European System of Central Banks
Encyclopedia
The European System of Central Banks (ESCB) is composed of the European Central Bank
(ECB) and the national central bank
s (NCBs) of all 27 European Union
(EU) Member States.
(which excludes all the NCBs which have not adopted the euro) became the institution in charge of those tasks which in principle had to be managed by the ESCB. In accordance with the treaty establishing the European Community and the Statute of the European System of Central Banks and of the European Central Bank
, the primary objective of the Eurosystem is to maintain price stability
(in other words control inflation). Without prejudice to this objective, the Eurosystem shall support the general economic policies in the Community and act in accordance with the principles of an open market economy.
The basic tasks to be carried out by the Eurosystem are:
In addition, the Eurosystem contributes to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system
. The ECB has an advisory role vis-à-vis the Community and national authorities on matters which fall within its field of competence, particularly where Community or national legislation is concerned. Finally, in order to undertake the tasks of the ESCB, the ECB, assisted by the NCBs, has the task of collecting the necessary statistical information either from the competent national authorities or directly from economic agents.
is centralized through the decision-making bodies of the ECB, namely the Governing Council and the Executive Board. As long as there are Member States which have not adopted the euro, a third decision-making body, the General Council, shall also exist. The NCBs of the Member States that do not participate in the euro area
are members of the ESCB with a special status while they are allowed to conduct their respective national monetary policies, they do not take part in the decision-making with regard to the single monetary policy for the euro area and the implementation of such decisions.
The Governing Council comprises all the members of the Executive Board and the governors of the NCBs of the Member States without a derogation, i.e. those countries which have adopted the euro. The main responsibilities of the Governing Council are:
The Executive Board comprises the President, the Vice-President and four other members, all chosen from among persons of recognized standing and professional experience in monetary or banking matters. They are appointed by common accord of the governments of the Member States at the level of the Heads of State or Government, on a recommendation from the Council of Ministers
after it has consulted the European Parliament
and the Governing Council of the ECB (i.e. the Council of the European Monetary Institute
(EMI) for the first appointments). The main responsibilities of the Executive Board are:
The General Council comprises the President and the Vice-President and the governors of the NCBs of all 27 Member States. The General Council performs the tasks which the ECB took over from the EMI and which, owing to the derogation of one or more Member States, still have to be performed in Stage Three of Economic and Monetary Union
(EMU). The General Council also contributes to:
The Eurosystem
is independent. When performing Eurosystem-related tasks, neither the ECB, nor an NCB, nor any member of their decision-making bodies may seek or take instructions from any external body. The Community institutions and bodies and the governments of the Member States may not seek to influence the members of the decision-making bodies of the ECB or of the NCBs in the performance of their tasks. The Statute of the ESCB makes provision for the following measures to ensure security of tenure for NCB governors and members of the Executive Board:
The ECB's capital amounts to €5 billion. The NCBs are the sole subscribers to and holders of the capital of the ECB. The subscription of capital is based on a key established on the basis of the EU Member States' respective shares in the GDP and population of the Community. It has, thus far, been paid up to an amount just over €4 billion. The euro area NCBs have paid up their respective subscriptions to the ECB's capital in full. The NCBs of the non-participating countries have to pay up 7% of their respective subscriptions to the ECB's capital as a contribution to the operational costs of the ECB. As a result, the ECB was endowed with an initial capital of just under €4 billion.
In addition, the NCBs of the Member States participating in the euro area have provided the ECB with foreign reserve assets of up to an amount equivalent to around €40 billion. The contributions of each NCB were fixed in proportion to its share in the ECB's subscribed capital, while in return each NCB was credited by the ECB with a claim in euro equivalent to its contribution. 15% of the contributions were made in gold, and the remaining 85% in US dollars and Japanese yen.
(those states that have adopted the euro, plus the ECB) which sets eurozone monetary policy. The second section contains those banks which maintain separate currencies.
