View source for European Central Bank

{{short description|Supranational central bank in Europe}}
{{distinguish|European Investment Bank|European Bank for Reconstruction and Development|Council of Europe Development Bank|text=}}
{{Use British English|date=March 2013}}
{{Use dmy dates|date=March 2022}}
{{Infobox central bank
| native_name = 
| logo = Logo European Central Bank.svg
| logo_size = 150px
| image = Europäische Zentralbank - European Central Bank (19190136328) (cropped).jpg
| caption = [[Seat of the European Central Bank|Seat]] in [[Frankfurt]]
| image_size = 
| headquarters = [[Ostend (Frankfurt am Main)|Ostend]] district, [[Frankfurt]], Germany
| coordinates = {{Coord|50.1089|8.7034|region:DE-HE_type:landmark|format=dms}}
| established = {{Start date and age|df=y|p=y|1998|6|1}}
| governance = {{ubl|[[Governing Council of the European Central Bank|Governing Council]]|[[Executive Board of the European Central Bank|Executive Board]]}}
| key_people = {{plainlist|
* [[Christine Lagarde]]<br />([[President of the European Central Bank|president]])
* [[Luis de Guindos]]<br />([[President of the European Central Bank#Vice Presidents|vice president]])
* [[Philip R. Lane]]<br />(chief economist)
 }}
| currency = [[Euro]] (€)
| currency_iso = EUR
| reserves = {{Collapsible list |title = €526 billion
  | €40 billion {{Small|(directly)}}
  | €340 billion {{Small|([[Eurosystem]] incl. gold)}}
  | €150 billion {{Small|([[Foreign exchange reserves|forex reserves]])}}
}}
| reserve_requirements = <!-- % of reserves required to be held against deposits, or "None" if there are no such requirements -->
| borrowing_rate = 2.40% (main refinancing operations)<ref name="rates" /><br />2.65% (marginal lending facility)<ref name="rates" />
| interest_rate_target = <!-- the target interest rate, or target interest rate range -->
| deposit_rate = 2.25% (deposit facility)<ref name="rates" />
| excess_reserves = <!-- "yes" or "no" reg. interest on excess reserves - or "not applicable - no reserve requirement" if there is no reserve requirement -->
| website = {{URL|https://www.ecb.europa.eu/home/html/index.en.html|ecb.europa.eu}}
| predecessor = {{Collapsible list |title = 20 central banks
  | [[Oesterreichische Nationalbank]]
  | [[National Bank of Belgium]]
  | [[Croatian National Bank]]
  | [[Central Bank of Cyprus]]
  | [[Bank of Estonia]]
  | [[Bank of Finland]]
  | [[Banque de France]]
  | [[Deutsche Bundesbank]]
  | [[Bank of Greece]]
  | [[Central Bank of Ireland]]
  | [[Banca d'Italia]]
  | [[Latvijas Banka]]
  | [[Bank of Lithuania]]
  | [[Central Bank of Luxembourg]]
  | [[Central Bank of Malta]]
  | [[De Nederlandsche Bank]]
  | [[Banco de Portugal]]
  | [[Bank of Slovenia|Banka Slovenije]]
  | [[National Bank of Slovakia|Národná banka Slovenska]]
  | [[Bank of Spain|Banco de España]]
}}
| successor = 
| footnotes = 
}}
[[File:Euro Monetary Policy.webp|thumb|274px|right|Euro [[monetary policy]]
{{legend|#0076BA|Euro zone inflation year/year}}
{{legend-line|#FFD932 solid 3px|M3 money supply increases}}
{{legend-line|#EE220C solid 3px|Marginal Lending Facility}}
{{legend-line|#970E53 solid 3px|Main Refinancing Operations}}
{{legend-line|#F27200 solid 3px|Deposit Facility Rate}}
{{legend-line|#FF95CA solid 3px|[[Euribor]]}}
]]
[[File:Europäische Zentralbank Frankfurt.jpg|upright=1.2|thumb|[[Seat of the European Central Bank]]]]
[[File:Frankfurt am Main, die Europäische Zentralbank vanaf die Alte Mainbrücke foto5 2016-08-11 16.21.jpg|Frankfurt am Main, the European Central Bank from Alte Mainbrücke|thumb|upright=1.2]]

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]].<ref>{{cite web|url=https://www.ecb.europa.eu/ecb/orga/escb/html/index.en.html|website=www.ecb.europa.eu|title=ECB, ESCB and the Eurosystem|date=25 June 2015|access-date=2021-09-30}}</ref> It is one of the world's [[Big Four (banking)#International use|most important central banks]] with a balance sheet total of around 7 trillion.<ref>{{cite web | url=https://www.infina.at/trends/ezb-bilanzsumme/ | title=EZB-Bilanzsumme: Entwicklung und Prognose &#124; INFINA }}</ref>

The [[Governing Council of the European Central Bank|ECB Governing Council]] makes [[monetary policy]] for the [[Eurozone]] and the [[European Union]], administers the [[foreign exchange reserves]] of EU member states, engages in foreign exchange operations, and defines the intermediate monetary objectives and key interest rate of the EU. The [[Executive Board of the European Central Bank|ECB Executive Board]] enforces the policies and decisions of the Governing Council, and may direct the national central banks when doing so.<ref>{{cite web|url=https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A12016E%2FPRO%2F04|website=eur-lex.europa.eu|title=STATUTE OF THE EUROPEAN SYSTEM OF CENTRAL BANKS AND OF THE EUROPEAN CENTRAL BANK|access-date=2021-09-30}}</ref> The ECB has the exclusive right to authorise the issuance of [[euro banknotes]]. Member states can issue [[euro coins]], but the volume must be approved by the ECB beforehand. The bank also operates the [[T2 (RTGS)]] payments system.

The ECB was established by the [[Treaty of Amsterdam]] in May 1999 with the purpose of guaranteeing and maintaining [[price stability]]. On 1 December 2009, the [[Treaty of Lisbon]] became effective and the bank gained the official status of an [[Institutions of the European Union|EU institution]]. When the ECB was created, it covered a [[Eurozone]] of eleven members. Since then, Greece joined in January 2001, Slovenia in January 2007, Cyprus and Malta in January 2008, Slovakia in January 2009, Estonia in January 2011, Latvia in January 2014, Lithuania in January 2015 and Croatia in January 2023.<ref name="CVCE-2016" /> The current [[President of the European Central Bank|president of the ECB]] is [[Christine Lagarde]]. [[Seat of the European Central Bank|Seated]] in Frankfurt, Germany, the bank formerly occupied the [[Eurotower (Frankfurt am Main)|Eurotower]] prior to the construction of its new seat.

The ECB is directly governed by [[European Union law]]. Its capital stock, worth €11 billion, is owned by all 27 central banks of the EU member states as [[shareholder]]s.<ref name="capital" /> The initial capital allocation key was determined in 1998 on the basis of the states' population and GDP, but the capital key has been readjusted since.<ref name="capital" /> Shares in the ECB are not transferable and cannot be used as collateral.

==History==
[[File:Euro inflation.webp|thumb|Euro zone inflation]]
{{Further|History of the euro}}

=== Early years (1998–2007) ===
[[File:Wim Duisenberg.jpg|thumb|upright=0.7|right|[[Wim Duisenberg]], first President of the ECB]]
The European Central Bank is the ''de facto'' successor of the [[European Monetary Institute]] (EMI).<ref name="ECB-2007a">{{cite web|url=http://www.ecb.int/ecb/history/emu/html/index.en.html |title=ECB: Economic and Monetary Union|publisher=ECB |access-date=15 October 2007}}</ref> The EMI was established at the start of the second stage of the EU's [[Economic and Monetary Union of the European Union|Economic and Monetary Union]] (EMU) to handle the transitional issues of states adopting the euro and prepare for the creation of the ECB and [[European System of Central Banks]] (ESCB).<ref name="ECB-2007a"/>  The EMI itself took over from the earlier [[European Monetary Cooperation Fund]] (EMCF).<ref name="CVCE-2016">{{cite web |title=European Central Bank |publisher=CVCE |url=http://www.cvce.eu/obj/european_central_bank-en-fc8d2e17-cbde-4ec8-8f79-46f06c471540.html |access-date=18 February 2014|date=7 August 2016 }}</ref>

The ECB formally replaced the EMI on 1 June 1998 by virtue of the [[Treaty on European Union]] (TEU, Treaty of Maastricht), however it did not exercise its full powers until the [[introduction of the euro]] on 1 January 1999, signalling the third stage of EMU.<ref name="ECB-2007a"/> The bank was the final institution needed for EMU, as outlined by the EMU reports of [[Pierre Werner]] and President [[Jacques Delors]]. It was established on 1 June 1998 The first [[List of Presidents of the European Central Bank|President of the Bank]] was [[Wim Duisenberg]], the former president of the [[De Nederlandsche Bank|Dutch central bank]] and the [[European Monetary Institute]].<ref name="Ecb.int-2011">{{cite web|title=ECB: Economic and Monetary Union|url=http://www.ecb.int/ecb/history/emu/html/index.en.html|access-date=26 June 2011|publisher=Ecb.int}}</ref> While Duisenberg had been the head of the EMI (taking over from [[Alexandre Lamfalussy]] of Belgium) just before the ECB came into existence,<ref name="Ecb.int-2011" /> the French government wanted [[Jean-Claude Trichet]], former head of the [[Banque de France|French central bank]], to be the ECB's first president.<ref name="Ecb.int-2011" /> The French argued that since the ECB was to be located in Germany, its president should be French. This was opposed by the German, Dutch and Belgian governments who saw Duisenberg as a guarantor of a strong euro.<ref name="ENA EMU3">{{cite web |title=The third stage of Economic and Monetary Union |publisher=CVCE |url=http://www.cvce.eu/obj/the_third_stage_of_economic_and_monetary_union-en-e2e91dc0-3a6d-49fc-b3f8-f96fb5f3addb.html |access-date=18 February 2014 |date=7 August 2016}}</ref> Tensions were abated by a [[gentleman's agreement]] in which Duisenberg would stand down before the end of his mandate, to be replaced by Trichet.<ref>{{cite web |url=https://www.flickr.com/photos/uggboy/4417740330/ |title=The powerful European Central Bank [E C B] in the heart of Frankfurt/Main&nbsp;– Germany&nbsp;– The Europower in Mainhattan&nbsp;– Enjoy the glances of euro and europe....03/2010....travel round the world....:)|work=UggBoy♥UggGirl [PHOTO // WORLD // TRAVEL] |publisher=Flickr |date=6 March 2010 |access-date=14 October 2011}}</ref>

Trichet replaced Duisenberg as president in November 2003. Until 2007, the ECB had very successfully managed to maintain inflation close but below 2%.

[[File:Mario Draghi World Economic Forum 2013 crop.jpg|thumb|upright=0.7|right|[[Mario Draghi]], President of the ECB between 2011 and 2019]]

=== Response to the financial crises (2008–2014) ===
The European Central Bank underwent through a deep internal transformation as it faced the [[2008 financial crisis]] and the [[European debt crisis]]. 
{{Expand section|here we need some headline facts on the early response to the Lehman shock: interest cuts, repos & swap lines, securitized bond purchases…|date=April 2021}}

==== Early response to the Eurozone debt crisis ====
{{main|European debt crisis}}The so-called ''[[European debt crisis]]'' began after Greece's new elected government uncovered the real level of indebtedness and budget deficit and warned EU institutions of the imminent danger of a Greek [[sovereign default]].

Foreseeing a possible sovereign default in the eurozone, the general public, international and European institutions, and the financial community reassessed the economic situation and creditworthiness of some Eurozone member states. Consequently, sovereign bonds yields of several Eurozone countries started to rise sharply. This provoked a self-fulfilling panic on financial markets: the more Greek bonds yields rose, the more likely a default became possible, the more bond yields increased in turn.<ref>{{Cite news|url=https://www.reuters.com/article/idUSLDE61F0W720100216|title=Peripheral euro zone government bond spreads widen|first=George|last=Matlock|date=16 February 2010|access-date=28 April 2010|work=Reuters}}</ref><ref>{{cite news|url=http://www.economist.com/node/16009099|title=Acropolis now|date=29 April 2010|newspaper=The Economist|access-date=22 June 2011}}</ref><ref name="wsj">{{Cite news|url=https://www.wsj.com/articles/SB10001424052748704041504575045743430262982|title=Global Markets Shudder: Doubts About U.S. Economy and a Debt Crunch in Europe Jolt Hopes for a Recovery|first1=Brian|last1=Blackstone|date=5 February 2010|work=The Wall Street Journal|access-date=10 May 2010|first2=Tom|last2=Lauricella|first3=Neil|last3=Shah}}</ref><ref>[https://www.nytimes.com/2012/03/06/world/europe/geir-haarde-former-iceland-leader-goes-on-trial-for-role-in-financial-crisis.html "Former Iceland Leader Tried Over Financial Crisis of 2008"], ''The New York Times'', 5 March 2012. Retrieved 30 May 2012.</ref><ref>{{citation|title=Greek/German bond yield spread more than 1,000 bps|date=28 April 2010|publisher=Financialmirror.com}}</ref><ref>{{cite web|url=http://www.ft.com/cms/s/0/7d25573c-1ccc-11df-8d8e-00144feab49a.html |archive-url=https://ghostarchive.org/archive/20221210/http://www.ft.com/cms/s/0/7d25573c-1ccc-11df-8d8e-00144feab49a.html |archive-date=10 December 2022 |url-access=subscription|title=Gilt yields rise amid UK debt concerns|date=18 February 2010 |work=Financial Times |access-date=15 April 2011}}{{registration required}}</ref><ref>{{cite web|url=http://www.voxeu.org/index.php?q=node/3454|title=The politics of the Maastricht convergence criteria &#124; vox&nbsp;– Research-based policy analysis and commentary from leading economists|date=15 April 2009|publisher=Voxeu.org|access-date=1 October 2011}}</ref>

This panic was also aggravated because of the reluctance of the ECB to react and intervene on sovereign bond markets for two reasons. First, because the ECB's legal framework normally forbids the purchase of sovereign bonds in the primary market (Article 123. TFEU),<ref>Bagus, ''The Tragedy of the Euro'', 2010, p.75.</ref> An over-interpretation of this limitation, inhibited the ECB from implementing [[quantitative easing]] like the Federal Reserve and the Bank of England did as soon as 2008, which played an important role in stabilizing markets.

