Unit 5. Other institutions and organisational bodies of the European Union

Step 1. European Central Bank. Structure and main competencies

The European Central Bank (ECB) is the guardian of price stability in the Euro area. Established on 1 June 1998, it is one of the world’s youngest central banks. However, it has inherited the credibility and expertise of all the Eurozone’s national central banks, which together with the ECB implement the stability-oriented monetary policy for the Euro area.

(Source: https://www.ecb.europa.eu/pub/pdf/infobr/ecbbren.pdf )

In this regard the main tasks of the European Central Bank include:

• Conducting the EU’s monetary policy – as the central bank for the Eurozone the ECB is responsible for issuing the Euro currency and deciding on the Eurozone’s monetary policy.
• Maintaining the financial stability of the Eurozone system – according to Article 282 of the Treaty of Functioning of the European Union the primary objective of the ECB is to maintain price stability within the Eurozone and support the general economic policies of the Union. This includes setting interest rates at which commercial banks can borrow and deposit money at the ECB.
• Conducting foreign exchange operations – to ensure liquidity and stability of the Eurozone, the ECB may buy or sell foreign reserves. The reserves are in the hands of the Eurozone countries, but it is the ECB that manages these in close cooperation with national central banks.

(Source: https://www.ecb.europa.eu/ecb/tasks/html/index.en.html )

Now watch this introductory video on the Euro and the European Central Bank.