European Central Bank
The European Central Bank is the institution of the European Union that administers the monetary policy of the 17 EU Eurozone member states. It is thus one of the world's most important central banks. The bank was established by the Treaty of Amsterdam in 1998, and is headquartered in Frankfurt,...
(ECB) and the national central bank
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
s (NCBs) of all 27 European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
(EU) Member States.
Functions
Since not all the EU states have joined the euro, the ESCB could not be used as the monetary authority of the eurozone. For this reason the EurosystemEurosystem
The Eurosystem is the monetary authority of the Eurozone, the collective of European Union member states that have adopted the euro as their sole official currency...
(which excludes all the NCBs which have not adopted the euro) became the institution in charge of those tasks which in principle had to be managed by the ESCB. In accordance with the treaty establishing the European Community and the Statute of the European System of Central Banks and of the European Central Bank
European Central Bank
The European Central Bank is the institution of the European Union that administers the monetary policy of the 17 EU Eurozone member states. It is thus one of the world's most important central banks. The bank was established by the Treaty of Amsterdam in 1998, and is headquartered in Frankfurt,...
, the primary objective of the Eurosystem is to maintain price stability
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
(in other words control inflation). Without prejudice to this objective, the Eurosystem shall support the general economic policies in the Community and act in accordance with the principles of an open market economy.
The basic tasks to be carried out by the Eurosystem are:
- to define and implement the monetary policyMonetary policyMonetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
of the eurozone; - to conduct foreign exchangeForeign exchange marketThe foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...
operations; - to hold and manage the official foreign reservesForeign exchange reservesForeign-exchange reserves in a strict sense are 'only' the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, Special Drawing Rights and International Monetary Fund reserve positions...
of the Member States; and - to promote the smooth operation of payment systems.
In addition, the Eurosystem contributes to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system
Global financial system
The global financial system is the financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level...
. The ECB has an advisory role vis-à-vis the Community and national authorities on matters which fall within its field of competence, particularly where Community or national legislation is concerned. Finally, in order to undertake the tasks of the ESCB, the ECB, assisted by the NCBs, has the task of collecting the necessary statistical information either from the competent national authorities or directly from economic agents.
Organization
The process of decision-making in the EurosystemEurosystem
The Eurosystem is the monetary authority of the Eurozone, the collective of European Union member states that have adopted the euro as their sole official currency...
is centralized through the decision-making bodies of the ECB, namely the Governing Council and the Executive Board. As long as there are Member States which have not adopted the euro, a third decision-making body, the General Council, shall also exist. The NCBs of the Member States that do not participate in the euro area
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
are members of the ESCB with a special status while they are allowed to conduct their respective national monetary policies, they do not take part in the decision-making with regard to the single monetary policy for the euro area and the implementation of such decisions.
The Governing Council comprises all the members of the Executive Board and the governors of the NCBs of the Member States without a derogation, i.e. those countries which have adopted the euro. The main responsibilities of the Governing Council are:
- to adopt the guidelines and take the decisions necessary to ensure the performance of the tasks entrusted to the Eurosystem;
- to formulate the monetary policy of the euro area, including, as appropriate, decisions relating to intermediate monetary objectives, key interest rates and the supply of reserves in the Eurosystem, and
- to establish the necessary guidelines for their implementation.
The Executive Board comprises the President, the Vice-President and four other members, all chosen from among persons of recognized standing and professional experience in monetary or banking matters. They are appointed by common accord of the governments of the Member States at the level of the Heads of State or Government, on a recommendation from the Council of Ministers
Council of the European Union
The Council of the European Union is the institution in the legislature of the European Union representing the executives of member states, the other legislative body being the European Parliament. The Council is composed of twenty-seven national ministers...
after it has consulted the European Parliament
European Parliament
The European Parliament is the directly elected parliamentary institution of the European Union . Together with the Council of the European Union and the Commission, it exercises the legislative function of the EU and it has been described as one of the most powerful legislatures in the world...
and the Governing Council of the ECB (i.e. the Council of the European Monetary Institute
European Monetary Institute
The European Monetary Institute was the forerunner of the European Central Bank , operating between 1994 and 1997.-History:The EMI was created 1 January 1994 to oversee the second stage in the creation of monetary union. The EMI itself took over from the earlier European Monetary Cooperation Fund...