Secondly, a decision by the ECB made in 2005 introduced a minimum credit rating (BBB-) for all Eurozone sovereign bonds to be eligible as collateral to the ECB's open market operations. This meant that if a private rating agencies were to downgrade a sovereign bond below that threshold, many banks would suddenly become illiquid because they would lose access to ECB refinancing operations. According to former member of the governing council of the ECB [[Athanasios Orphanides]], this change in the ECB's collateral framework "planted the seed" of the euro crisis.<ref>{{Cite web|url=https://voxeu.org/article/how-ecb-planted-seeds-euro-area-crisis|title=Monetary policy and fiscal discipline: How the ECB planted the seeds of the euro area crisis|last=Orphanides|first=Athanasios|date=9 March 2018|website=VoxEU.org|access-date=22 September 2018}}</ref>

Faced with those regulatory constraints, the ECB led by Jean-Claude Trichet in 2010 was reluctant to intervene to calm down financial markets. Up until 6 May 2010, Trichet formally denied at several press conferences<ref>{{Cite press release|url=https://www.ecb.europa.eu/press/pressconf/2010/html/is100506.en.html|title=Introductory statement with Q&A|website=European Central Bank|language=en|access-date=3 October 2018}}</ref> the possibility of the ECB to embark into sovereign bonds purchases, even though Greece, Ireland, Portugal, Spain and Italy faced waves of [[credit rating]] downgrades and increasing interest rate spreads.

==== Market interventions (2010–2011) ====
[[File:ECB SMP Bond Purchases.png|thumb|upright=0.9|ECB Securities Markets Programme (SMP) covering bond purchases since May 2010]]
In a remarkable u-turn, the ECB announced on 10 May 2010,<ref>{{Cite press release|url=https://www.ecb.europa.eu/press/pr/date/2010/html/pr100510.en.html|title=ECB decides on measures to address severe tensions in financial markets|website=European Central Bank|language=en|access-date=22 September 2018}}</ref> the launch of a "Securities Market Programme" (SMP) which involved the discretionary purchase of sovereign bonds in secondary markets. Extraordinarily, the decision was taken by the Governing Council during a teleconference call only three days after the ECB's usual meeting of 6 May (when Trichet still denied the possibility of purchasing sovereign bonds). The ECB justified this decision by the necessity to "address severe tensions in financial markets." The decision also coincided with the EU leaders decision of 10 May to establish the European Financial Stabilisation mechanism, which would serve as a crisis fighting fund to safeguard the euro area from future sovereign debt crisis.<ref>{{Cite news|url=https://euobserver.com/economic/30048|title=Mixed support for ECB bond purchases|access-date=22 September 2018|language=en}}</ref>

Although at first limited to the debt of Greece, Ireland and Portugal, the bulk of the ECB's bond buying eventually consisted of Spanish and Italian debt.<ref>{{cite news |first1=John |last1=McManus |first2=Dan |last2=O'Brien |title=Market rout as Berlin rejects call for more EU action |journal=Irish Times |date=5 August 2011 }}</ref> These purchases were intended to dampen international speculation against stressed countries, and thus avoid a contagion of the Greek crisis towards other Eurozone countries. The assumption—largely justified—was that speculative activity would decrease over time and the value of the assets increase.

Although SMP purchases did inject liquidity into financial markets, all of these injections were "sterilized" through weekly liquidity absorption. So the operation was net neutral in liquidity terms (though this was of little practical importance since normal monetary policy operations were ensuring unlimited supplies of liquidity at the main policy interest rate).<ref name="Euro debt working paper">{{cite web|date=February 2011|title=WOrking paper 2011 / 1 A Comprehensive approach to the EUro-area debt crisis|url=http://unipub.lib.uni-corvinus.hu/304/1/wp_2011_1_darvas.pdf|access-date=28 October 2011|work=Zsolt Darvas|publisher=Corvinus University of Budapest}}</ref>{{Citation needed|reason=Reference does not mention 'sterilized injections' or 'liquidity absorption'. Add page number, or a different source.|date=April 2019}}<ref>{{Cite web|date=June 2010|title=Euro area money growth and the 'Securities and Markets Programme'|url=https://www.ecb.europa.eu/pub/pdf/other/mb201006_focus01.en.pdf|website=European Central Bank}}</ref>

In September 2011, ECB's Board member [[Jürgen Stark]], resigned in protest against the "Securities Market Programme" which involved the purchase of sovereign bonds from Southern member states, a move that he considered as equivalent to [[monetary financing]], which is prohibited by the EU Treaty. The ''[[Financial Times Deutschland]]'' referred to this episode as "the end of the ECB as we know it", referring to its hitherto perceived "hawkish" stance on inflation and its historical [[Deutsche Bundesbank]] influence.<ref>{{cite news|author=Proissl, von Wolfgang|date=9 September 2011|title=Das Ende der EZB, wie wir sie kannten|language=de|trans-title=The end of the ECB, as we knew it|work=[[Financial Times Deutschland]]|department=Kommentar|url=http://www.ftd.de/politik/europa/:stark-ruecktritt-das-ende-der-ezb-wie-wir-sie-kannten/60102214.html|url-status=dead|archive-url=https://web.archive.org/web/20111015235754/http://www.ftd.de/politik/europa/%3Astark-ruecktritt-das-ende-der-ezb-wie-wir-sie-kannten/60102214.html|archive-date=15 October 2011}}</ref>

As of 18 June 2012, the ECB in total had spent €212.1bn (equal to 2.2% of the Eurozone GDP) for bond purchases covering outright debt, as part of the Securities Markets Programme.<ref>{{cite web|url=http://www.commbank.com.au/corporate/research/publications/economics/economic-issues/international/2012/180612-ECB.pdf|title=The ECB's Securities Market Programme (SMP) – about to restart bond purchases?|work=Global Markets Research – International Economics|publisher=Commonwealth Bank|date=18 June 2012|access-date=21 April 2013}}</ref> Controversially, the ECB made substantial profits out of SMP, which were largely redistributed to Eurozone countries.<ref>{{Cite news|url=http://www.positivemoney.eu/2018/07/ecb-smp-profits-billions-lost-for-greece/|title=How Greece lost billions out of an obscure ECB programme|date=25 July 2018|work=Positive Money Europe|access-date=25 September 2018|language=en-GB}}</ref><ref>{{Cite web|url=http://www.guengl.eu/news/article/the-ecb-as-vulture-fund-how-central-banks-speculated-against-greece-and-won|title=The ECB as vulture fund: how central banks speculated against Greece and won big – GUE/NGL – Another Europe is possible|website=guengl.eu|language=en|access-date=25 September 2018|archive-date=26 September 2018|archive-url=https://web.archive.org/web/20180926014354/http://www.guengl.eu/news/article/the-ecb-as-vulture-fund-how-central-banks-speculated-against-greece-and-won|url-status=dead}}</ref> In 2013, the [[Eurogroup]] decided to refund those profits to Greece, however, the payments were suspended from 2014 until 2017 over the conflict between [[Yanis Varoufakis]] and ministers of the Eurogroup. In 2018, profits refunds were reinstalled by the Eurogroup. However, several NGOs complained that a substantial part of the ECB profits would never be refunded to Greece.<ref>{{Cite news|url=http://www.positivemoney.eu/2018/10/petition-eurogroup-return-ecb-profits-to-greece/|title=Unfair ECB profits should be returned to Greece, 117,000 citizens demand|date=19 October 2018|work=Positive Money Europe|access-date=21 October 2018|language=en-GB}}</ref>

====Role in the Troika (2010–2015) ====
[[File:Europe bonds sovereign debt crisis.webp|thumb|300px|European 10 year bonds, before the [[Great Recession in Europe]] bonds floated together in parity
{{legend-line|#001489 solid 3px|[[Greece]] 10 year bond}}
{{legend-line|#046A38 solid 3px|[[Portugal]] 10 year bond}}
{{legend-line|#FF8200 solid 3px|[[Republic of Ireland|Ireland]] 10 year bond}}
{{legend-line|#F1BF00 solid 3px|[[Spain]] 10 year bond}}
{{legend-line|#CD212A solid 3px|[[Italy]] 10 year bond}}
{{legend-line|#970E53 solid 3px|[[France]] 10 year bond}}
{{legend-line|#000000 solid 3px|[[Germany]] 10 year bond}}
]]
{{See also|Greek government-debt crisis|Post-2008 Irish banking crisis|European debt crisis}}
The ECB played a controversial role in the "[[European troika|Troika]]" by rejecting most forms of debt restructuring of public and bank debts,<ref>{{Cite news|last=O'Connell|first=Hugh|title=Everything you need to know about the promissory notes, but were afraid to ask|language=en|work=TheJournal.ie|url=http://www.thejournal.ie/anglo-promissory-notes-ecb-775366-Feb2013/|access-date=3 October 2018}}</ref> and pressing governments to adopt bailout programmes and structural reforms through secret letters to Italian, Spanish, Greek and Irish governments. It has further been accused of interfering in the [[Greek referendum 2015|Greek referendum of July 2015]] by constraining liquidity to Greek commercial banks.<ref>{{Cite web|date=2017-03-28|title=Transparency International EU|url=https://transparency.eu/ecb|access-date=2021-04-03|website=Transparency International EU|language=en}}</ref>
{{Expand section|explanations on the role of ECB for Greece, Italy, Spain, Cyprus, Portugal.|date=April 2021}}
In November 2010, reflecting the huge increase in borrowing, including the cover the cost of having guaranteed the liabilities of banks, the cost of borrowing in the private financial markets had become prohibitive for the Irish government. Although it had deferred the cash cost of recapitalising the failing Anglo Irish Bank by nationalising it and issuing it with a "promissory note" (an IOU), the Government also faced a large deficit on its non-banking activities, and it therefore turned to the official sector for a loan to bridge the shortfall until its finances were credibly back on a sustainable footing. Meanwhile, Anglo used the promissory note as collateral for its emergency loan (ELA) from the Central Bank. This enabled Anglo to repay its depositors and bondholders.

It became clear later that the ECB played a key role in making sure the Irish government did not let Anglo default on its debts, to avoid financial instability risks. On 15 October and 6 November 2010, the ECB President [[Jean-Claude Trichet]] sent two secret letters<ref>{{Cite press release|url=https://www.ecb.europa.eu/press/html/irish-letters.en.html|title=Irish letters|website=European Central Bank|language=en|access-date=3 October 2018}}</ref> to the Irish finance Minister which essentially informed the Irish government of the possible suspension of ELA's credit lines, unless the government requested a financial assistance programme to the [[Eurogroup]] under the condition of further reforms and fiscal consolidation.

In addition, the ECB insisted that no debt restructuring (or [[bail-in]]) should be applied to the nationalized banks' bondholders, a measure which could have saved Ireland 8 billion euros.<ref>{{Cite news|url=https://www.irishtimes.com/business/financial-services/chopra-ecb-refusal-to-burn-bondholders-burdened-taxpayers-1.2347861|title=Chopra: ECB refusal to burn bondholders burdened taxpayers|newspaper=The Irish Times|access-date=3 October 2018|language=en-US}}</ref>

During 2012, the ECB pressed for an early end to the ELA, and this situation was resolved with the liquidation of the successor institution IBRC in February 2013. The promissory note was exchanged for much longer term marketable floating rate notes which were disposed of by the Central Bank over the following decade.

In April 2011, the ECB raised interest rates for the first time since 2008 from 1% to 1.25%,<ref>{{Cite news|last1=Blackstone|first1=Brian|year=2011|title=ECB Raises Interest Rates&nbsp;– MarketWatch|work=marketwatch.com|url=http://www.marketwatch.com/story/ecb-raises-interest-rates-2011-04-07|access-date=14 July 2011}}</ref> with a further increase to 1.50% in July 2011.<ref>{{cite web|year=2011|title=ECB: Key interest rates|url=http://www.ecb.int/stats/monetary/rates/html/index.en.html|access-date=29 August 2011}}</ref> However, in 2012–2013 the ECB sharply lowered interest rates to encourage economic growth, reaching the historically low 0.25% in November 2013.<ref name="rates">{{cite web|url=https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html|title=Key ECB interest rates|website=ecb.europa.eu|access-date=3 May 2025}}</ref> Soon after the rates were cut to 0.15%, then on 4 September 2014 the central bank reduced the rates by two-thirds from 0.15% to 0.05%.<ref name="ECBcuts">{{cite news|date=4 September 2014|title=Draghi slashes interest rates, unveils bond-buying plan|publisher=europenews.net|url=http://www.europenews.net/index.php/sid/225407609|access-date=5 September 2014}}</ref> Recently, the interest rates were further reduced reaching 0.00%, the lowest rates on record.<ref name="rates" />

In a report adopted on 13 March 2014, the [[European Parliament]] criticized the "potential conflict of interest between the current role of the ECB in the Troika as 'technical advisor' and its position as a creditor of the four Member States, as well as its mandate under the Treaty". The report was led by Austrian right-wing MEP [[Othmar Karas]] and French Socialist MEP [[Liêm Hoang-Ngoc|Liem Hoang Ngoc]].

====Response under Mario Draghi (2012–2015)====

[[File:ECB balance sheet.png|thumb|ECB balance sheet]]
[[File:ECB deposit facility.svg|thumb|ECB deposit facility]]
[[File:Current accounts at the ECB.png|thumb|Current accounts at the ECB]]

On 1 November 2011, [[Mario Draghi]] replaced Jean-Claude Trichet as President of the ECB.<ref>{{Cite news|date=1 November 2011|title=Mario Draghi takes centre stage at ECB|work=BBC|url=https://www.bbc.com/news/business-13901139|access-date=28 December 2011}}</ref> This change in leadership also marks the start of a new era under which the ECB will become more and more interventionist and eventually ended the [[European debt crisis|Eurozone sovereign debt crisis]].

