European Central Bank
From Wikipedia, the free encyclopedia.
The European Central Bank (ECB) in Frankfurt am Main is the central bank of the European Union, in charge of monetary policy for the 12 countries that use the new euro currency.
The ECB is known by different initials in different languages:
- EZB: Europaeische Zentralbank
- BCE: Banque Centrale Europeenne, Banco Central Europeo, Banca Centrale Europea, Banco Central Europeu
- ECB: European Central Bank, Europæiske Centralbank, Europese Centrale Bank, Europeiska Centralbanken
- ΕΚΤ: Ευρωπαικη Κεντρικη Τραπεζα
- EKP: Euroopan Keskuspankki
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2 European Central Bank: Organization 3 European System of Central Banks (ESCB) 4 Criticisms 5 External link |
Goals and instruments
The main goal of the ECB is to keep inflation stable. Currently (2002), the target was to keep inflation below 2% in the eurozone. For keeping prices stable, the ECB may cut or raise rates.
European Central Bank: Organization
The ECB is governed by a board of directors, headed by a President, and a board of governors, consisting of the members of the board of directors and representatives of the other central banks in the ESCB.
The organization of the ECB is modelled on that of the German Bundesbank and Landesbanks.
European System of Central Banks (ESCB)
The European System of Central Banks (ESCB) is comprised of the European Central Bank (ECB), and the national central banks of the 25 member-states of the European Union.
Criticisms
There are two main lines of criticism against the ECB.
First, critics focus on the independence of the institution. The ECB was established as a central bank designed to operate independently of political intervention. Its objectives and powers were politically established, but the decisions as to how those powers should best be used to achieve the objectives was left in the hands of the ECB itself.
Some see this independence as undemocratic and therefore criticise the decision making process and objectives of the ECB, asserting that the economic goals of the ECB are hard-wired to be secretive and independent from most citizens of the European Union, and to be isolated from feedback mechanisms regarding the influence of the money economy on human rights violations or the natural environment.
The ECB does not publish or invite comments on its proposed decisions. After publication of its actions and decisions, ECB web pages do not solicit direct comments by citizens.
European citizens may influence the policy decisions of the ECB very indirectly via the formal, national democratic electoral process. However, even if changes in economic assumptions are expressed via formal democratic means, elected politicians have very little power to transmit these changes to the ECB.
Second, critics assert that the objectives given to and pursued by the ECB are inappropriate. The ECB sets interest rates with a view to controlling inflation, but does not take into account objectives such as employment and exchange rate stability. Some therefore view this as too narrow a set of objectives, leading to interest rate decisions that are inappropriate given the wider needs of the economy.
External link