European Central Bank Author: Irina Violina

3979 words - 16 pages

CONTENTSIntroduction.................................................................31. Composition of the ECB................................................42. Independence of the ECB..............................................53. Capital of the ECB........................................................64. Monetary policy of the ECB.............................................65. Price-stability..............................................................136. Managing the Euro currency..........................................137. TARGET...................................................................148. The impact of the ECB on the globalisation.......................15Conclusion.....................................................................16Bibliography....................................................................17Annex 1..........................................................................19INTRODUCTIONIn order to form a more perfect Single Market, provide a high level of employment, promote convergence of economic performance, and secure the sustainable and non-inflationary growth, 11 (now they are 12) European countries have established a European Central Bank (ECB).The ECB was founded on the 1st June 1998 and it derived from the European Monetary Institute (EMI), which played the main role in preparing for the launch of the Euro. The ECB and 12 central banks of the countries that adopted the Euro make the Eu-rosystem. It is headquartered in Frankfurt am Main.First of all, in our project we will discuss the main bodies of the ECB that participate in the decision-making process and as well conduct other tasks. Secondly, we will discuss the level of independence of the ECB and the composition of its capital.Then we will pass to the discussion of the main task of the ECB, which is to conduct the monetary policy of the Euro zone. In this context we will analyse monetary instruments and tools the ECB is using to pursue its strategies. We will also talk about how the ECB manages the Euro currency, the essence of its primary goal of price-stability, and the role of the TARGET payment system.The final part of our project will be dedicated to the impact of the ECB policies in the context of globalisation.1. COMPOSITION OF THE ECB1. 1 The Governing CouncilThe highest decision-making body of the ECB is the Governing Council. It consists of the six members of the Executive Board and the 12 governors of the national central banks of the Euro area. President of the ECB chairs both the Governing Council and the Executive Board.The primary mission of the Governing Council is to define the monetary policy of the Euro zone and to fix the interest rates at which commercial banks borrow funds from their central bank.Thus the Governing Council indirectly influences interest rates throughout the Euro area economy, including the rates that commercial banks charge their...

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