(EMI) for the first appointments). The main responsibilities of the Executive Board are:
- to implement monetary policy in accordance with the guidelines and decisions laid down by the Governing Council of the ECB and, in doing so, to give the necessary instructions to the NCBs; and
- to execute those powers which have been delegated to it by the Governing Council of the ECB.
The General Council comprises the President and the Vice-President and the governors of the NCBs of all 27 Member States. The General Council performs the tasks which the ECB took over from the EMI and which, owing to the derogation of one or more Member States, still have to be performed in Stage Three of Economic and Monetary Union
Economic and Monetary Union of the European Union
The Economic and Monetary Union is an umbrella term for the group of policies aimed at converging the economies of members of the European Union in three stages so as to allow them to adopt a single currency, the euro. As such, it is largely synonymous with the eurozone.All member states of the...
(EMU). The General Council also contributes to:
- the ECB's advisory functions;
- the collection of statistical information;
- the preparation of the ECB's annual reports;
- the establishment of the necessary rules for standardising the accounting and reporting of operations undertaken by the NCBs;
- the taking of measures relating to the establishment of the key for the ECB's capital subscription other than those already laid down in the Treaty;
- the laying-down of the conditions of employment of the members of staff of the ECB; and
- the necessary preparations for irrevocably fixing the exchange rates of the currencies of the Member States with a derogation against the euro.
The Eurosystem
Eurosystem
The Eurosystem is the monetary authority of the Eurozone, the collective of European Union member states that have adopted the euro as their sole official currency...
is independent. When performing Eurosystem-related tasks, neither the ECB, nor an NCB, nor any member of their decision-making bodies may seek or take instructions from any external body. The Community institutions and bodies and the governments of the Member States may not seek to influence the members of the decision-making bodies of the ECB or of the NCBs in the performance of their tasks. The Statute of the ESCB makes provision for the following measures to ensure security of tenure for NCB governors and members of the Executive Board:
- a minimum renewable term of office for national central bank governors of five years;
- a minimum non-renewable term of office for members of the Executive Board of eight years (a system of staggered appointments was used for the first Executive Board for members other than the President in order to ensure continuity); and
- removal from office is only possible in the event of incapacity or serious misconduct; in this respect the Court of Justice of the European Communities is competent to settle any disputes.
The ECB's capital amounts to €5 billion. The NCBs are the sole subscribers to and holders of the capital of the ECB. The subscription of capital is based on a key established on the basis of the EU Member States' respective shares in the GDP and population of the Community. It has, thus far, been paid up to an amount just over €4 billion. The euro area NCBs have paid up their respective subscriptions to the ECB's capital in full. The NCBs of the non-participating countries have to pay up 7% of their respective subscriptions to the ECB's capital as a contribution to the operational costs of the ECB. As a result, the ECB was endowed with an initial capital of just under €4 billion.
In addition, the NCBs of the Member States participating in the euro area have provided the ECB with foreign reserve assets of up to an amount equivalent to around €40 billion. The contributions of each NCB were fixed in proportion to its share in the ECB's subscribed capital, while in return each NCB was credited by the ECB with a claim in euro equivalent to its contribution. 15% of the contributions were made in gold, and the remaining 85% in US dollars and Japanese yen.
Member banks
The ESCB is composed of the following 27 NCBs and the ECB. The first section of this list comprises those ESCB banks that form the EurosystemEurosystem
The Eurosystem is the monetary authority of the Eurozone, the collective of European Union member states that have adopted the euro as their sole official currency...
