The Eurosystem is the

monetary authority In finance and economics, a monetary authority is the entity that manages a country’s currency and money supply, often with the objective of controlling inflation, interest rates, real GDP or unemployment rate. With its monetary tools, a m ...

of the

eurozone The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro ( €) as their primary currency and sole legal tender, and have thus fully implemented EMU polici ...

, 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 prime component of the monetary 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 most important centr ...

(ECB) has, under Article 16 of its Statute,Statute of the ECB
(PDF) the exclusive right to authorise the issuance of euro banknotes. Member states can issue

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

, but the amount must be authorised by the ECB beforehand. The Eurosystem consists of the ECB and the national central banks (NCB) of the 19 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 Price stability is a goal of monetary and fiscal policy aiming to support sustainable rates of economic activity. Policy is set to maintain a very low rate of inflation or deflation. For example, the European Central Bank (ECB) describes price s ...

. 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 organization 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 Lisb ...

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 control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...

of the eurozone *to conduct foreign exchange operations *to hold and manage the official

foreign reserves Foreign exchange reserves (also called forex reserves or FX reserves) are cash and other reserve assets such as gold held by a central bank or other monetary authority that are primarily available to balance payments of the country, influence ...

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 complex, ...

. 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.

Current members

References

External links

ECB – Eurosystem – Governing CouncilThe Payment System
{{DEFAULTSORT:Eurosystem Eurozone

Functions

Current members

See also

References

External links