EPRSauthor By / March 27, 2014

The European Central Bank: stable money

The European Central Bank has a growing portfolio of responsibilities, but its essential job is to keep our common currency stable. The ECB has been responsible for the monetary policy of the euro area since 1999.

© pixs:sell / Fotolia

The European Central Bank has a growing portfolio of responsibilities, but its essential job is to keep our common currency stable. The ECB has been responsible for the monetary policy of the euro area since 1999. On the 1st of January of that year, 11 national central banks transferred this power to the ECB. In the following years more countries joined them: Greece in 2001, Slovenia in 2007, Cyprus and Malta in 2008, Slovakia in 2009, Estonia in 2011 and Latvia in 2014.

The legal basis for EU 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 European System of Central Banks comprises all national central banks of all the EU member states and the ECB, not to be confused with the co-existing Eurosystem, which includes the 18 countries of the euro area and the ECB.


Monetary policy / ECB, updated: 5 February 2014.
These recently updated slides and the corresponding notes cover topics from price stability as an objective of the Eurosystem through monetary policy strategy to the ECB’s response to the crisis.

The Role of the European Central Bank / Alessi, Christopher; Council on Foreign Relations, Backgrounder, September 2012.
To introduce the European Central Bank, this page offers a historical overview of the ECB and describes its mandate and function. This is followed by a description of the bank’s response to the crisis and the evolving role of the institution.

The European Central Bank, the Eurosystem, the European System of Central Banks / ECB, 2011, 34 p.
This document by the ECB gives a detailed introduction to the development of the European Monetary Union, describes the structure and tasks of the ECB, and sheds light on its monetary policy.

(New) tasks of the ECB

ECB interest rates
© pixs:sell / Fotolia

European Central Bank accountability: how the monetary dialogue could be improved / Claeys, Grégory; Hallerberg, Mark; Tschekassin, Olga; Bruegel Policy Contribution, iss. 2014/04, 3 March 2014.
Monetary dialogue takes place during a quarterly meeting between the president of the ECB and the European Parliament Economic and Monetary Affairs committee. The authors describe the accountability practices, comparing and assessing them and make recommendations.

The European Central Bank as Lender of Last Resort in the Government Bond Markets / De Grauwe, Paul; CESifo Economic Studies 59 (3), 2013, pp. 520-535
In this article the author argues that the central bank should be lender of the last resort in government bond markets as well as the banking system to prevent countries from suffering from a self-fulfilling crisis of high interest rates, recession, budgetary problems and solvency issues. De Grauwe evaluates this new role of the ECB and discusses arguments brought up by those who are against this role. 

The various roles of the ECB in the new EMU architecture / Darvas, Zsolt et al.; DG Internal Policies, Policy Department A: Economic and Scientific Policy; Monetary Dialogue, IP/A/ECON/NT/2013-03, 23 September 2013, 100 p.
Papers in this collection study the responsibilities of the ECB and the place the ECB occupies in the structure of the EMU.

Limits and opportunities for the ECB in the multi-tier governance / Repasi, René; EP DG for Internal Policies Department C: Citizens’ Rights and Constitutional Affairs, 2012, 24 p.
Under the unique system of governance of the European System of Central Banks, tasks are shared between the national and the EU level and decentralisation is a crucial characteristic. While the EU level determines the extent to which national bodies are competent, the decision-making body itself is made up of members representing the national level.

Activities during the crisis

The German Constitutional Court’s ruling on the ECB’s bond buying decision / Poptcheva, Eva-Maria; European Parliament Research Service Briefing, 11 February 2014
Germany’s Federal Constitutional Court considered the legality of the ECB’s purchase of government bonds on secondary markets through the Outright Monetary Transactions programme.

The European Central Bank’s response to the crisis / Malo de Molina, José Luis, Banco de España, Economic Bulletin, July-August 2013, pp. 37-45
This article addresses the challenges for the ECB at the beginning of the crisis, describes the uniqueness of the institution and discusses the liquidity that the ECB has injected into the system since the start of the crisis. A section is devoted to “monetary expansion and the zero interest rate bound”, another to “Fragmentation of the euro area and breakdown of the transmission mechanism of the single monetary policy”. The banking union is briefly mentioned.

The eurozone crisis: action taken by the European Central Bank (ECB) / Thompson, Gavin, UK Parliament, Commons Library Standard Note SN06448; October 2012, 14 p.
This note describes measures taken by the ECB during the crisis.

European Central Bank (un)conventional policy measures / Jong, Willemijn de; European Parliament Library Briefing, October 2012

Outsider views

Unpalatable choices / The Economist, 4 January 2014

Is the European Central Bank Failing Its Price Stability Mandate? / Ubide, Angel; Peterson Institute for International Economics (PIIE), Policy Brief 14-5, February 2014, 20 p.

ECB: Independence at risk? / Weber, Christoph S.; Forschner, Benedikt; In: Intereconomics, vol. 49, no. 1, 2014, pp.45-50


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