Pablo Javier Mayordomo Signes European Union Economics

Index 1 General Characteristics and context 2 The tasks of the ECB 3 Intervention criteria 4 The corporate governance of the ECB

General characteristics and context The primary objective of the ECB’s monetary policy is to maintain price stability. This is the best contribution monetary policy can make to minimizing distortions in the allocation of resources, thus fostering economic growth at the economy’s productive potential. The legal basis for the single monetary policy is the Treaty establishing the European Community and the Statute of the European System of Central Banks (ESCB) and of the European Central Bank. The ECB was established as the core of the Eurosystem and the ESCB

Tasks a) Basic tasks definition and implementation of monetary policy for the euro area ( this is the EU countries that have adopted the euro) the conduct of foreign exchange operations the holding and management of the official foreign reserves of the euro area countries the promotion of the smooth operation of payment systems

b) Further tasks Banknotes collection of necessary statistical information supervision of credit institutions and the stability of the financial system International and European cooperation

INTERVENTION CRITERIA Independence: this means that it’s provided with clear institutional independence from political pressures to help development of the conditions that would deliver its credibility. In practice, either the ECB nor the national central banks ( NCB’s ), 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.

Transparency Transparency means that the central bank provides the general public and the markets with all relevant information on its strategy, assessments and policy decisions as well as its procedures in an open, clear and timely manner. Transparency helps the public to understand the ECB’s monetary policy

accountability: To retain legitimacy, an independent central bank must be accountable to democratic institutions and the general public for its actions in the pursuit of its mandate. The ECB has precise reporting obligations.

THE CORPORATE GOVERNANCE OF THE ECB a) the decision-making bodies General Council Governing Council the President and Vice-President the 6 members of the of the ECB Executive Board + the governors of the national central Banks the governors of the national central banks of the 15 euro area countries

Responsibilities of General Council : -ECB’s advisory functions -Collection of statistical information -Preparation of the ECB’s annual reports -Rules for standardising the accounting and reporting of operations -laying-down of the conditions of employment etc… Responsibilities of Governing Council: -ensure the performance of the tasks entrusted to the Eurosystem - formulate monetary policy for the euro area

Executive board the President, Vice-President + 4 other members All members are appointed by common accord of the Heads of State or Government of the euro area countries Responsibilities: prepare Governing Council meetings to implement monetary policy to manage the day-to-day business of the ECB exercise certain powers delegated to it by the Governing Council

b) Control layers EXTERNAL INTERNAL. External auditors and European. Internal Audit Court of Auditors. Internal control structure.. Code of Conduct and insider trading rules.Budgetary authority.Data Protection Officer. Prevention of fraud within the ECB.Internal Auditors Committee

THE END