Draghi's presidency started with the impressive launch of a new round of 1% interest loans with a term of three years (36 months) – the '''Long-term Refinancing operations (LTRO)'''. Under this programme, 523 Banks tapped as much as €489.2 bn (US$640 bn). Observers were surprised by the volume of loans made when it was implemented.<ref name="ECB82011">{{cite press release|url=http://www.ecb.int/press/pressconf/2011/html/is111208.en.html|title=Introductory statement to the press conference (with Q&A)|first1=Mario|last1=Draghi|author2=President of the ECB|date=8 December 2011|publisher=European Central Bank|location=Frankfurt am Main|format=Press conference|access-date=22 December 2011|first3=Vítor|last3=Constâncio|author4=Vice-President of the ECB}}</ref><ref name="NYTloans">{{cite news|url=https://www.nytimes.com/2011/12/22/business/global/demand-for-ecb-loans-surpasses-expectations.html|title=European Bank in Strong Move to Loosen Credit|first1=Nelson D.|last1=Schwartz|date=21 December 2011|newspaper=The New York Times|access-date=22 December 2011|first2=David|last2=Jolly|quote=the move, by the European Central Bank, could be a turning point in the Continent's debt crisis}}</ref><ref name="NYTNorris">{{cite news|url=https://www.nytimes.com/2011/12/22/business/a-central-bank-doing-what-central-banks-do.html |archive-url=https://ghostarchive.org/archive/20220101/https://www.nytimes.com/2011/12/22/business/a-central-bank-doing-what-central-banks-do.html |archive-date=2022-01-01 |url-access=limited|title=A Central Bank Doing What It Should|first=Floyd|last=Norris|date=21 December 2011|newspaper=The New York Times|access-date=22 December 2011|format=Analysis}}{{cbignore}}</ref> By far biggest amount of {{Nowrap|€325bn}} was tapped by banks in Greece, Ireland, Italy and Spain.<ref>{{cite news|url=https://www.theguardian.com/business/2012/feb/29/eurozone-debt-crisis-ecb-loans-ltro#block-3|title=Eurozone crisis live: ECB to launch massive cash injection|last1=Wearden|first1=Graeme|date=29 February 2012|work=The Guardian|access-date=29 February 2012|last2=Fletcher|first2=Nick|location=London}}</ref> Although those LTROs loans did not directly benefit EU governments, it effectively allowed banks to do a [[carry trade]], by lending off the LTROs loans to governments with an interest margin. The operation also facilitated the rollover of {{Nowrap|€200bn}} of maturing bank debts<ref>{{cite news|last1=Ewing|first1=Jack|last2=Jolly|first2=David|date=21 December 2011|title=Banks in the eurozone must raise more than 200bn euros in the first three months of 2012|work=[[The New York Times]]|url=https://www.nytimes.com/2011/12/22/business/global/demand-for-ecb-loans-surpasses-expectations.html|access-date=21 December 2011}}</ref> in the first three months of 2012.

===== "Whatever it takes" (26 July 2012) =====
Facing renewed fears about sovereigns in the eurozone continued Mario Draghi made a decisive speech in London, by declaring that the ECB "...is ready to do '''''whatever it takes''''' to preserve the Euro. And believe me, it will be enough."<ref>{{Cite press release|url=https://www.ecb.europa.eu/press/key/date/2012/html/sp120726.en.html|title=Verbatim of the remarks made by Mario Draghi|website=European Central Bank|language=en|access-date=25 September 2018}}</ref> In light of slow political progress on solving the eurozone crisis, Draghi's statement has been seen as a key turning point in the eurozone crisis, as it was immediately welcomed by European leaders, and led to a steady decline in bond yields for eurozone countries, in particular Spain, Italy and France.<ref>{{Cite news|url=https://www.ft.com/content/93b358ba-c1d4-11e0-bc71-00144feabdc0 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/93b358ba-c1d4-11e0-bc71-00144feabdc0 |archive-date=10 December 2022 |url-access=subscription|title=Itay and Spain respond to ECB treatment|date=8 August 2011|work=Financial Times|access-date=28 December 2019}}</ref><ref>{{Cite web|date=2012-07-26|title=ECB 'will do whatever it takes' to save the euro|url=https://www.politico.eu/article/ecb-will-do-whatever-it-takes-to-save-the-euro/|access-date=2021-04-03|website=POLITICO|language=en-US}}</ref>

Following up on Draghi's speech, on 6 September 2012 the ECB announced the '''[[Outright Monetary Transactions]]''' programme (OMT).<ref>{{cite news|url=https://www.nytimes.com/2012/09/07/business/global/european-central-bank-leaves-interest-rates-unchanged-at-0-75-percent.html?pagewanted=all|title=Europe's Central Bank Moves Aggressively to Ease Euro Crisis|last1=Ewing|first1=Jack|date=6 September 2012|work=The New York Times|last2=Erlanger|first2=Steven}}</ref> Unlike the previous SMP programme, OMT has no [[ex-ante]] time or size limit.<ref>{{cite press release|url=http://www.ecb.int/press/pressconf/2012/html/is120906.en.html|title=ECB press conference, 6 September 2012|access-date=14 September 2014}}</ref> However, the activation of the purchases remains conditioned to the adherence by the benefitting country to an adjustment programme to the ESM. The program was adopted with near unanimity, the Bundesbank president [[Jens Weidmann]] being the sole member of the ECB's Governing Council to vote against it.<ref>"[…] the decision on Outright Monetary Transactions (OMTs) that we took in September 2012 to protect the euro area from speculation that could have forced some countries out of the single currency. That decision was almost unanimous; the single vote against came from the President of the Bundesbank" {{Cite press release|date=2019-12-16|title=Interview with Libération|url=https://www.ecb.europa.eu/press/inter/date/2019/html/ecb.in191216_1~bb222205e4.en.html|access-date=2021-04-03|website=European Central Bank|language=en}}</ref>

Even if OMT was never actually implemented until today, it made the "Whatever it takes" pledge credible and significantly contributed to stabilizing financial markets and ending the sovereign debt crisis. According to various sources, the OMT programme and "whatever it takes" speeches were made possible because EU leaders previously agreed to build the [[European Banking union|banking union]].<ref>{{Cite web|title=Ministers agree deal on EU banking union|url=https://euobserver.com/economic/118516|access-date=2021-04-03|website=EUobserver|date=13 December 2012 |language=en}}</ref>

=== Low inflation and quantitative easing (2015–2019) ===
In November 2014, the bank moved into its [[Seat of the European Central Bank|new premises]], while the [[Eurotower (Frankfurt am Main)|Eurotower building]] was dedicated to hosting the newly established supervisory activities of the ECB under [[European Banking Supervision]].<ref>{{Cite press release|date=2013-11-09|title=Eurotower to house ECB's banking supervision staff|url=https://www.ecb.europa.eu/press/pr/date/2013/html/pr131109.en.html|access-date=2021-04-03|website=European Central Bank|language=en}}</ref>

Although the sovereign debt crisis was almost solved by 2014, the ECB started to face a repeated decline<ref>{{Cite web|url=https://calrev.org/2019/05/04/on-the-causes-of-european-political-instability/|title=On the Causes of European Political Instability|last=Henderson|first=Isaiah M.|date=4 May 2019|website=The California Review|language=en-US|access-date=19 July 2019}}</ref> in the Eurozone inflation rate, indicating that the economy was going towards a deflation. Responding to this threat, the ECB announced on 4 September 2014 the launch of two bond buying purchases programmes: the Covered Bond Purchasing Programme (CBPP3) and Asset-Backed Securities Programme (ABSPP).<ref>{{Cite press release|url=https://www.ecb.europa.eu/press/pressconf/2014/html/is140904.en.html|title=Introductory statement to the press conference (with Q&A)|website=European Central Bank|language=en|access-date=25 September 2018}}</ref>

==== Asset Purchase programme (APP) ====
On 22 January 2015, the ECB announced an extension of those programmes within a full-fledge "[[quantitative easing]]" programme which also included sovereign bonds, to the tune of 60 billion euros per month up until at least September 2016. The programme was started on 9 March 2015.<ref>{{cite news|date=27 April 2017|title=Draghi fends off German critics and keeps stimulus untouched|newspaper=Financial Times|url=https://www.ft.com/content/efece562-2b30-11e7-bc4b-5528796fe35c |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/efece562-2b30-11e7-bc4b-5528796fe35c |archive-date=10 December 2022 |url-access=subscription |url-status=live}}</ref>

On 8 June 2016, the ECB added corporate bonds to its asset purchases portfolio with the launch of the corporate sector purchase programme (CSPP).<ref>{{Cite web|url=https://www.ecb.europa.eu/ecb/legal/pdf/celex_32016d0016_en_txt.pdf?0240957ff3a5d0b909a9482628799777|title=DECISION (EU) 2016/948 OF THE EUROPEAN CENTRAL BANK of 1 June 2016 on the implementation of the corporate sector purchase programme (ECB/2016/16)|access-date=29 January 2020|archive-date=17 May 2020|archive-url=https://web.archive.org/web/20200517052517/https://www.ecb.europa.eu/ecb/legal/pdf/celex_32016d0016_en_txt.pdf?0240957ff3a5d0b909a9482628799777|url-status=dead}}</ref> Under this programme, it conducted the net purchase of corporate bonds until January 2019 to reach about €177 billion. While the programme was halted for 11 months in January  2019, the ECB restarted net purchases in November 2019.<ref>{{Cite web|url=https://www.ecb.europa.eu/mopo/implement/omt/html/index.en.html#cspp|title=Corporate sector purchase programme (CSPP) – Questions & Answers|website=European Central Bank|date=7 December 2021}}</ref>

On May 5, 2020, the Court ordered the [[Bundestag]] and the [[Cabinet of Germany|Bundesregierung]] to ensure the ECB had carried out a proportionality assessment of the vast purchases of government debt in the [[Public Sector Purchase Programme]] (PSPP) to ensure the economic and fiscal policy effects do not outweigh its policy objectives.<ref name="Camous-2020b" /><ref name="Bundesverfassungsgericht-2023">{{Cite web |title=ECB decisions on the Public Sector Purchase Programme exceed EU competences |url=https://www.bundesverfassungsgericht.de/SharedDocs/Pressemitteilungen/EN/2020/bvg20-032.html |access-date=2023-12-20 |website=www.bundesverfassungsgericht.de}}</ref><ref>{{Cite web |last1=Arnold |first1=Martin |last2=Stubbington |first2=Tommy |date=2020-05-05 |title=German court calls on ECB to justify bond-buying programme |url=https://www.ft.com/content/a1beda5e-5c2d-429e-a095-27728ed2d72b |access-date=2023-12-20 |website=Financial Times}}</ref><ref name="Arnold-2020c">{{Cite web |last1=Arnold |first1=Martin |last2=Hall |first2=Ben |date=2020-05-06 |title=German court ruling casts doubt on European monetary policy |url=https://www.ft.com/content/07f19a1b-7494-439d-9765-7fd7ddf09860 |access-date=2023-12-20 |website=Financial Times}}</ref> The PSPP-implementing decision has been considered an act [[ultra vires]] by the ECB as it was too arbitrary and lacks reasoning in ints proportionality assessment.<ref name="Bundesverfassungsgericht-2023" /><ref>{{Cite web |date=2020-05-05 |title=German Constitutional Court rules the Court of Justice's Weiss judgment ultra vires due to poor reasoning and weak standard of review |url=https://eulawlive.com/german-constitutional-court-rules-the-court-of-justices-weiss-judgment-ultra-vires-due-to-poor-reasoning-and-weak-standard-of-review/ |access-date=2023-12-20 |website=EU Law Live |language=en-GB}}</ref><ref>{{Cite journal |last=Smits |first=René |date=2021-04-14 |title=The European Central Bank's Pandemic Bazooka: Mandate Fulfilment in Extraordinary Times |url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3824740 |journal=EU Law Live |pages=19 |ssrn=3824740}}</ref> This ruling by the German Constitutional Court comes at a difficult time for the ECB as it was at the time considering expanding the PEPP. The ruling also reflects the mistrust within some parts of Germany in the ECB, which is seen there as an institution that bails out profligate Southern European countries.<ref name="Arnold-2020c" /> Moreover, this ruling also highlights the vital problem on the euro area architecture, as the range of instruments can use to fulfil its mandate remains unclear.<ref name="Camous-2020b" />

{{As of|2021|post=,}} the size of the ECB's quantitative easing programme had reached 2947 billion euros.<ref>{{Cite web |date=2021-03-25 |title=Asset purchase programmes |url=https://www.ecb.europa.eu/mopo/implement/app/html/index.en.html |access-date=2021-04-03 |website=European Central Bank |language=en}}</ref>

==== Long Term Refinancing Operations (LTRO) ====
The long term refinancing operations (LTRO) are regular open market operations providing financing to credit institutions for periods up to four years. They aim at favoring lending conditions to the private sector and more generally stimulating bank lending to the real economy,<ref>{{Cite web |last= |first= |date=2023-11-29 |title=Open market operations |url=https://www.ecb.europa.eu/mopo/implement/omo/html/index.en.html |access-date=2023-12-05 |website=European Central Bank - Eurosystem |language=en}}</ref> thereby fostering growth.

In December 2011 and January 2012, in the aftermath of the [[2008 financial crisis]], the ECB implemented two LTROs, injecting over €1000 billion of liquidity in the Eurozone financial system. They were later criticized for their inability to revive growth and to help truly revive the real economy, despite having stabilized the Eurozone's financial institutions.<ref name="Fontan-2018">{{Cite journal |last=Fontan |first=Clement |date=2018-10-12 |title=Frankfurt's double standard: the politics of the European Central Bank during the Eurozone crisis |url=https://www.tandfonline.com/doi/full/10.1080/09557571.2018.1495692 |journal=Cambridge Review of International Affairs |volume=31 |issue=2 |pages=175 |doi=10.1080/09557571.2018.1495692 |via=Taylor & Francis Online}}</ref> Further, these operations were devoid of monitoring from the ECB regarding the use made of these liquidities<ref name="Fontan-2018" /> and it appeared that banks had significantly used these funds to pursue carry-trade strategies,<ref>{{Cite journal |last1=Acharya |first1=Viral |last2=Steffen |first2=Sascha |date=6 June 2014 |title=The "greatest" carry trade ever? Understanding eurozone bank risks |url= |journal=Journal of Financial Economics |volume=115 |issue=2 |pages=215–236 |doi=10.1016/j.jfineco.2014.11.004 }}</ref> purchasing sovereign bonds with higher rates and corresponding maturity to generate profits, instead of increasing private lending.<ref name="Fontan-2018" /><ref name="Dwyer-2023">{{Cite journal |last1=Dwyer |first1=Gerald P. |last2=Gilevska |first2=Biljana |last3=Nieto |first3=Maria J. |last4=Samartín |first4=Margarita |date=2023-07-01 |title=The effects of the ECB's unconventional monetary policies from 2011 to 2018 on banking assets |journal=Journal of International and Financial Markets, Institutions & Money |volume=87 |issue=87 |pages=4 |doi=10.1016/j.intfin.2023.101800 |doi-access=free }}</ref>

These critics and deficiencies brought the ECB to instigate targeted long term refinancing operations (TLTROs), first in September and later in December 2014.<ref>ECB press release, 18 September 2014.</ref> These complementary programs imposed conditionality on the LTROs.<ref name="Fontan-2018" /> The TLTROs provided low cost financing to participating banks, under the condition that they reached certain targets in terms of lending to firms and households.<ref name="Dwyer-2023" /> The participating banks were thus more incited to lend to the real economy.