(those states that have adopted the euro, plus the ECB) which sets eurozone monetary policy. The second section contains those banks which maintain separate currencies.
| State | Bank | Governor | Website |
|---|---|---|---|
 European Union EurozoneEurozone The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender... |
European Central Bank European Central Bank The European Central Bank is the institution of the European Union that administers the monetary policy of the 17 EU Eurozone member states. It is thus one of the world's most important central banks. The bank was established by the Treaty of Amsterdam in 1998, and is headquartered in Frankfurt,... |
Mario Draghi Mario Draghi Mario Draghi is an Italian banker and economist who succeeded Jean-Claude Trichet as President of the European Central Bank on 1 November 2011... |
http://www.ecb.int/ |
 Austria |
Österreichische Nationalbank | Ewald Nowotny Ewald Nowotny Ewald Nowotny is an Austrian economist and social democratic politician and currently president of the National Bank of Austria and member of the European Central Bank ’s governing council.... |
http://www.oenb.co.at |
 Belgium |
Nationale Bank van België/Banque nationale de Belgique National Bank of Belgium The National Bank of Belgium has been the central bank of Belgium since 1850... |
Luc Coene Luc Coene Luc Coene is a Belgian economist and Governor of the National Bank of Belgium .-Education:Luc Coene graduated in economics at Ghent University and obtained a postgraduate diploma in European economic integration at the College of Europe .-Career:He started his career at the NBB in July 1973,... |
http://www.nbb.be |
 Cyprus |
Kεντρική Τράπεζα της Κύπρου/Central Bank of Cyprus/Kıbrıs Merkez Bankasi | Athanasios Orphanides Athanasios Orphanides Athanasios Orphanides is a Cypriot economist who has been the Governor of the Central Bank of Cyprus since 3 May 2007 and a member of the Governing Council of the European Central Bank since 1 January 2008.Prior to his appointment as Governor, he served as Senior Adviser at the Board of... |
http://www.centralbank.gov.cy |
 Estonia |
Eesti Pank Bank of Estonia The Bank of Estonia , is the central bank of Estonia, which is a member of the European Union organisation and the European System of Central Banks... |
Andres Lipstok Andres Lipstok Andres Lipstok is the current chairman of the Bank of Estonia... |
http://www.bankofestonia.info |
 Finland |
Suomen Pankki/Finlands Bank Bank of Finland The Bank of Finland is the central bank of Finland. It is the fourth oldest central bank in the world.-History:The Bank of Finland was established on 1 March in 1812 in the city of Turku by Alexander I of Russia. In 1819 it was relocated to Helsinki... |
Erkki Liikanen Erkki Liikanen Erkki Liikanen is a Finnish social democratic politician and the Governor of the Bank of Finland.-Career:... |
http://www.bof.fi |
 Early Modern France |
Banque de France Banque de France The Banque de France is the central bank of France; it is linked to the European Central Bank . Its main charge is to implement the interest rate policy of the European System of Central Banks... |
Christian Noyer Christian Noyer Christian Noyer is a French higher civil servant, current governor of the Bank of France , and former vice-president of the Executive Board of the European Central Bank . In March 2010 Noyer became Chairman of the Bank for International Settlements.-References: *... |
http://www.banque-france.fr |
 Germany |
Deutsche Bundesbank Deutsche Bundesbank The Deutsche Bundesbank is the central bank of the Federal Republic of Germany and as such part of the European System of Central Banks . Due to its strength and former size, the Bundesbank is the most influential member of the ESCB. Both the Deutsche Bundesbank and the European Central Bank are... |
Jens Weidmann Jens Weidmann Jens Weidmann is a German economist and president of the Deutsche Bundesbank. Before assuming the top Bundesbank position in 2011, from February 2006, he served as Head of Division IV in the Federal Chancellery... |
