the euro area countries, after consulting the European Parliament and the Governing Council of the ECB.

General Council

The General Council ensures an institutional link between the Eurosystem and the NCBs of the non-euro area Member States. Its existence, composition and responsibilities are a consequence of the different levels of integration in EMU (see Section 1.2.2). As such, the General Council will be dissolved when all EU Member States have adopted the euro as their currency.

The status of the General Council as a decision-making body of the ESCB underlines the importance which the authors of the Treaty attached to preserving links and cooperation with the NCBs of EU Member States that have not yet adopted the euro. It currently has 27 members.

Web page: http://www.ecb.int 

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