A third wave of TLTRO's was announced on 7 March 2019, namely the TLTRO III.<ref>{{Cite web |date=2019-03-07 |title=Monetary Policy Decisions |url=https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.mp190307~7d8a9d2665.en.html |access-date=2023-12-10 |website=European Central Bank - Eurosystem}}</ref> Under TLTRO III, the interest rate was set at -0.5% below the deposit facility rate (DFR), under condition that banks reached a specific lending performance threshold. The TLTRO III programme was successful to stimulate credit growth.<ref name="Barmeier-2023">{{Cite journal |last1=Barmeier |first1=Marcel |last2=Falath |first2=Juraj |last3=Kiššová |first3=Alena |last4=Lojschová |first4=Adriana |date=2023 |title=Impact of TLTRO III on bank lending: The Slovak experience |url=https://nbs.sk/dokument/b6528586-2679-4245-a850-cca84c5a9ca6/stiahnut/?force=false |journal=National Bank of Slovakia Working Papers |issue=2/2023 |pages=4 |via=National Bank of Slovakia}}</ref><ref>{{Cite journal |last1=Silva |first1=Emilie Da |last2=Grossmann-Wirth |first2=Vincent |last3=Nguyen |first3=Benoit |last4=Vari |first4=Miklos |date=2021 |title=Paying Banks to Lend? Evidence from the Eurosystem's TLTRO and the Euro Area Credit Registry |url=https://ideas.repec.org//p/bfr/banfra/848.html |journal=Working Papers |language=en}}</ref>

=== Christine Lagarde's era (2019 – ) ===
In July 2019, EU leaders nominated [[Christine Lagarde]] to replace Mario Draghi as ECB President. Lagarde resigned from her position as managing director of the [[International Monetary Fund]] in July 2019<ref>{{Cite news|date=2019-07-16|title=Christine Lagarde resigns as head of IMF|language=en-GB|work=BBC News|url=https://www.bbc.com/news/business-49009226|access-date=2021-04-03}}</ref> and formally took over the ECB's presidency on 1 November 2019.<ref>{{Cite news|last1=Hujer|first1=Marc|last2=Sauga|first2=Michael|date=30 October 2019|title=Elegance and Toughness: Christine Lagarde Brings a New Style to the ECB|work=Spiegel Online|url=https://www.spiegel.de/international/europe/christine-lagarde-takes-over-at-the-european-central-bank-a-1294033.html|access-date=11 November 2019}}</ref>

Lagarde immediately signalled a change of style in the ECB's leadership. She embarked the ECB on a strategic review of the ECB's monetary policy strategy, an exercise the ECB had not done for 17 years. As part of this exercise, Lagarde committed the ECB to look into how monetary policy could contribute to [[climate change mitigation|address climate change]],<ref>{{Cite web|date=2019-08-29|title=Lagarde promises to paint the ECB green|url=https://www.politico.eu/article/christine-lagarde-promises-to-paint-the-ecb-green-european-central-bank/|access-date=2021-04-03|website=POLITICO|language=en-US}}</ref> and promised that "no stone would be left unturned." The ECB president also adopted a change of communication style, in particular in her use of social media to promote gender equality,<ref>{{Cite web|date=2021-03-05|title=Christine Lagarde's uphill battle for ECB gender equality|url=https://www.politico.eu/article/christine-lagarde-ecb-gender-equality/|access-date=2021-04-03|website=POLITICO|language=en-US}}</ref> and by opening dialogue with civil society stakeholders.<ref>{{Cite web|date=2019-12-04|title=Christine Lagarde meets with Positive Money Europe|url=https://www.positivemoney.eu/2019/12/meeting-ecb-president-christine-lagarde/|access-date=2021-04-03|website=Positive Money Europe|language=en-GB}}</ref><ref>{{Cite news|date=2020-10-21|title=Lagarde turns to civil society in ECB transformation effort|language=en|work=Reuters|url=https://www.reuters.com/article/us-ecb-lagarde-idUKKBN276166|access-date=2021-04-03}}</ref>

==== The ECB's response to COVID-19 pandemic ====
The onset of the [[COVID-19 pandemic]] precipitated an unprecedented crisis, profoundly impacting global public health, economies, and societal structures on an unparalleled scale. The crisis led to renewed tensions in European sovereign bonds markets, marked by a growing spreads between the interest rates paid by Eurozone member states,<ref name="Runkel-2022">{{Cite journal |last=Runkel |first=Corey N |date=2022-07-15 |title=Eurozone: Pandemic Emergency Purchase Program |url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4175432 |journal=Journal of Financial Crises |volume=4 |issue=2 |pages=1570–1580 |ssrn=4175432 |via=SSRN}}</ref> which spurred important concerns that the Eurozone couild be headed towards a new [[European debt crisis|sovereign debt crisis]].

On 12 March 2020, the ECB announced a set of policy measures such as an additional package of net asset purchases of €120 billion by the end of 2020 under the already existing APP, and more favorable terms on the TLTRO III. During the press conference, Christine Lagarde declared that the ECB "[...] is not here to close spreads."<ref name="Tesche-2022b" /><ref name="Lagarde-2020c">{{Cite journal |last=Lagarde |first=Christine |date=2020-03-12 |title=Press conferenece |url=https://www.ecb.europa.eu/press/pressconf/2020/html/ecb.is200312~f857a21b6c.en.html |access-date=2023-12-06 |website=EUropean Central Bank - Eurosystem}}</ref><ref name="Balmer-2020b">{{Cite news |last1=Balmer |first1=Crispian |last2=Mackenzie |first2=James |date=2020-03-12 |title=Italy furious at ECB's Lagarde 'not here to close spreads' comment |url=https://www.reuters.com/article/us-ecb-policy-italy-minister/italy-furious-at-ecbs-lagarde-not-here-to-close-spreads-comment-idUSKBN20Z3DW/ |access-date=2023-12-07 |work=Reuters}}</ref> This particular statement triggered a sudden negative reaction on financial markets, with a widening of yield spreads in Spain, Italy and Greece.<ref name="Moessner-2022">{{Cite journal |last1=Moessner |first1=Richhild |last2=de Haan |first2=Jakob |date=2022 |title=Effects of monetary policy announcements on term premia in the euro area during the COVID-19 pandemic |journal=Financial Research Letters |volume=44 |issue=44 |pages=1–4 |doi=10.1016/j.frl.2021.102055 |pmc=9014297 |pmid=35463215}}</ref>

===== Pandemic Emergency Purchase Programme (PEPP) =====
On 19 March 2020—less than one week after Lagarde's unfortunate statements on the spreads—the ECB announced by surprise the launch of the Pandemic Emergency Purchase Programme (PEPP) worth €750 billion to boost liquidity in the European economy and to contain any sharp increases in sovereign yield spreads.<ref name="Sciorilli Borrelli-2020c">{{Cite web |last=Sciorilli Borrelli |first=Silvia |date=2020-03-19 |title=ECB rises to expectations with massive bond-buying move |url=https://www.politico.eu/article/the-ecb-rises-up-to-expectations-launches-massive-bond-buying-program/ |access-date=2023-12-06 |website=POLITICO |language=en}}</ref><ref>{{Cite journal |date=2020-03-18 |title=ECB announces €750 billion Pandemic Emergency Purchase Programme (PEPP) |url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html#:~:text=The%20ECB%20will%20not%20tolerate,jurisdictions%20of%20the%20euro%20area. |access-date=2023-12-07 |website=European Central Bank - Eurosystem}}</ref> This announcement led to an immediate reboot in stock prices<ref name="Moessner-2022" /><ref name="Ortmans-2021">{{Cite journal |last1=Ortmans |first1=Aymeric |last2=Tripier |first2=Fabien |date=2021-06-09 |title=COVID-induced sovereign risk in the euro area: When did the ECB stop the spread? |journal=European Economic Review |volume=137 |issue=137 |pages=2–3 |doi=10.1016/j.euroecorev.2021.103809 |pmc=9750059 |pmid=36536819}}</ref><ref name="Benigno-2022">{{Cite journal |last1=Benigno |first1=Pierpaolo |last2=Canofari |first2=Paolo |last3=Di Bartolomeo |first3=Giovanni |last4=Messori |first4=Marcello |date=2022-07-16 |title=The ECB'sasset purchase programme: Theory, effects, and risks |url=https://onlinelibrary.wiley.com/doi/full/10.1111/joes.12521 |journal=Journal of Economic Surveys |volume=37 |issue=3 |pages=893–902 |doi=10.1111/joes.12521 |s2cid=250636847 |via=Wiley Online Library |hdl-access=free |hdl=10067/1896580151162165141}}</ref> and came one day after the spike of sovereign risk spreads.<ref name="Alberola-2022">{{Cite journal |last1=Alberola |first1=Enrique |last2=Cheng |first2=Gong |last3=Consiglio |first3=Andrea |last4=Zenios |first4=Stavros A. |date=2022-07-19 |title=Debt sustainability and monetary policy: the case of ECB asset purchases |url=https://www.bis.org/publ/work1034.htm |journal=BIS Working Papers |volume= |issue=1034 |pages=3–4}}</ref>

The PEPP was designed as a typical "[[quantitative easing]]" policy, under which the ECB is able to purchase securities from the private and public sector in a flexible manner.<ref name="Arnold-2020d">{{Cite web |last=Arnold |first=Martin |date=2020-06-04 |title=ECB boosts bond-buying stimulus package by €600bn |url=https://www.ft.com/content/c59ab92d-e614-4284-a028-46ee3bcf92f9 |access-date=2023-12-05 |website=Financial Times}}</ref><ref name="Tesche-2022b">{{Cite journal |last=Tesche |first=Tobias |date=2022-02-16 |title=Pandemic Politics: The European Union in Times of the Coronavirus Emergency |url=https://onlinelibrary.wiley.com/doi/10.1111/jcms.13303 |journal=Journal of Common Market Studies |volume=60 |issue=2 |pages=485–486 |doi=10.1111/jcms.13303 |s2cid=245528815 |via=Wiley Online Library|url-access=subscription }}</ref><ref name="Bertoldi-2023c">{{Cite journal |last1=Bertoldi |first1=Moreno |last2=Eriksgård |first2=Annika |last3=Orsini |first3=Kristian |last4=Pfeiffer |first4=Philipp |date=2023-07-28 |title=Where is the EU economy headed? The international dimension |url=https://www.sciencedirect.com/science/article/pii/S0161893823000728 |journal=Journal of Policy Modeling |volume=45 |issue=4 |pages=819–821 |doi=10.1016/j.jpolmod.2023.07.005 |s2cid=260307969 |via=Elsevier Science Direct|url-access=subscription }}</ref> The purpose of the PEPP was to stabilize sovereign bonds yields to low and stable levels, thus preventing self-fulfilling panics in financial markets as was the case during the [[European debt crisis]].<ref name="Tesche-2020a">{{Cite journal |last=Tesche |first=Tobias |date=2020-06-15 |title=The European Union's response to the coronavirus emergency: an early assessment |url=https://www.lse.ac.uk/european-institute/Assets/Documents/LEQS-Discussion-Papers/LEQSPaper157.pdf |journal=LSE 'Europe in Question' Discussion Paper Series |volume=157/2020 |pages=1–5 |via=SSRN}}</ref><ref name="Carnazza-2021">{{Cite journal |last1=Carnazza |first1=Giovanni |last2=Liberati |first2=Paolo |date=2021-04-10 |title=The asymmetric impact of the pandemic crisis on interest rates on public debt in the Eurozone |url=https://www.sciencedirect.com/science/article/pii/S0161893821000223/pdfft?md5=d558e4e98a05a43cda259897b42525c9&pid=1-s2.0-S0161893821000223-main.pdf |journal=Journal of Policy Modeling |volume=43 |issue=3 |pages=522–541 |doi=10.1016/j.jpolmod.2021.04.001 |s2cid=234834111 |via=Elsevier Science Direct}}</ref>

The PEPP was established as a separate purchase programme alongside the pre-existing Asset Purchase Programme (APP) with the sole purpose to respond to the economic and financial consequences of the COVID-19 crisis, and in particular prevent market fragmentations.<ref name="DB-2023">{{Cite web |title=Pandemic emergency purchase programme (PEPP) |url=https://www.bundesbank.de/en/tasks/monetary-policy/outright-transactions/pandemic-emergency-purchase-programme-pepp--831136 |access-date=2023-11-30 |website=Deutsche Bundesbank Eurosystem}}</ref><ref name="Grund-2020">{{Cite journal |last=Grund |first=Sebastian |date=2020-03-25 |title=Legal, Compliant and Suitable: The ECB's Pandemic Emergency Purchase Programme (PEPP) |url=https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=13475&context=ypfs-documents |journal=Hertie School Jacques Delors Centre |pages=1–3 |via=Elischolar}}</ref> While very similar, Contrary to the APP, the ECB decided to allow itself to deviate from the capital key. This temporal flexibility from the capital key meant that the ECB could more effectively prevent the rise of Italian and Spanish yield spreads.<ref name="Tesche-2020a" /><ref name="Borri-2021">{{Cite journal |last1=Borri |first1=Nicola |last2=di Giorgio |first2=Giorgio |date=6 February 2021 |title=Systemic risk and the COVID challenge in the european banking sector |url=https://www.sciencedirect.com/science/article/pii/S0378426621000315/pdf |journal=Journal of Banking and Finance |volume=140 |pages=9–12 |via=Elsevier Science Direct}}</ref><ref name="Blotevogel-2023">{{Cite journal |last1=Blotevogel |first1=Robert |last2=Hudecz |first2=Robert |last3=Vangelista |first3=Elisabetta |date=2024 |title=Asset purchases and sovereign bond spreads in the euro area during the pandemic |url=https://www.sciencedirect.com/science/article/pii/S0261560623001791 |journal=Journal of International Money and Finance |volume=140 |issue= |pages=1–8 |doi=10.1016/j.jimonfin.2023.102978 |access-date= |via=Elsevier Science Direct|url-access=subscription }}</ref><ref>{{Citation |title=Decision (EU) 2020/440 of the European Central Bank of 24 March 2020 on a temporary pandemic emergency purchase programme (ECB/2020/17) |date=2020-03-24 |url=http://data.europa.eu/eli/dec/2020/440/oj/eng |access-date=2023-11-30 |language=en}}</ref><ref name="Camous-2020b">{{Cite journal |last1=Camous |first1=Antoine |last2=Claeys |first2=Grégory |date=2020-10-26 |title=The evolution of European economic institutions during the COVID-19 crisis |journal=European Policy Analysis |volume=6 |issue=2 |pages=334–336 |doi=10.1002/epa2.1100 |pmid=34616911 |pmc=7753405 }}</ref><ref>{{Cite journal |last=Fabbrini |first=Federico |date=2022 |title=The Legal Architecture of the Economic Responses to COVID-19: EMU beyond the Pandemic |journal=Journal of Common Market Studies |volume=60 |issue=1 |pages=190 |doi=10.1111/jcms.13271 |doi-access=free }}</ref>

