ECB, functions and relationship with key indicators
| Date: November 26, 2008 | Source: Economic @ 21 |
| Category: ECONO-CONCEPTS | |
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Loading ... ECB and its Functions
The European Central Bank (ECB) is the central bank of the single European currency, the Euro , and is the main axis of the Eurosystem . The ECB is part of the European System of Central Banks and subject to the provisions of the Treaty on European Community and its Constitution.
This entity is one of the most important organs of the European Union (EU) and is headquartered in Frankfurt am Main, Germany.
The ECB's main function is to maintain the purchasing power of the single currency, and thus price stability in the euro area which comprises the 15 EU countries that have adopted the euro since 1999. The ECB controls the money supply and price developments.
The legal basis of the single monetary policy is set in the Treaty establishing the European Community and the Statute of the European System of Central Banks (ESCB) and the ECB. The Statute established the constitution of the ECB and the ESCB from 1 June 1998.
The ECB is also responsible for establishing and implementing the broad outlines of economic policy and monetary union.
For this, the ECB works with the ESCB, which includes the 27 EU countries. However, only 15 of these countries have so far adopted the euro, thus constituting the " euro zone ", and their central banks, together with the ECB, form the" Eurosystem ".
The ECB has legal personality under international public law.
Jean-Claude Trichet is President of the ECB from November 1, 2003. Succeeded by the first President Wim Duisenberg .
RELATIONSHIP WITH MAIN INDICATORS
The official interest rates or intervention rates of the European Central Bank determines the monetary policy stance of this. Currently, interest rates ECB are:
- the central rate is the minimum bid rate on main refinancing operations.
Among the operations that use the central bank to intervene in monetary policy is the open market operations to regulate the liquidity of available credit institutions, within these there are the so-called main refinancing operations, which rate tenders variable interest is responsible for injecting liquidity into the banking system. These auctions are competitive in nature and have minimal interest. This interest is the minimum output rate by the ECB.
- the interest rate on the marginal lending facility
- the interest rate on the deposit facility.
These two types included in the so-called permanent facilities are often set 100 basis points above and below, respectively, of the official plant.
The interest rates of the European Central Bank has considerable importance for the public because the interest of many mortgage loans is variable and is linked to Euribor rate and the rate depends largely on the interest rate that remains the central bank, its influence is beyond it also strongly influences the overall long-term rates, the price of shares and fixed assets and general economic activity as a whole.
Indicators are closely related Euribor and inflation / deflation .
Here you have an informative video published by the ECB itself in which these terms are treated in a very nice and easy.
December 13, 2008 at 18:37
[...] You place this week at 3.47% from 3.7% last week, after the ECB's decision to continue its policy of cuts to revive the economy. Also, [...]
January 16, 2009 at 17:59
[...] One of the most important changes that have occurred in the short term but not immediate effects is accused of falling interest rates, which in the euro area and has a cumulative total of nearly 3 percentage points less than six months until the level of 2% today. This measure, as they say in economics textbooks is effective to stimulate the market when inflation remains contained and close to 2% level, encouraging interbank lending and therefore the circulation of money, the family will affect you so that you can buy with lower interest rates, which is a stimulus, but when we come from relatively high rates (compared to recent years) and begins to detect continuing declines in the price of money, it's natural that will stimulate consumption (housing, for the case we are dealing with), but in the short term has a negative effect is that the perception for the end the situation we are in crisis and therefore both the price of housing stock and continue to fall as the Euribor, makes further delay its decision to purchase the home, hoping it reaches a minimum, so will prices continue to fall and these Euribor also to try to encourage consumption, even, in the end to put the economy in a deflationary environment. [...]
February 5, 2009 at 15:03
[...] Rate this post Loading ... The Governing Council of the European Central Bank (ECB) decided today to keep interest rates in the euro zone at 2%, such as [...]