http://www.bundesbank.de |
 Greece |
Τράπεζα της Ελλάδος (Trapeza tis Ellados) Bank of Greece The Bank of Greece is the nationalcentral bank of Greece, located in Athens on Panepistimiou Street, with several branches across the country. Founded in 1927... |
George Provopoulos George Provopoulos George Provopoulos is the current Governor of the Bank of Greece, and European Central Bank Governing Council member... |
http://www.bankofgreece.gr |
 Republic of Ireland |
Banc Ceannais na hÉireann / Central Bank of Ireland Central Bank and Financial Services Authority of Ireland The Central Bank of Ireland is the financial services regulator of Ireland and historically the central bank. The bank was the issuer of Irish pound banknotes and coinage until the introduction of the euro currency, and now provides this service for the European Central Bank.The bank was founded... |
Patrick Honohan Patrick Honohan Patrick Honohan is an economist who was appointed Governor of the Central Bank of Ireland in September 2009. Among his main tasks are the challenge of helping to resolve the 2008–2010 Irish banking crisis. He is married with one son.-Education:Honohan graduated with a B.A... |
http://www.centralbank.ie |
 Italy |
Banca d'Italia Banca d'Italia Banca d'Italia is the central bank of Italy and part of the European System of Central Banks. It is located in Palazzo Koch, Roma, via Nazionale... |
Ignazio Visco Ignazio Visco Ignazio Visco is an Italian economist and the current Governor of the Banca d'Italia- Life and career :Visco was born in Naples on 21 November 1949... |
http://www.bancaditalia.it |
 Luxembourg |
Banque Centrale du Luxembourg | Yves Mersch Yves Mersch Yves Mersch is a Luxembourgian jurist and lawyer who has served as Governor of the Central Bank of Luxembourg since the bank's formation in 1998. In that capacity, he also sits as a member on the European Central Bank's Governing Council and General Council... |
http://www.bcl.lu |
 Malta |
Bank Ċentrali ta’ Malta Central Bank of Malta The Central Bank of Malta was established on 17 April 1968. In May 2004, when Malta joined the European Union, it became an integral part of the European System of Central Banks. It was responsible for, amongst other things, issuing Maltese lira banknotes and coins, before Malta adopted the euro... |
Michael C Bonello Michael C Bonello Michael C Bonello is the Governor of the Central Bank of Malta, he is also a member of the Governing and General Councils of the European Central Bank, a Fellow of the Institute of Financial Services and a member of the Board of Governors of the Malta Financial Services Authority .-Early... |
http://www.centralbankmalta.com |
 Netherlands |
De Nederlandsche Bank De Nederlandsche Bank De Nederlandsche Bank is the central bank of the Netherlands. It is part of the European System of Central Banks .-History:... |
Nout Wellink Nout Wellink Arnout Henricus Elisabeth Maria "Nout" Wellink is a Dutch economist and central banker.In 2010, Financial News determined that Wellink as the one man who is believed to have wielded the greatest influence on worldwide financial oversight including "game-changing proposals on capital requirements... |
http://www.dnb.nl |
 Portugal |
Banco de Portugal Banco de Portugal The Banco de Portugal is the central bank of the Republic of Portugal. Established by a royal charter of 19 November 1846 to act as a commercial bank and issuing bank, it came about as the result of a merger of the Banco de Lisboa and the Companhia de Confiança Nacional, an investment company... |
Carlos Costa Carlos Costa (banker) Carlos da Costa Silva is a Portuguese economist and the present governor of the Bank of Portugal since June 7, 2010.... |
http://www.bportugal.pt |
 Slovakia |
Národná banka Slovenska National Bank of Slovakia National Bank of Slovakia , is the central bank of Slovakia, which is a member of the European Union and the European System of Central Banks. Since 1 January 2009, it has also been a member of Eurosystem.-History:... |