Assets meeting the eligibility criteria of the APP were also eligible under the PEPP.<ref name="Bank-2023">{{Cite journal |date=2023-08-09 |title=FAQ on the pandemic emergency purchase programme |url=https://www.ecb.europa.eu/mopo/implement/pepp/html/ecb.faq_pepp.en.html |access-date=2023-11-30 |website=European Central Bank - Eurosystem}}</ref> However, the pool of assets eligible under the PEPP was broader than the usual ECB collateral eligibility framework.<ref name="Sciorilli Borrelli-2020c" /> For instance, greek sovereign bonds could be purchased by the ECB under this programme, despite having a credit ratings below the usual investment grade requirement.<ref name="Sciorilli Borrelli-2020c" /><ref name="FT-2023b">{{Cite web |title=ECB set to expand bond-buying to soak up debt |url=https://www.ft.com/content/3cf499f7-9c17-46c6-bedd-8893f2d56cf7 |access-date=2023-12-07 |website=Financial Times|date=2 June 2020 |last1=Arnold |first1=Martin }}</ref><ref name="Arnold-2020e">{{Cite web |last=Arnold |first=Martin |date=2020-03-19 |title=ECB to launch €750bn bond-buying programme |url=https://www.ft.com/content/711c5df2-695e-11ea-800d-da70cff6e4d3 |access-date=2023-12-04 |website=Financial Times}}</ref> This waiver was given based on several considerations from the ECB: there was a need to alleviate the pressures stemming from the pandemic on the Greek financial markets; Greece was already and would be closely monitored by giving the waiver; and Greece regained market access.<ref name="Boninghausen-2022b">{{cite journal |last1=Böninghausen |first1=Benjamin |last2=Fernández Brennan |first2=León |last3=McCabe |first3=Laura |last4=Schumacher |first4=Julian |title=The pandemic emergency purchase programme – an initial review |journal=ECB Economic Bulletin |issue=8/2022 |page=97 & 98}}</ref> Non-financial commercial paper with a remaining maturity of at least 28 days were also eligible for purchase under the PEPP.<ref name="Bank-2023" /><ref>{{Cite web |last=Ondernemen |first=Agentschap Innoveren & |title=EU Funding Overview |url=https://eufundingoverview.be/ |access-date=2023-11-30 |website=eufundingoverview.be |language=en}}</ref>

On 4 June 2020, the ECB announced<ref>{{Cite journal |date=2020-06-04 |title=Monetary policy decisions |url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.mp200604~a307d3429c.en.html |access-date=2023-12-07 |website=European Central Bank - Eurosystem}}</ref> it would expand the PEPP by another €600 billion,<ref name="Pinto-2023">{{Cite journal |last1=Pinto |first1=João |last2=Costa |first2=Tiago |date=2023-09-26 |title=The Impact of the ECB's PEPP on Euro Area Bond Spreads |url=https://repositorio.ual.pt/bitstream/11144/6572/3/The%20Impact%20of%20the%20ECB%C3%94%C3%87%C3%96s%20PEPP%20on%20Euro%20Area%20Bond%20Spreads_ERBE_II_2.pdf |journal=European Review of Business Economics |volume=11 |issue=2 |pages=62–63 |via=Social Science Research Network}}</ref> as it became clear that the pandemic would continue to harm European economies.<ref name="Runkel-2022" /><ref name="Arnold-2020d" /><ref name="Benigno-2022" /><ref name="Moessner-2022" /> Half a year later, on 10 December 2020, the ECB announced its final expansion of the PEPP worth another €500 billion, totalling the final PEPP to €1.850 trillion,<ref name="Bank-2020a">{{Cite journal |date=2020-12-10 |title=Monetary policy decisions |url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.mp201210~8c2778b843.en.html |access-date=2023-12-07 |website=European Central Bank - Eurosystem}}</ref><ref name="DB-2023" /><ref name="Alberola-2022" /> corresponding to 15.4% of the euro-area GDP of 2019.<ref name="Wieland-2023">{{Cite journal |last=Wieland |first=Volker |date=2023-07-13 |title=Discussion of "policy packages and policy space: Lessons from COVID-19" by Bergant & Forbes |url=https://www.sciencedirect.com/science/article/pii/S0014292123001654 |journal=European Economic Review |volume=158 |issue=158 |pages=7 |doi=10.1016/j.euroecorev.2023.104536 |s2cid=259942585 |via=Elsevier Science Direct|url-access=subscription }}</ref>
[[File:PEPP_Graph_Improved.png|thumb|Gross securities purchases by the ECB under the PEPP<ref name="ECB-2023">{{Cite web |date=2023-10-05 |title=Breakdown of cumulative net purchases under the PEPP |url=https://www.ecb.europa.eu/mopo/pdf/PEPP_breakdown_history.csv?6fd58bd8812b585a58b751aebd9a1e4f |access-date=2023-11-10 |website=European Central Bank - Eurosystem}}</ref>]]
In December 2021 the ECB announced that it would discontinue net purchases under the PEPP as from the end of March 2022 and that it intended to reinvest the principal payments from maturing securities at least until the end of 2024.<ref name="Wellink-2023d">{{Cite journal |last=Wellink |first=Nout |date=2023-08-02 |title=Crises have shaped the European Central Bank |journal=Journal of International Money and Finance |volume=138 |pages=7–8 |doi=10.1016/j.jimonfin.2023.102923 |doi-access=free}}</ref><ref>{{Cite journal |date=2020-12-16 |title=Monetary Policy Decisions |url=https://www.ecb.europa.eu/press/pr/date/2021/html/ecb.mp211216~1b6d3a1fd8.en.html |access-date=2023-12-07 |website=European Central Bank - Eurosystems}}</ref>

On 31 March 2022, at the end of the net purchases, the net purchases amounted to €1.718 billion, of which €1.665 billion is invested in public sector securities and €52 billion in private sector securities.<ref name="Boninghausen-2022a">{{cite journal |last1=Böninghausen |first1=Benjamin |last2=Fernández Brennan |first2=León |last3=McCabe |first3=Laura |last4=Schumacher |first4=Julian |title=The pandemic emergency purchase programme – an initial review |journal=ECB Economic Bulletin |issue=8/2022 |pages=93–104}}</ref> Of the total €1.850 billion available under the PEPP, 93% of the full envelope wase used, due to indications of decreased financial stress in the Euro Area, mainly thanks to relaxation of COVID restrictions and the reopening of European markets.<ref>{{Cite journal |last1=Birkholz |first1=Carlo |last2=Heinemann |first2=Friedrich |date=2022-06-09 |title=Magnitudes and capital key divergence of the Eurosystem's PSPP/PEPP purchases – updated june 2022 |url=https://www.econstor.eu/bitstream/10419/271651/1/zew-exp202205.pdf |journal=ZEW Expert Brief |issue=5 |pages=5 |via=econstor.eu}}</ref>
{| class="wikitable"
|+Cumulative PEPP purchases in million euros<ref name="ECB-2023" />
!
!Private sector
securities
!Public sector
securities
!Total
securities
!Additional PEPP commitment
by ECB
!Total PEPP
commitment by the ECB
|-
|Mar-May 2020
|           48,062.00
|              186,603.00
|              234,665.00
|              750,000.00
|                    750,000.00
|-
|Jun-Jul
|           55,592.00
|              384,817.00
|              440,409.00
|              600,000.00
|                 1,350,000.00
|-
|Aug-Sep
|           55,534.00
|              511,649.00
|              567,183.00
|                            -  
|                 1,350,000.00
|-
|Oct-Nov
|           48,194.00
|              651,809.00
|              700,003.00
|                            -  
|                 1,350,000.00
|-
|Dec-Jan 2021
|           42,064.00
|              768,148.00
|              810,212.00
|              500,000.00
|                 1,850,000.00
|-
|Feb-Mar
|           43,916.00
|              899,731.00
|              943,647.00
|                            -  
|                 1,850,000.00
|-
|Apr-May
|           39,696.00
|           1,064,769.00
|           1,104,465.00
|                            -  
|                 1,850,000.00
|-
|Jun-Jul
|           42,989.00
|           1,229,199.00
|           1,272,189.00
|                            -  
|                 1,850,000.00
|-
|Aug-Sep
|           46,640.00
|           1,365,650.00
|           1,412,290.00
|                            -  
|                 1,850,000.00
|-
|Oct-Nov
|           50,089.00
|           1,498,100.00
|           1,548,189.00
|                            -  
|                 1,850,000.00
|-
|Dec-Jan 2022
|           50,384.00
|           1,597,293.00
|           1,647,677.00
|                            -  
|                 1,850,000.00
|-
|Feb-Mar
|           52,439.00
|           1,665,635.00
|           1,718,075.00
|                            -  
|                 1,850,000.00
|-
|Apr-May
|           52,441.00
|           1,665,618.00
|           1,718,061.00
|                            -  
|                 1,850,000.00
|-
|Jun-Jul
|           52,437.00
|           1,664,913.00
|           1,717,352.00
|                            -  
|                 1,850,000.00
|-
|Aug-Sep
|           52,440.00
|           1,660,593.00
|           1,713,035.00
|                            -  
|                 1,850,000.00
|-
|Oct-Nov
|           52,440.00
|           1,660,312.00
|           1,712,753.00
|                            -  
|                 1,850,000.00
|-
|Dec-Jan 2023
|           52,440.00
|           1,661,204.00
|           1,713,645.00
|                            -  
|                 1,850,000.00
|-
|Feb-Mar
|           52,440.00
|           1,661,077.00
|           1,713,518.00
|                            -  
|                 1,850,000.00
|-
|Apr-May
|           52,393.00
|           1,660,634.00
|           1,713,028.00
|                            -  
|                 1,850,000.00
|-
|Jun-Jul
|           52,443.00
|           1,660,307.00
|           1,712,752.00
|                            -  
|                 1,850,000.00
|-
|Aug-Sep
|           52,464.00
|           1,659,969.00
|           1,712,435.00
|                            -  
|                 1,850,000.00
|}

==== Criticism against PEPP ====
Overall, the PEPP programme was widely welcomed by market participants and European policy makers. However in March 2021, a group of German economists and lawyers filed a lawsuit against the PEPP at the [[Federal Constitutional Court|German Federal Constitutional Court]].<ref name="Tesche-2022b" /><ref name="Wellink-2023d" />

===== New TLTRO III and PELTROs =====
On 30 April 2020, the ECB Governing council introduced additional measures to support the economy during the Covid19 pandemic, including PELTROs and new modalities for the TLTROs.

First, the ECB made several adjustments to the framework of its TLTRO III.<ref name="Bank-2020c">{{Cite journal |date=2020-04-30 |title=ECB announces new pandemic emergency longer-term refinancing operations |url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200430_1~477f400e39.en.html |access-date=2023-12-07 |website=European Central Bank - Eurosystem}}</ref> A key change was that the ECB also reduced the interest rate applied to these open market operations to a rate going as low as -1% for the banks meeting the lending threshold of 0%.<ref name="Bank-2020c" /> With the TLTRO III, the participating banks were thus enabled to borrow at lower interest rates than those paid on their excess reserve.<ref name="Castillo Lozoya-2022">{{Cite journal |last1=Castillo Lozoya |first1=M. Carmen |last2=García-Escudero |first2=Enrique Esteban |last3=Pérez Ortiz |first3=Maria Luisa |date=2022-04-07 |title=The Effect of TLTRO III on Spanish Credit Institutions' Balance Sheets |url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4101166 |journal=Banco de España |issue=9/22 |pages=3–8 |ssrn=4101166 |via=Social Science Research Network}}</ref>  Another key change was thet ECB's decision to expand bank's borrowing allowance under TLTRO III from 30% to 50%, then up to 55% of their portfolio of loans to firms and households.<ref name="ReferenceA">ECB press release, 10 December 2020.</ref>

Second, the ECB introduced pandemic emergency long-term refinancing operations (PELTROs).<ref name="ECB press release, 30 April 2020">ECB press release, 30 April 2020.</ref> The market operations are similar to the TLTRO III, but are conduced in a more fequent basis in order to ensure smooth liquidity provision to the market.

During the pandemic, these monetary responses proved essential. In their absence, a credit crunch would normally have taken place. Indeed, increase in demand traditionally translates in a rise of borrowing costs.<ref name="Altavilla-2023">{{Cite journal |last1=Altavilla |first1=Carlo |last2=Barbiero |first2=Francesca |last3=Boucinha |first3=Miguel |last4=Burlon |first4=Lorenzo |date=2023-05-13 |title=The Great Lockdown: Pandemic response policies and bank lending conditions |url=https://www.sciencedirect.com/science/article/pii/S0014292123001071 |journal=European Economic Review |volume=156 |pages=6–14 |doi=10.1016/j.euroecorev.2023.104478 |via=Elsevier Science Direct}}</ref> Reports from various member states central banks on the matter indicate that loans supply by participating banks has indeed expanded, in line with the ECB policy.<ref name="Barmeier-2023" /><ref name="Castillo Lozoya-2022" /><ref>{{Cite journal |last1=Kwapil |first1=Claudia |last2=Rieder |first2=Kilian |date=2021-03-11 |title=The effects of the monetary policy response to the COVID-19 pandemic: preliminary evidence from a pilot study using Austrian bank-level data |url=https://www.oenb.at/en/Publications/Economics/Monetary-Policy-and-the-Economy/2021/monetary-policy-and-the-economy-q4-20-q1-21.html |journal=Monetary Policy and the Economy Q4/20-Q1/21 |pages=134 |via=Oesterreichische Nationalbank}}</ref> Accordingly, thorough academic studies have confirmed the actual enhancement of financing conditions and the avoidance of credit scarcity.<ref name="Altavilla-2023" /><ref>{{Cite journal |last1=Dwyer |first1=Gerald |last2=Gilevska |first2=Biljana |last3=Nieto |first3=Maria |last4=Samartín |first4=Margarita |date=1 July 2023 |title=The effects of the ECB's unconventional monetary policies from 2011 to 2018 on banking assets. |url=|journal=Journal of International Financial Markets |volume=87 |pages=28 |doi=10.1016/j.intfin.2023.101800 |doi-access=free }}</ref> In fact, the credit to firms attained unprecedented levels when from March to May 2020, it increased by €250 billion on aggregate.<ref name="Altavilla-2023" /> Furthermore, analysts observed  that even non-participating banks (to the TLTROs and PELTROs) benefited from it in parallel manners.

