| EU/EMU ACCESSION |
9 May 2012
| Institutional structure and role of central banks in EU |
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European Central Bank, European System of Central Banks and the Eurosystem
The
European Central Bank (ECB) is an independent, supranational monetary
institution, representing the core of the ESCB and the Eurosystem. The (ECB) is
headquartered in Frankfurt am Main, Germany.
The primary objective of the ECB is to maintain price stability, and without
prejudice to its primary objective, to support the general economic policies of
the EU. All other objectives are of secondary importance and must not be in
conflict with its primary objective.
The ECB tasks are the following: 1) defining Eurosystem policies; 2) deciding,
co-ordinating and monitoring the monetary policy operations; 3) adopting legal
acts (primarily guidelines and instructions, to ensure that decentralised
operations are carried out consistently by national central banks; 4) planning, co-ordinating
and monitoring the issuance of euro banknotes; 5) interventions on the foreign
exchange markets; 6) international and European co-operation; 7) monitoring
financial risks and 8) fulfilling advisory functions to Community institutions
and national authorities.
The ECB's decision-making bodies are the General Council, the Governing Council
and the Executive Board. These bodies also manage the ESCB and the Eurosystem.
| Independence of the ECB and national central banks
Both the ECB and national central banks are independent in performing their tasks. Functional independence implies that ECB, in order to meet its primary objective of price stability, has at its disposal all instruments and competencies necessary for the conduct of an efficient monetary policy and is authorised to decide autonomously how and when to use them. Institutional independence implies that neither the ECB nor the national central banks (NCBs), nor any member of their decision-making bodies, are allowed to seek or take instructions from European Community institutions or bodies, from any government of an EU Member State or from any other body. At the same time, Community institutions, governments and bodies are forbidden to give instructions or, in any other way, to influence the ECB's decision-making bodies or the national central banks. Personal independence implies a minimum term of office for NCB governors of five years (with a possiblity of re-appointment) and a non-renewable term of office of eight years for members of the Executive Board of the ECB. In addition, the members of the decision-making bodies cannot be removed from office, except in the cases provided for by the ESCB and ECB Statute. Financial independence implies that the ECB and national central banks must be capable of providing, independently, sufficient financial resources for fulfilling its tasks. The ECB has its own capital, subscribed and paid up by the NCBs and it also has its own budget, kept separate from that of other EU institutions. The national central banks also must have sufficient financial resources for carrying out their tasks, both their own and those related to the ESCB.
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The General Council of the ECB is the ECB's decision-making body, consisting of the ECB's President and Vice-President and the governors of the national central banks of all 27 EU Member States. It can be regarded as a transitional body and it will be dissolved once all EU Member States have introduced the euro (since at that point, the composition of the ECB's General Council will be identical to the composition of the ECB's Governing Council).
The Governing Council of the ECB is the main decision-making body of the Eurosystem that adopts monetary policy decisions for the euro area, and it consists of the Executive Board members (President and Vice-President of the ESB and four other members) and the governors of the national central banks of the 16 EU Member States that have introduced the euro.
The Executive Board of the ECB is an operational decision-making body of the ECB and the Eurosystem, which manages day-to-day business. It consists of the ECB's President, Vice-President and four other members (a total of 6 members).
As regards the organisational structure, the ECB consists of 17 organisational units, among which there are 10 main and 7 ancillary business areas. The ECB's employees come from all 27 EU Member States and their total number is approximately 1 600 (according to data for 2011).
European System of Central Banks (ESCB) is a group of central banks,
comprising the European Central Bank (ECB) and national central banks (NCBs) of
all EU Member States.
Eurosystem is a group of central banks, comprising the European Central Bank and national central banks of the EU Member States that have introduced euro.
National central banks as a part of the ESCB and the Eurosystem
National central banks (NCB) have an important role in implementing the
activities of the ESCB and the Eurosystem. They carry out their tasks in
accordance with the rules, instructions and guidelines adopted by the ECB's
decision-making bodies. The decisions are adopted at the ECB and are implemented
in a decentralised manner, i.e. through national central banks.
The NCBs' tasks are the following: 1) execution of monetary policy operations (as
ECB's agents); 2) operational management of the ECB's foreign reserves; 3)
management of their own foreign reserves; 4) operation and supervision of
payment systems; 5) joint issuance of banknotes together with the ECB; 6)
collection and processing of statistics, and 7) providing assistance to the ECB
in translating and issuing the publications and preparing economic analyses.