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Market operations. The European Central Bank (ECB) is the central bank of the European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.
Price stability is the best contribution that monetary policy can make to economic growth. Our main aim at the ECB is price stability. We serve people living in the euro area by working to preserve the value of the euro. In this section you can learn about our policy strategy, the tools we use and the impact they have on your day-to-day life.
Early years (1998–2007) Wim Duisenberg, first President of the ECB. The European Central Bank is the de facto successor of the European Monetary Institute (EMI). The EMI was established at the start of the second stage of the EU's Economic and Monetary Union (EMU) to handle the transitional issues of states adopting the euro and prepare for the creation of the ECB and European System of ...
- Overview
- Managing the supply of euros
- Responding to economic crisis
bank, Europe
Also known as: ECB
Written byPeter Bondarenko
Peter Bondarenko
Former Assistant Editor, Economics, Encyclopædia Britannica.
Fact-checked byThe Editors of Encyclopaedia Britannica
The ECB is the only institution that can authorize the printing of euro banknotes. Unlike the Federal Reserve—which, as the central banking authority of the United States, uses the buying and selling of U.S. government bonds to influence the money supply—the ECB influences the supply of euros in the market by directly controlling the amount of euros available to eligible member banks. Every week, the ECB announces a specified amount of cash funds it wishes to supply and sets the lower limit for the acceptable interest rate. Eligible banks—which are euro-zone national central banks and commercial banks that have provided collateral and meet certain balance-sheet criteria—then start to bid for the ECB funds via an auction mechanism. Sometimes, instead of an auction, the ECB specifies the interest rate it is willing to accept and allows member banks to request as much funding as they wish at the allotted rate. Once the banks have received the funds, they use them to make loans to businesses and consumers in the economy. That way the ECB controls the amount of money that enters the system and the short-term interest rate that banks pay to receive the funds.
Euros, the currency of the European Union.
The ECB was instrumental in organizing a response to the euro-zone debt crisis that started in 2009 after the spillover effects of the financial crisis of 2007–08 hit Europe. The ECB lowered interest rates to ensure a steady supply of euros into the Eurosystem. Under its president, Jean-Claude Trichet, the ECB also joined the International Monetary...
Bloomberg via YahooWorld Rate Paths Set to Diverge With ECB’s First Cut
(Bloomberg) -- The European Central Bank could open the door to a weaker euro on Thursday as its first interest-rate cut of the cycle puts the region on a divergent policy path from the US.Most ...
1 day ago
- The Telegraph via Yahoo
How copying America’s money-printing scheme could save British taxpayers billions
There is no need to sell bonds into the market on big losses,” he..., moving to a Fed or ECB-style system would loosen the fiscal straitjacket on the Government and potentially free up billions ...
4 days ago
The ECB is the central bank of the European Union countries which use the euro. Our main task is to maintain price stability. We do this by making sure that inflation remains low, stable and predictable. In this way, we seek to help you plan your saving and spending. Find out more about our monetary policy.
May 31, 2022 · Key Takeaways. The European Central Bank (ECB) is the central bank of the European Union and the Eurozone currency union. The ECB coordinates Eurozone monetary policy, including setting...
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