==== Transmission Protection instrument (TPI) ====
The Transmission Protection Instrument (TPI) is a tool the ECB could use to ensure monetary policy decisions are smoothly transmitted across all euro area countries, introduced on July 21, 2022.<ref name="Bertoldi-2023c"/><ref name="Broeders-2023c">{{Cite journal |last1=Broeders |first1=Dirk |last2=de Haan |first2=Leo |last3=van den End |first3=Jan Willem |date=2023-06-10 |title=How quantitative easing changes the nature of sovereign risk |url=https://www.sciencedirect.com/science/article/pii/S0261560623000827 |journal=Journal of International Money and Finance |volume=137 |pages=3–11 |doi=10.1016/j.jimonfin.2023.102881 |s2cid=259541844 |via=Elsevier Science Direct |hdl-access=free |hdl=1871.1/6bab4cb8-1f5e-4670-8381-374e6a8ed3f3}}</ref><ref name="Arnold-2023c">{{Cite journal |last=Arnold |first=Ivo J.M. |date=2023-09-26 |title=Teaching economics of monetary union with the IS-MP-PC model |url=https://www.sciencedirect.com/science/article/pii/S1477388023000178 |journal=International Review of Economics Education |volume=44 |pages=4–9 |doi=10.1016/j.iree.2023.100276 |via=Elsevier Science Direct}}</ref><ref name="Bank-2022">{{Cite journal |date=2022-07-21 |title=The Transmission Protection Instrument |url=https://www.ecb.europa.eu/press/pr/date/2022/html/ecb.pr220721~973e6e7273.en.html |access-date=2023-12-19 |website=European Central Bank - Eurosystem |last1=Bank |first1=European Central }}</ref><ref name="Lengwiler-2023">{{Cite journal |last1=Lengwiler |first1=Yvan |last2=Orphanides |first2=Athanasios |date=2023-03-21 |title=Collateral Framework: Liquidity Premia and Multiple Equilibria |url=https://onlinelibrary.wiley.com/doi/epdf/10.1111/jmcb.13048 |journal=Journal of Money, Credit and Banking |volume=56 |issue=2–3 |pages=20–21 |doi=10.1111/jmcb.13048 |via=Wiley Online Library|hdl=10419/233209 |hdl-access=free }}</ref> Under the TPI, the ECB would be able to purchase securities in the secondary market, to counter against "unwanted, disorderly market dynamics", self fulfilling crises market expectations that do not reflect reality,<ref name="Sandbu-2022">{{Cite web |last=Sandbu |first=Martin |date=2022-07-21 |title=The ECB reminds everyone who really has the authority |url=https://www.ft.com/content/3f1e6cb3-1a63-412e-bb1f-a8624760fd86 |access-date=2023-12-19 |website=Financial Times}}</ref><ref name="Callegari-2023">{{Cite journal |last1=Callegari |first1=Giovanni |last2=Marimon |first2=Ramon |last3=Wicht |first3=Adrien |last4=Zavalloni |first4=Luca |date=2023-08-05 |title=On a lender of last resort with a central bank and a stability Fund |journal=Review of Economic Dynamics |volume=50 |pages=118 |doi=10.1016/j.red.2023.07.012 |doi-access=free |hdl=10230/59232 |hdl-access=free }}</ref><ref name="Spendzharova-2023">{{Cite journal |last=Spendzharova |first=Aneta |date=2023-08-29 |title=Gouvernement Économique, but Not Like in the 1990s: The Commission and the ECB's Policies Advancing the 'Green Transition' |journal=Journal of Common Market Studies |volume=61 |pages=143 |doi=10.1111/jcms.13541 |doi-access=free }}</ref> thus not justified by "country specific fundamentals."<ref name="Arnold-2023c"/><ref name="Wellink-2023d"/><ref name="Bank-2022" /><ref name="Peychev-2022">{{Cite journal |last=Peychev |first=Anna |date=2022-11-09 |title=Disorder and Discipline: The ECB's Transmission Protection Instrument |url=https://www.europeanpapers.eu/en/europeanforum/disorder-discipline-ecb-transmission-protection-instrument |journal=European Papers |volume=7 |issue=2 |pages=739–747 }}</ref><ref name="Arnold-2022">{{Cite web |last=Arnold |first=Martin |date=2022-07-21 |title=Spread betting: how will the ECB's new bond-buying tool work? |url=https://www.ft.com/content/c5499acd-0271-458d-8363-9e75633399ee |access-date=2023-12-19 |website=Financial Times}}</ref><ref name="FT-2022">{{Cite web |date=2022-07-22 |title=The ECB arms itself against bond market pessimism |url=https://www.ft.com/content/aed7b9f8-87d3-4da4-83af-a476a8c2b850 |access-date=2023-12-19 |website=www.ft.com}}</ref> The TPI thus enables the ECB to control the difference between borrowing costs across the euro area, thereby reducing fragmentation risk across the euro area.<ref name="Broeders-2023c"/><ref name="Arnold-2023c"/><ref name="Sandbu-2022" /><ref name="FT-2022" /><ref name="Grimm-2023">{{Cite journal |last1=Grimm |first1=Veronika |last2=Nöh |first2=Lukas |last3=Wieland |first3=Volker |date=2023-05-31 |title=Government bond rates and interest expenditure of large euro area member states: A scenario analysis |url=https://onlinelibrary.wiley.com/doi/epdf/10.1111/infi.12434 |journal=International Finance |volume=26 |issue=3 |pages=297 |doi=10.1111/infi.12434 |via=Wiley Online Library|hdl=10419/261487 |hdl-access=free }}</ref><ref name="Koranyi-2022">{{Cite news |last1=Koranyi |first1=Balazs |last2=John |first2=Mark |date=2022-07-21 |title=ECB unveils new TPI anti-fragmentation instrument |url=https://www.reuters.com/markets/europe/ecb-unveils-new-tpi-anti-fragmentation-instrument-2022-07-21/ |access-date=2023-12-20 |work=Reuters}}</ref> By not letting interfere market dynamics that do not reflect economic reality, the ECB fulfils its secondary mandate under the TFEU, namely "to support the general economic policies of the Union."<ref name="Arnold-2023c"/><ref name="Sandbu-2022" /> Although PEPP would remain the first line of defence to counter for transmission risks,<ref name="Wellink-2023d"/><ref name="Peychev-2022" /> the TPI should be seen as an addition to the ECB's toolkit.<ref name="Bank-2022" />

===== Eligible securities under the TPI =====
Contrary to the PEPP and the APP, the TPI does not have an ''ex ante'' upper limit on the purchase of securities.<ref name="Bank-2022" /><ref name="Spendzharova-2023" /><ref name="Arnold-2022" /><ref name="Grimm-2023" /><ref>{{Cite web |last1=Arnold |first1=Martin |last2=Johnston |first2=Ian |date=2021-07-21 |title=ECB raises rates for first time in more than a decade |url=https://www.ft.com/content/42b002c0-434e-4688-bdb7-33e0a7c2323f |access-date=2023-12-19 |website=Financial Times}}</ref> Although the ECB has stated it would primarily buy only government bonds on the secondary market<ref name="Spendzharova-2023" /> maturing between 1 and 10 years,<ref name="Arnold-2022" /> the bonds purchased fall under the complete discretion of the ECB and does not necessarily follow the capital key, and private securities could be considered as well.<ref name="Bank-2022" /><ref name="FT-2022" /><ref>{{Cite web |last=Treeck |first=Johanna |date=2023-05-05 |title=ECB needs a new type of bazooka to battle Baltic risk |url=https://www.politico.eu/article/ecb-needs-a-new-type-of-bazooka-to-battle-baltic-risk/ |access-date=2023-12-20 |website=POLITICO |language=en}}</ref> However, there are four conditions that need to be met before securities are eligible for purchasing under TPI:<ref name="Grimm-2023" />

# Compliance with the fiscal framework of the EU and not be involved in the [[Stability and Growth Pact|excessive deficit procedure]];
# Absence of macroeconomic imbalances and not being involved in an excessive [[Macroeconomic Imbalance Procedure|macroeconomic imbalance procedure]], demonstrating that it is in compliance with the commission's recommendations;
# Sovereign debt trajectory must be sustainable, assessed by the ECB and other relevant bodies;
# Stick to commitments made under the Recovery and Resilience Facility, proving that the government follows sound and sustainable macroeconomic policies.<ref name="Bank-2022" /><ref name="Peychev-2022" /><ref name="Arnold-2022" /><ref name="Koranyi-2022" /><ref name="POLITICO-2022b">{{Cite web |date=2022-07-21 |title=ECB lifts rates for first time in more than a decade |url=https://www.politico.eu/article/ecb-delivers-50-basis-point-rate-hike-adds-tool-to-its-box/ |access-date=2023-12-20 |website=POLITICO |language=en}}</ref>

The conditions for government bonds to be eligible under the TPI draw heavily on the macroeconomic governance, and making sure that politicians do not take decisions that facilitate speculation.<ref name="Sandbu-2022" /><ref name="Martin-2022b">{{Cite web |last=Martin |first=Katie |date=2022-07-22 |title=Markets will test the ECB's resolve |url=https://www.ft.com/content/a9851c45-f2bb-4e00-9a8a-000038308f0e |access-date=2023-12-20 |website=Financial Times}}</ref> The decision by the ECB to support a country by using the TPI will depend on the severity of the risks a country faces.<ref name="Arnold-2022" /><ref name="POLITICO-2022b"/> Government debt should thus be sustainable to be eligible for TPI purchases.<ref name="Callegari-2023" /><ref name="FT-2022" />

If the aforementioned conditions are met, the ECB could decide to activate the TPI.<ref name="Bank-2022" /><ref name="Spendzharova-2023" /><ref name="Arnold-2022" /><ref>{{Cite web |last=Treeck |first=Johanna |date=2022-07-27 |title=Italian central banker plays down chance of big rate hike in September |url=https://www.politico.eu/article/ecb-ignazio-visco-rate-hike-september/ |access-date=2023-12-20 |website=POLITICO |language=en}}</ref> Purchases will be ended under the TPI either due to increased transmission of monetary policy or the risks have proven to be country-specific.<ref name="Wellink-2023d"/><ref name="Bank-2022" /> So far, the TPI has not been deployed yet.

===== Effects of and critiques on the TPI =====
The TPI enables the Governing Council to a more rapid increase in interest rate,<ref name="Broeders-2023c"/><ref name="Wellink-2023d"/> the first raise in interest rates by the ECB in 11 years.<ref name="Bertoldi-2023c"/><ref name="Martin-2022b"/> and the unpredictable nature of market sentiment could justify the reason for ECB-intervention to stabilise the monetary union,<ref name="Arnold-2023c"/> more or less the same reasoning as for the PEPP.

However, the relationship between the PEPP and the TPI raises questions as the PEPP would remain the first line of defence against transmission risks.<ref name="Wellink-2023d" /> The creation of the TPI seems legally vulnerably: problems in the Euro Area are common and recurring, but it is not automatically the argument to invent a whole new anti-fragmentation tool.<ref name="Wellink-2023d" /> With the TPI, the ECB can put pressure on countries by assessing publicly if they are eligible for the TPI, that is assessing whether the government has conducted adequate fiscal policies and structural reforms to deserve the support of the ECB. This endangers the politic neutrality of the ECB.<ref>{{Cite journal |last1=Campoy |first1=Juan Cristóbal |last2=Negrete |first2=Juan Carlos |date=2023-08-18 |title=Quantitative easing rules as a means to achieve optimal levels of structural reforms and government deficits in a monetary union |journal=The World Economy |volume=46 |issue=9 |pages=2775 |doi=10.1111/twec.13460 |doi-access=free }}</ref> If ever deployed, the usage of the TPI will spark controversy as the conditions to be deployed are not watertight.<ref name="Wellink-2023d" /><ref name="POLITICO-2022b"/>

===== Strategy Review (2020-2021) =====
As a consequence of the COVID-19 crisis, the ECB extended the duration of the strategy review until September 2021. On 13 July 2021, the ECB presented the outcomes of the strategy review, with the main following announcements:

* The ECB announced a new inflation target of 2% instead of its "close but below two per cent" inflation target. The ECB also made it clear it could overshoot its target under certain circumstances.<ref name="Amaro-2021">{{Cite web|last=Amaro|first=Silvia|date=2021-07-08|title=European Central Bank sets its inflation target at 2% in new policy review|url=https://www.cnbc.com/2021/07/08/ecb-lagarde-presents-first-policy-review-in-almost-two-decades.html|access-date=2021-07-10|website=CNBC|language=en}}</ref>
* The ECB announced it would try to incorporate the cost of housing (imputed rents) into its inflation measurement
* The ECB announced an action plan on climate change<ref>{{Cite press release|publisher=European Central Bank|date=2021-07-08|title=ECB presents action plan to include climate change considerations in its monetary policy strategy|url=https://www.ecb.europa.eu/press/pr/date/2021/html/ecb.pr210708_1~f104919225.en.html|language=en}}</ref>

The ECB also said it would carry out another strategy review in 2025.