Jozef Makúch | http://www.nbs.sk |
 Slovenia |
Banka Slovenije Bank of Slovenia The Bank of Slovenia is the bank of issue and the central bank of the Republic of Slovenia. Based in Ljubljana, it was established on 25 June 1991. Its primary task is to take care of the stability of the domestic currency and to ensure the liquidity of payments within the country and with... |
Marko Kranjec | http://www.bsi.si |
 Spain |
Banco de España | Miguel Fernández Ordóñez | http://www.bde.es |
 Kingdom of Bulgaria |
Българска народна банка (Balgarska narodna banka) Bulgarian National Bank The Bulgarian National Bank is the central bank of the Republic of Bulgaria with its headquarters in Sofia. The BNB has been established on 25 January 1879. It is an independent institution responsible for issuing all banknotes and coins in the country, overseeing and regulating the banking sector... |
Ivan Iskrov Ivan Iskrov Ivan Iskrov is the Governor of the Bulgarian National Bank since October 2003. His work was recognized with Commander of the Order of Leopold by the Belgian government.- Biography :... |
http://www.bnb.bg |
 Czech Republic |
Česká národní banka Czech National Bank The Czech National Bank is the central bank and financial market supervisor in the Czech Republic with its headquarters in Prague. The Bank's governor is Miroslav Singer. In accordance with its primary objective, the ČNB sets monetary policy, issues banknotes and coins and manages the circulation... |
Miroslav Singer Miroslav Singer Miroslav Singer is a Czech economist and currently the Governor of the Czech National Bank. He received his PhD in Economics from the University of Pittsburgh in 1995.- References :... |
http://www.cnb.cz |
 Denmark |
Danmarks Nationalbank Danmarks Nationalbank Danmarks Nationalbank is the central bank of the Kingdom of Denmark. It is a non-eurozone member of the European System of Central Banks . The bank issues the Danish currency, the krone.... |
Nils Bernstein | http://www.nationalbanken.dk |
 Hungary |
Magyar Nemzeti Bank Hungarian National Bank The Hungarian National Bank is the central bank of Hungary. The principal aim of the bank is to retain price stability. It is also responsible for issuing the national currency, the forint, controlling the cash circulation, setting the Central Bank base rate, publishing official exchange rates... |
András Simor | http://www.mnb.hu |
 Latvia |
Latvijas Banka | Ilmārs Rimšēvičs | http://www.bank.lv |
 Lithuania |
Lietuvos Bankas Bank of Lithuania The Bank of Lithuania is the central bank of the Republic of Lithuania. The Bank of Lithuania is a non-Eurozone member of the European System of Central Banks... |
Vitas Vasiliauskas | http://www.lbank.lt |
 Poland |
Narodowy Bank Polski | Marek Belka Marek Belka Marek Marian Belka is a Polish professor of Economics, a former Prime Minister and Finance Minister of Poland, former Director of the International Monetary Fund's European Department and current Head of National Bank of Poland.- Biography :... |
http://www.nbp.pl |
 Kingdom of Romania |
Banca Națională a României | Mugur Isărescu Mugur Isarescu Mugur Isărescu is the Governor of the National Bank of Romania. From 22 December 1999 to 28 November 2000 he served as Prime Minister. He is a member of the Romanian Academy.... |
http://www.bnro.ro |
 Sweden |
Sveriges Riksbank Sveriges Riksbank Sveriges Riksbank, or simply Riksbanken, is the central bank of Sweden and the world's oldest central bank. It is sometimes called the Swedish National Bank or the Bank of Sweden .-History:... |
Stefan Ingves | http://www.riksbank.se |
 United Kingdom |
Bank of England Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world... |
Mervyn King Mervyn King (economist) An ex-officio member of the Bank's interest-rate setting Monetary Policy Committee since its inception in 1997, Sir Mervyn is the only person to have taken part in every one of its monthly meetings to date. His voting style is often seen as "hawkish", a perspective that emphasises the dangers of... |
http://www.bankofengland.co.uk |