European Central Bank

European Central Bank

INTRODUCTION

The ECB is the central bank of the European Union. In this capacity, this bank is responsible for overseeing the banking system in the European Union, the collection of statistical data required for the conduct of monetary policy, the operation of payment systems, such as a system Target. This bank created a platform for settlement of securities transactions. Moreover, ECB is responsible for the prevention of Counterfeit banknotes, cooperation with other authorities in the field of regulation of financial markets (Högermann, 2012).

In carrying out these tasks, the ECB uses the European System of Central Banks, which groups the ECB and the 27 national central banks of the European Union. In a narrower sense, the ECB is a bank that issues a common currency, the euro, and conducts monetary policy in the euro area, including through the establishment of the basic bank interest rates and open market operations. In this respect, the ECB is backed by 17 central banks of the EU countries that have adopted the euro - they form a group of closely cooperating within the ESCB, known as the Euro-system (Brand, 2006).

The issue is outside the competence of the ECB, although directly affecting the conditions under which it may keep monetary policy, fiscal discipline euro zone countries. They are required in this area to comply with the Stability and Growth Pact, which, as practice shows in recent years, sometimes disturbed by some EU member states. In order to implement the monetary policy of the ECB and the national central banks of the instruments used, which are divided into reserve requirements, open market operations, and loan and deposit at the end of the day (Brand, 2006).

DISCUSSION

ECB along with national Federal bank established the European system of Central Bank (ESCB). They have a uniform currency of Euro and these banks carry out the development of monitory policy of Union (Högermann, 2012).

When and Why ECB Was Established

The European Central Bank (ECB) was established on June 1, 1988 to manage the euro. In preparation for the third phase of the Economic and Financial Education Union, i.e. issuance of a single European currency Jan. 1, 1999, the central bank was responsible for conducting the financial policy of the EU. The ECB is an independent legal entity, which manages the activities of its individual members, such as the German Bundes bank, the Bank of France and Italian banks. Relevant authorities of ECB i.e. Governors of the European System of Central Banks, have a responsibility to control the circulation of money, operations of foreign exchange, the maintenance and accumulation of foreign exchange reserves of the EU's Member States and in the operation of the European settlement of a financial institution (Brand, 2006).

Objectives of ECB

As a central bank is not an ordinary bank, but leads the monetary policy of a country, it has two major goals. The first goal, usually the main goal, of ECB is price stability. It is important to avoid large fluctuations in the value of ...