=== Inflation surge of 2021 ===
In the summer of 2021, coinciding with the European Central Bank's announcement of its revised monetary policy framework and its initiative for climate action, the eurozone witnessed a notable [[2021–2023 inflation|inflationary surge]]. This resurgence of inflation continued to escalate over the following year, culminating in inflation rates reaching double digits for the first time since the 1970s, a year after the ECB's strategic updates.<ref name=":0">{{Cite journal |last1=Goutsmedt |first1=Aurélien |last2=Fontan |first2=Clément |date=2023-11-19 |title=The ECB and the inflation monsters: strategic framing and the responsibility imperative (1998–2023) |url=https://www.tandfonline.com/doi/full/10.1080/13501763.2023.2281583 |journal=Journal of European Public Policy |volume=31 |issue=4 |language=en |pages=999–1025 |doi=10.1080/13501763.2023.2281583 |s2cid=265300761 |issn=1350-1763}}</ref> The inflation rate reached an unprecedented peak of 4.9% in November 2021, marking the highest level since the introduction of the euro.<ref name=":3">{{Cite journal |last=Baltensperger |first=Ernst |date=2023-06-06 |title=The return of inflation |journal=[[Swiss Journal of Economics and Statistics]] |volume=159 |issue=1 |pages=10 |doi=10.1186/s41937-023-00114-x |doi-access=free |issn=2235-6282}}</ref>

==== Framing of the crisis ====
The new era of inflation prompted a significant shift in the European Central Bank's framing compared to its stance in the 2000s. Initially, from its inception until the [[2008 financial crisis]], the ECB's primary objective was price stability, adhering to strict institutional rules that minimized policy trade-offs with other goals beyond price stability.<ref>{{Cite book |last=Drazen |first=A |title=Political economy in macroeconomics |publisher=[[Princeton University Press]] |year=2002 |edition=New |language=English}}</ref><ref>{{Cite journal |last1=Braun |first1=Benjamin |last2=Carlo |first2=Donato Di |last3=Diessner |first3=Sebastian |date=2022 |title=Planning laissez-faire: Supranational central banking and structural reforms |journal=[[Zeitschrift für Politikwissenschaft]] |language=en |volume=32 |issue=3 |pages=707–716 |doi=10.1007/s41358-022-00322-6 |issn=1430-6387|doi-access=free }}</ref> This approach was rooted in the "Central Bank Independence template", advocating that central bank's limited role to price stability and its independence were optimal.<ref>{{Cite book |last=Issing & al |first=O. |title=Monetary policy in the euro area: Strategy and decision-making at the european central bank. |publisher=Cambridge University Press |year=2001}}</ref><ref name=":0" /><ref name=":5">{{Cite journal |last1=Hartmann |first1=Philipp |last2=Smets |first2=Frank |date=2018 |title=The European Central Bank's Monetary Policy during Its First 20 Years |url=https://www.jstor.org/stable/26743874 |journal=Brookings Papers on Economic Activity |volume=2018 |issue=2 |pages=1–118 |doi=10.1353/eca.2018.0026 |jstor=26743874 |s2cid=203324137 |issn=0007-2303}}</ref><ref>{{Cite book |last1=Howarth |first1=David |title=The European Central Bank : The New European Leviathan? |last2=Loedel |first2=Peter |publisher=Palgrave Macmillan |year=2005}}</ref>

However, the post-financial crisis landscape, especially during the [[European debt crisis|sovereign debt crisis]] of the 2010s and subsequent economic stagnation era, necessitated a substantial revision in the ECB's strategy.<ref name=":0" /><ref name=":5" /> The ECB moved away from its original Central Bank Independence template, leading to a blurring of its objective hierarchy. It adopted new strategies such as acting as a [[lender of last resort]] for the banking system and fostering growth through very low interest rates and extensive asset purchase programs, which were designed to help stabilizing specific market segments and in the end revive growth.<ref>{{Cite journal |last1=Rodríguez |first1=Carlos |last2=Carrasco |first2=Carlos A. |date=2016 |title=ECB policy responses between 2007 and 2014: A chronological analysis and an assessment of their effects |url=https://doiserbia.nb.rs/Article.aspx?ID=1452-595X1604455R |journal=Panoeconomicus |volume=63 |issue=4 |pages=455–473 |doi=10.2298/pan1604455r|doi-access=free }}</ref><ref>{{Cite journal |last1=Gabor |first1=Daniela |last2=Ban |first2=Cornel |date=2015-10-12 |title=Banking on Bonds: The New Links Between States and Markets |url=http://dx.doi.org/10.1111/jcms.12309 |journal=Journal of Common Market Studies |volume=54 |issue=3 |pages=617–635 |doi=10.1111/jcms.12309 |s2cid=153924047 |issn=0021-9886|url-access=subscription }}</ref><ref>{{Cite journal |last1=Johnson |first1=Juliet |last2=Arel-Bundock |first2=Vincent |last3=Portniaguine |first3=Vladislav |date=2019 |title=Adding rooms onto a house we love: Central banking after the global financial crisis |url=https://onlinelibrary.wiley.com/doi/10.1111/padm.12567 |journal=Public Administration |language=en |volume=97 |issue=3 |pages=546–560 |doi=10.1111/padm.12567 |s2cid=158391365 |issn=0033-3298}}</ref>

In 2021, the European Central Bank embraced a significant strategic pivot by adopting its Climate Action Plan along with a new monetary policy strategy.<ref>{{Cite journal |last=Deyris |first=Jérôme |date=2023-09-03 |title=Too green to be true? Forging a climate consensus at the European Central Bank |url=https://www.tandfonline.com/doi/full/10.1080/13563467.2022.2162869 |journal=New Political Economy |language=en |volume=28 |issue=5 |pages=713–730 |doi=10.1080/13563467.2022.2162869 |s2cid=249832219 |issn=1356-3467}}</ref> This shift aimed to institutionalize the ECB's evolving role, moving beyond the singular focus on price stability—a policy shaped largely by the aftermath of the European sovereign debt crisis. Instead, the ECB began acknowledging its multifaceted responsibilities, which now include maintaining financial stability, supporting economic growth, and addressing climate-related objectives.<ref name=":0" /> However, with the [[2021–2023 inflation|surging of inflation in 2021]], some wondered as to whether the European Central Bank would revert to its foundational role, predominantly focused on chasing the “inflation monsters”. The term “inflation monsters<nowiki>''</nowiki> echoes the 2010 video of the ECB where two young people are facing a blue inflation monster unleashing banknotes and threatening to wreck the economy.<ref name=":0" /> Nevertheless, ECB policymakers effectively drew connections between the Central Bank Independence (CBI) framework and the experiences of the stagflation era to rationalize their decision to increase interest rates, avoiding the need for a discourse on regime change. In doing so, they recognized the complex trade-offs inherent in balancing various macroeconomic objectives and the challenging decisions they had to face.<ref name=":0" />

It was with this new monetary strategy that the eurozone found itself facing rising [[2021–2023 inflation|inflation in 2021]].<ref name=":0" /> Recent studies stated that key debate among policymakers centered on whether this inflationary trend would be transitory or permanent. Paul Krugman argued that the current inflationary surge would prove to be transitory, whereas other economists such as Olivier Blanchard and Larry Summers had issued warnings regarding the possible persistence of this inflation.<ref>{{Cite news |last=Krugman |first=Paul |date=2021-12-16 |title=Opinion {{!}} The Year of Inflation Infamy |url=https://www.nytimes.com/2021/12/16/opinion/inflation-economy-2021.html |access-date=2024-01-19 |work=The New York Times |language=en-US |issn=0362-4331}}</ref> Initially, both the European Central Bank and the Federal Reserve misjudged the situation, assuming the inflation spike to be temporary and expecting a swift return to their inflation target. This misperception led to the ECB's initial inaction regarding its [[monetary policy]].<ref name=":1">{{Cite web |last=Storm |first=Servaas |title=In the Footsteps of Ptolemy: The 'Science of Monetary Policy' and the Inflation of 2021-2023 |url=https://www.ineteconomics.org/perspectives/blog/in-the-footsteps-of-ptolemy-the-science-of-monetary-policy-and-the-inflation-of-2021-2023 |access-date=2024-01-13 |website=Institute for New Economic Thinking |language=en}}</ref>

==== Response to the 2021 inflation crisis ====
After big increases in the inflation rates throughout 2021 and 2022, the European Central Bank and the FED finally decided to raise their interest rates and abandon their very low interest rates, for the first time since the sovereign debt crisis and the end of the CBI era, as it had become clear the inflationary trend wasn't temporary.<ref name=":0" /> This decision came in late July 2022 for the ECB, when the inflation rate in the eurozone was already at 8.9% and had been higher than the 2% target for more than a year, and in March 2022 for the FED.<ref>{{Cite web |last1=Heimberger |first1=Philipp |last2=Steininger |first2=Lea |date=2022-08-15 |title=ECB interest rate hikes will damage climate protection policies |url=https://blogs.lse.ac.uk/europpblog/ |access-date=2024-01-13 |website=LSE European Politics and Policy (EUROPP) blog}}</ref> The European Central Bank's response to the Federal Reserve's actions can partly be attributed to concerns about imported inflation from the USA. Specifically, if the FED increases its policy rates while the ECB remains static, it could lead to a depreciation of the euro against the dollar. Such a scenario would likely result in higher import costs for the eurozone, as many global trade goods are priced in dollars. On the other hand, this would benefit the US economy by making imports from the eurozone cheaper.<ref>{{Cite journal |last1=Degasperi |first1=Riccardo |last2=Hong |first2=Seokki Simon |last3=Ricco |first3=Giovanni |date=2023-01-13 |title=The Global Transmission of U.S. Monetary Policy |url=https://ideas.repec.org//p/crs/wpaper/2023-02.html |journal=Working Papers |language=en}}</ref><ref>{{Cite journal |last1=Breitenlechner |first1=Max |last2=Georgiadis |first2=Georgios |last3=Schumann |first3=Ben |date=2022-10-01 |title=What goes around comes around: How large are spillbacks from US monetary policy? |url=https://www.sciencedirect.com/science/article/pii/S0304393222000940 |journal=Journal of Monetary Economics |volume=131 |pages=45–60 |doi=10.1016/j.jmoneco.2022.07.001 |issn=0304-3932|hdl=10419/238263 |hdl-access=free }}</ref><ref name=":2">{{Cite journal |last1=Moessner |first1=Richhild |last2=Xia |first2=Dora |last3=Zampolli |first3=Fabrizio |date=2023-06-01 |title=Global Inflation and Global Monetary Policy Tightening: Implications for the Euro Area |url=https://www.sciendo.com/article/10.2478/ie-2023-0031 |journal=Intereconomics |language=en |volume=58 |issue=3 |pages=151–154 |doi=10.2478/ie-2023-0031 |issn=1613-964X|hdl=10419/275711 |hdl-access=free }}</ref>

Furthermore, the impact of US dollar appreciation, following the FED's policy rate hikes, tends to be more pronounced in the international inflation rates of energy and food. These commodities are commonly priced in US dollars, making their inflation rates more sensitive to exchange rate variations.<ref>{{Cite journal |last=Moessner |first=Richhild |date=2022 |title=Effects of Precipitation on Food Consumer Price Inflation |url=https://www.ssrn.com/abstract=4235476 |journal=SSRN Electronic Journal |language=en |doi=10.2139/ssrn.4235476 |hdl=10419/265996 |s2cid=252772695 |issn=1556-5068|hdl-access=free }}</ref> In the European Union, public inflation expectations are significantly influenced by the prices of energy and food. Thus, this form of imported inflation can further exacerbate overall inflation levels of the eurozone.

The ECB also declared its intention to systematically diminish net asset purchases within their asset purchase program (APP) and end them under the pandemic emergency purchase program (PEPP) launched during the COVID crisis by the first trimester of 2022.<ref name=":0" /> On the other hand, the Federal Reserve initiated the reduction of its asset purchase program in November 2021, to finally stop it by March 2022. The Asset Purchase Programs of the ECB initially boosted asset values on bank balance sheets and led to expectations of lower future short short-term interest rates. These programs also raised inflation expectations, eventually reanchoring long-term inflation expectations. Phasing out the Asset Purchase Programs thus signals alignment with the different policy rate hikes in an attempt to cool down the economy and demonstrates a commitment to combating inflation.<ref>{{Cite journal |last1=Burlon |first1=Lorenzo |last2=Notarpietro |first2=Alessandro |last3=Pisani |first3=Massimiliano |date=2019-11-01 |title=Macroeconomic effects of an open-ended asset purchase programme |url=https://www.sciencedirect.com/science/article/pii/S0161893819300250 |journal=Journal of Policy Modeling |volume=41 |issue=6 |pages=1144–1159 |doi=10.1016/j.jpolmod.2019.03.005 |issn=0161-8938|url-access=subscription }}</ref><ref>{{Cite report |url=https://econpapers.repec.org/paper/ecbecbwps/20161956.htm |title=The ECB's asset purchase programme: an early assessment |last1=Breckenfelder |first1=Johannes |last2=De Fiore |first2=Fiorella |date=2016 |publisher=European Central Bank |issue=1956 |last3=Andrade |first3=Philippe |last4=Karadi |first4=Peter |last5=Tristani |first5=Oreste}}</ref><ref>{{Cite journal |last1=Benigno |first1=Pierpaolo |last2=Canofari |first2=Paolo |last3=Di Bartolomeo |first3=Giovanni |last4=Messori |first4=Marcello |date=July 2023 |title=The ECB's asset purchase programme: Theory, effects, and risks |url=https://onlinelibrary.wiley.com/doi/10.1111/joes.12521 |journal=Journal of Economic Surveys |language=en |volume=37 |issue=3 |pages=890–914 |doi=10.1111/joes.12521 |hdl=11385/223759 |s2cid=250636847 |issn=0950-0804|hdl-access=free }}</ref>

Research indicates that the European Central Bank responded to the escalating inflation more slowly and cautiously than the FED, showing hopes that a moderate tightening of monetary policy would suffice. The ECB was notably slower in acknowledging the mistaken nature of its initial assumption that the inflationary trend would be transitory.<ref name=":3" /> The transition away from extremely low interest rates was soon accompanied by various rate increases, culminating in the ECB's main rate reaching 4% by the end of September.<ref>{{Cite web |last=Board of Governors of the Federal Reserve System (US) |date=1954-07-01 |title=Federal Funds Effective Rate |url=https://fred.stlouisfed.org/series/FEDFUNDS |access-date=2024-01-19 |website=FRED, Federal Reserve Bank of St. Louis}}</ref> In contrast, the FED's latest rate hike elevated the Effective Federal Funds Rate to 5.33% in August, underscoring a more aggressive and rapid tightening of monetary policy compared to the ECB's approach.<ref>{{Cite web |date=2023-12-13 |title=Official interest rates |url=https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html |access-date=2024-01-19 |website=European Central Bank |language=en}}</ref> However, the global monetary tightening cycle turned out to be the most synchronized one in the past half-century. By February 2023, more than 90% of economies had hiked their policy rates. The latest peak of highly synchronized action by central banks was during the 1970s and the oil prices shocks where 70% of them had raised their interest rates.<ref name=":2" />

