ECB European Central Bank

DEFINITION of ECB European Central Bank

ECB the central bank for the eurozone. It is a new institution, having been formed in Germany in 1998.

WHAT IT IS IN ESSENCE

The European Central Bank (ECB) is one of the seven institutions of the EU and the central bank for the entire Eurozone. It is one of the most critical central banks in the world. For example,  it supervises over 120 central banks and commercial banks in the member states.

Here is a link to the European Central Bank’s website -> https://www.ecb.europa.eu

The bank works with the central banks in each EU state to formulate a monetary policy that helps maintain stable prices and strengthen the Euro.

There are four decision-making bodies of the ECB. They have the mandate to undertake the objectives of the institution. These bodies include the Governing Council, Executive Board, General Council, and the Supervisory Board.

The Governing Council

The Governing Council comprises six members of the Executive Board and Governors of the national central banks of the 19 Euro area member states. The Council members meet twice a month at the institution’s offices in Germany.  Moreover, the minutes of their meetings are required to be published prior to the next meeting.

One of the primary functions of this body is the formulation of monetary policy for the Euro area. In this regards, they make decisions on monetary objectives, interest rates and the supply of reserves in the Eurosystem.

Certainly, every six weeks, the President and Vice-President of the ECB must chair a press conference. Above all, to explain in detail their monetary policy decisions. The Governing Council also takes necessary decisions that ensure the performance of the functions of ECB and the Eurosystem.

HOW TO USE

The ECB’s policy decisions are hugely important to traders. As they have a major impact on the value of the euro and European companies.