The Eurosystem is the

monetary authority A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monet ...

of the

eurozone The euro area, commonly called the eurozone (EZ), is a Monetary union, currency union of 20 Member state of the European Union, member states of the European Union (EU) that have adopted the euro (Euro sign, €) as their primary currency ...

, the collective of European Union member states that have adopted the euro as their sole official currency. The

European Central Bank The European Central Bank (ECB) is the central component of the Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's Big Four (banking)#International ...

(ECB) has, under Article 16 of its Statute,Statute of the ECB
(PDF) the exclusive right to authorise the issuance of

euro banknotes Banknotes of the euro, the common currency of the eurozone (euro area members), have been in circulation since the first series (also called ''ES1'') was issued in 2002. They are issued by the national central banks of the Eurosystem or the Eur ...

. Member states can issue

euro coins There are eight euro coin denominations, ranging from one cent to two euro (the euro is divided into a hundred cents). The coins first came into use in 2002. They have a common Obverse and reverse, reverse, portraying a map of Europe, but each cou ...

, but the amount must be authorised by the ECB beforehand. The Eurosystem consists of the ECB and the national central banks (NCB) of the 20 member states that are part of the eurozone. The national central banks apply the monetary policy of the ECB. The primary objective of the Eurosystem is price stability. Secondary objectives are financial stability and financial integration. The mission statement of the Eurosystem says that the ECB and the national central banks jointly contribute to achieving the objectives. 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 Eurosystem is distinct from the European System of Central Banks (ESCB), which comprises the ECB and the central banks of all European Union member states, including those that are not part of the eurozone.

Functions

In accordance with the treaty establishing the

European Community The European Economic Community (EEC) was a regional organisation created by the Treaty of Rome of 1957,Today the largely rewritten treaty continues in force as the ''Treaty on the functioning of the European Union'', as renamed by the Lisbo ...

and the Statute of the European System of Central Banks and of the

, the primary objective of the Eurosystem is to maintain price stability. Without prejudice to this objective, the Eurosystem supports the general economic policies in the Community and acts in accordance with the principles of an open market economy. The basic tasks carried out by the Eurosystem are (art. 127 TFEU): *to define and implement the common

monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rat ...

of the eurozone *to conduct foreign exchange operations *to hold and manage the official foreign reserves of the euro zone 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 A financial system is a system that allows the exchange of funds between financial market participants such as lenders, investors, and borrowers. Financial systems operate at national and global levels. Financial institutions consist of comple ...

. The ECB has an advisory role vis-à-vis the Community and national authorities on matters within its field of competence, particularly where Community or national legislation is concerned. 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 to enable the ESCB to perform its tasks.

Members

Consolidated balance sheet of the Eurosystem

Notes

References

External links

ECB – Eurosystem – Governing CouncilThe Payment System
(PDF) (archived 7 January 2012) {{DEFAULTSORT:Eurosystem Eurozone