==== Critics regarding the new monetary policy ====
Criticism first emerged regarding the methodologies used for inflation estimation and their failure to anticipate the inflation surge. A primary critique focused on the inadequacy of traditional tools like the Phillips Curve, which examines the relationship between inflation and certain economic activity indicators, for accurately forecasting inflation.<ref name=":1" /><ref name=":6">{{Cite journal |last1=Baba |first1=Chikako |last2=Duval |first2=Romain |last3=Lan |first3=Ting |last4=Topalova |first4=Petia |date=2024-01-11 |title=The 2021-22 inflation surge in Europe: a Phillips-curve-based dissection |url=https://www.tandfonline.com/doi/full/10.1080/13504851.2024.2303383 |journal=Applied Economics Letters |language=en |pages=1–6 |doi=10.1080/13504851.2024.2303383 |issn=1350-4851|url-access=subscription }}</ref> During the 1970s, the Phillips Curve also faced significant criticism for its inability to accurately predict the inflation experienced in that decade. This period marked a critical reassessment of the curve's predictive capacity, particularly in the context of the economic phenomena of the time.<ref>{{Cite journal |last1=Atkeson |first1=Andrew |last2=Ohanian |first2=Lee E. |date=December 2001 |title=Are Phillips Curves Useful for Forecasting Inflation? |url=http://dx.doi.org/10.21034/qr.2511 |journal=Quarterly Review |volume=25 |issue=1 |doi=10.21034/qr.2511 |issn=0271-5287}}</ref> Traditional indicators used for forecasting economic dynamics, such as the output and unemployment gaps, were found to be inadequate in signaling the overheating of the economy and the prevailing tight labor market conditions.<ref name=":1" /><ref name=":6" /><ref>{{Cite journal |last=Lavoie |first=Marc |date=2024-01-05 |title=Conflictual Inflation and the Phillips Curve |url=https://www.tandfonline.com/doi/full/10.1080/09538259.2023.2294305 |journal=Review of Political Economy |volume=36 |issue=4 |language=en |pages=1397–1419 |doi=10.1080/09538259.2023.2294305 |s2cid=266796071 |issn=0953-8259|url-access=subscription }}</ref> Moreover, the important belief among central banks that sustained inflationary increases are a consequence of unanchored long-term inflation expectations was challenged during 2021–2022. During this period, inflation expectations remained relatively stable, leading to the misinterpretations by the European Central Bank and other monetary authorities regarding the inflationary trend's nature.<ref name=":1" /> Both the FED and the ECB argued that the rise in inflation was only temporary and was the sole result of post-pandemic supply disruptions on a few selected goods and services (food and energy). The FED and the ECB then maintained their expansionary monetary policy, keeping interest rates low.<ref name=":3" />

Some critics have also emerged saying that it was complicated for independent central banks, including the ECB, to accurately assess during a synchronized policy rate hike the potential spillovers of cross-countries monetary policy on the inflation. This might lead to excessive monetary tightening (higher interest rates) in unusual circumstances.<ref name=":2" />

Concerns have also been raised about the European Central Bank's effectiveness in addressing the recent surge in energy prices.<ref name=":4">{{Cite journal |last1=Ider |first1=Gökhan |last2=Kriwoluzky |first2=Alexander |last3=Kurcz |first3=Frederik |last4=Schumann |first4=Ben |date=2023 |title=The Energy-Price Channel of (European) Monetary Policy |url=https://ideas.repec.org//p/zbw/vfsc23/277710.html |journal=VFS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" |language=en}}</ref> Some experts suggest that the eurozone should be viewed as a small open economy, implying that changes in its demand may not significantly impact global prices. Moreover, they argue that monetary policy might have minimal influence on the global demand for energy. This is because household demand for essentials like heating and transportation is believed to be relatively insensitive to price changes.<ref name=":4" /> Additionally, while a stronger euro could theoretically lead to lower import prices, it's uncertain whether these savings would be effectively passed on to consumers.

However, recent studies contradict these views by highlighting the significant role of energy prices in the transmission of monetary policy within the eurozone. An increase in the ECB's policy rates tends to appreciate the euro against the dollar. This appreciation can lead to higher local energy costs but may also reduce demand, potentially lowering global energy prices. These studies support the ECB's decision to follow the Federal Reserve's lead in raising policy rates, which appears to have been a strategic move to curb imported inflation and address the spike in energy prices.<ref name=":4" />

==== Effects of the monetary tightening ====
The implementing a of tighter monetary policy has emerged as the eurozone solution to fight the latest inflationary pressure. However, this approach bears the risk of hindering the progress of the economic revival post-[[COVID-19 pandemic|COVID]].<ref name=":7">{{Cite journal |last1=Ider |first1=Gökhan |last2=Kriwoluzky |first2=Alexander |last3=Kurcz |first3=Frederik |title=DIW Berlin: ECB Can Lower Fuel and Heating Costs by Increasing Interest Rates but Would Risk Economic Recovery |url=https://www.diw.de/sixcms/detail.php?id=diw_01.c.838570.de |access-date=2024-01-15 |journal=Diw Weekly Report |date=2022 |volume=12 |issue=2022 |language=de |doi=10.18723/diw_dwr:2022-14-1}}</ref> 
[[File:Evolution_of_the_MRO_rate_and_the_HICP_for_the_EU.png|thumb|Evolution of the MRO rate and the HICP for the EU<ref>{{Cite web |last=European Central Bank |date=2024 |title=European Central Bank Data Portal. |url=https://data.ecb.europa.eu |access-date=19 January 2024}}</ref>]]
Raising interest rates is a strategic move by the ECB with specific aims: to decelerate economic activity, stabilize inflation expectations, and steer towards lower inflation levels. Studies have shown that as interest rates rise, the price on the world market does not really change. However, the Euro becomes more attractive to investors, leading to its appreciation against other currencies. This change benefits households paying for gas in Euros, as it translates into lower prices for dollar-traded oil.<ref name=":7" />

On the other hand, the increase in interest rates, while helping to suppress prices, also places strains on the manufacturing sector and the labor market. The aftermath of this shock sees tighter financing conditions and a dip in demand, resulting in a slight uptick in unemployment rates, going beyond 0.1 percentage points. Although the study shows that manufacturing sector quickly rebounds, returning to its pre-shock state within about three months, the impact on unemployment rates lingers for a longer period.<ref name=":7" />

=== 2025 ===

In May 2025, the European Central Bank launched a platform involving around 70 market participants to test digital euro payment functionalities and use cases. The initiative includes banks, fintechs, and merchants, aiming to simulate a digital euro ecosystem and support the development of future payment solutions.<ref>{{cite web | url=https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.pr250505~00207689f9.en.html | title=ECB partners with private sector through digital euro innovation platform | date=5 May 2025 }}</ref>

==Mandate and inflation target==
[[File:Euro bank notes centered (50s, 100s, 500s), maestro card, master card — Mattes 2006-05-12.jpg|thumb|[[Euro banknotes]]]]
The ECB has one primary objective – price stability – subject to which it may pursue secondary objectives.

=== Primary mandate ===
The primary objective of the European Central Bank, set out in Article 127(1) of the [[Treaty on the Functioning of the European Union]], is to maintain [[price stability]] within the [[Eurozone]].<ref>[[s:Consolidated version of the Treaty on the Functioning of the European Union/Title VIII: Economic and Monetary Policy#CHAPTER 2: MONETARY POLICY|wikisource consolidation]]</ref> However the EU Treaties do not specify exactly how the ECB should pursue this objective. The European Central Bank has ample discretion over the way it pursues its price stability objective, as it can self-decide on the [[inflation target]], and may also influence the way [[Inflation#Measures|inflation is being measured]].

The precise formulation of the price stability objective has changed over the years:
The Governing Council in October 1998<ref name="HANSPETER K 2006, page 81">THE EUROPEAN CENTRAL BANK HISTORY, ROLE AND FUNCTIONS BY HANSPETER K. SCHELLER SECOND REVISED EDITION 2006, {{ISBN|92-899-0022-9}} (print) {{ISBN|92-899-0027-X}} (online) page 81 at the pdf online version</ref> defined price stability as inflation of under 2%, "a year-on-year increase in the [[Harmonised Index of Consumer Prices]] (HICP) for the euro area of below 2%" and added that price stability "was to be maintained over the medium term".<ref name="ENA Pow">{{cite web |title=Powers and responsibilities of the European Central Bank |publisher=European Central Bank |url=http://www.ecb.int/ecb/orga/tasks/html/index.en.html |access-date=10 March 2009 |url-status=dead |archive-date=16 December 2008 |archive-url=https://web.archive.org/web/20081216083913/http://www.ecb.int/ecb/orga/tasks/html/index.en.html}}</ref> In May 2003, following a thorough review of the ECB's monetary policy strategy, the Governing Council clarified that "in the pursuit of price stability, it aims to maintain inflation rates below, but close to, 2% over the medium term".<ref name="HANSPETER K 2006, page 81" /> In 2016, the European Central Bank's president has further adjusted its communication, by introducing the notion of "symmetry" in its definition of its target,<ref>{{Cite press release|last=Draghi|first=Mario|date=2016-06-02|title=Delivering a symmetric mandate with asymmetric tools: monetary policy in a context of low-interest rates|url=https://www.ecb.europa.eu/press/key/date/2016/html/sp160602.en.html|access-date=2020-11-28|website=European Central Bank|language=en}}</ref> thus making it clear that the ECB should respond both to inflationary pressures and to deflationary pressures. As [[Mario Draghi|Draghi]] once said "symmetry meant not only that we would not accept persistently low inflation, but also that there was no cap on inflation at 2%."<ref>{{Cite press release|date=2019-06-18|title=Twenty Years of the ECB's monetary policy|url=https://www.ecb.europa.eu/press/key/date/2019/html/ecb.sp190618~ec4cd2443b.en.html|access-date=2020-11-28|website=European Central Bank|language=en}}</ref>

On 8 July 2021, as a result of the strategic review led by the new president [[Christine Lagarde]], the ECB officially abandoned the "below but close to two per cent" definition and adopted instead a 2% symmetric [[inflation targeting|inflation target]] over the medium term.<ref name="Amaro-2021" /><ref>{{Cite press release|date=2021-07-08|title=ECB's Governing Council approves its new monetary policy strategy|url=https://www.ecb.europa.eu/press/pr/date/2021/html/ecb.pr210708~dc78cc4b0d.en.html|language=en|website=European Central Bank}}</ref>

=== Secondary mandate ===
Without prejudice to the objective of price stability, the Treaty (127 TFEU) also provides room for the ECB to pursue other objectives:<blockquote>Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union as laid down in Article 3 of the Treaty on European Union.<ref>{{cite web|title=ECB: Monetary Policy|url=http://www.ecb.int/ecb/tasks/html/index.en.html|access-date=14 September 2014}}</ref></blockquote>This legal provision is often considered to provide a "secondary mandate" to the ECB and offers ample justifications for the ECB to also prioritize other considerations such as full employment or environmental protection,<ref>Blot, C., Creel, J., Faure, E. and Hubert, P., [https://www.europarl.europa.eu/cmsdata/207721/OFCE_FINAL2%20online.pdf Setting New Priorities for the ECB’s Mandate], Study for the Committee on Economic and Monetary Affairs, Policy Department for Economic, Scientific and Quality of Life Policies, European Parliament, Luxembourg, 2020.</ref> which are mentioned in the Article 3 of the Treaty on the European Union. At the same time, economists and commentators are often divided on whether and how the ECB should pursue those secondary objectives, in particular the environmental impact.<ref>{{Cite web|url=https://www.igmchicago.org/surveys/objectives-of-the-european-central-bank/|title=Objectives of the European Central Bank|access-date=2020-11-25|website=www.igmchicago.org}}</ref> ECB official have also frequently pointed out the possible contradictions between those secondary objectives.<ref>"Certainly, the protection of the environment is not the only transversal objective assigned to EU institutions and hence to the ECB. Under the Treaty, one could equally ask, for example, why the ECB should not promote industries that promise the strongest employment growth, irrespective of their ecological footprint. But equally importantly, the ECB is subject to the Treaty requirement to "act in accordance with the principle of an open market economy with free competition". – [https://www.ecb.europa.eu/press/key/date/2018/html/ecb.sp181108.en.html "Monetary policy and climate change], Speech from Benoit Cœuré, November 2018</ref> To better guide the ECB's action on its secondary objectives, it has been suggested that closer consultation with the [[European Parliament]] would be warranted.<ref>{{Cite web|title=How Can the European Parliament Better Oversee the European Central Bank? {{!}} Bruegel|url=https://www.bruegel.org/2020/09/how-can-the-european-parliament-better-oversee-the-european-central-bank/|access-date=2020-11-28|language=en-US}}</ref><ref>{{Cite news|date=2021-04-09|title=" La BCE devrait avoir un mandat politique clair qui expliciterait quels objectifs secondaires sont les plus pertinents pour l'UE "|language=fr|work=Le Monde.fr|url=https://www.lemonde.fr/idees/article/2021/04/09/la-bce-devrait-avoir-un-mandat-politique-clair-qui-expliciterait-quels-objectifs-secondaires-sont-les-plus-pertinents-pour-l-ue_6076202_3232.html|access-date=2021-04-16}}</ref><ref>{{Cite web |last1=Van't Klooster |first1=Jens |last2=De Boer |first2=Nik |date=2021-10-25 |title=New report "The ECB's neglected secondary mandate: An inter-institutional solution" |url=https://www.positivemoney.eu/2021/10/report-ecb-neglected-secondary-mandate/ |access-date=2022-05-28 |website=Positive Money Europe |language=en-GB}}</ref><ref>{{Cite web |last=Costa |first=Adua Dalla |date=2023-02-16 |title=EU Parliament offers historic solution on ECB's secondary objectives |url=https://www.positivemoney.eu/2023/02/historic-solution-ecb-secondary-objectives/ |access-date=2023-05-29 |website=Positive Money Europe |language=en-GB}}</ref> In 2023, the ECB recognised the possible role of the European Parliament in the prioritisation of its secondary objectives.<ref>"A clear prioritisation of certain economic policies by the competent EU institutions, including the European Parliament, will help to guide the ECB in its pursuit of its secondary objective. In addition, it is also relevant to the ECB’s pursuit of its secondary objective to consider factors such as the proximity of the policy to the primary objective and the ECB’s main field of expertise, as well as the degree of precision and unconditionality of those economic policies." [https://www.ecb.europa.eu/pub/pdf/other/ecb.20230525_feedback_on_the_input_provided_by_the_european_parliament~92020517af.en.pdf?dcef5730ce0bff0733e3d37013a4fec1 Feedback on the input provided by the European Parliament as part of its resolution on the ECB’s Annual Report 2021], 25 May 2023</ref><ref>{{Cite journal |last1=Ioannidis |first1=Michael |last2=Hlásková |first2=Sarah Jane |last3=Zilioli |first3=Chiara |date=2021 |title=The Mandate of the ECB: Legal Considerations in the Ecb's Monetary Policy Strategy Review |url=https://www.ssrn.com/abstract=3928298 |journal=SSRN Electronic Journal |language=en |doi=10.2139/ssrn.3928298 |issn=1556-5068|url-access=subscription }}</ref>

===Tasks===
{{one source|section|date=December 2015}}
To carry out its main mission, the ECB's tasks include:

* Defining and implementing '''monetary policy'''<ref>{{Cite web|url=https://www.ecb.europa.eu/pub/pdf/other/monetarypolicy2011en.pdf?4004e7099b3dcdbf58d0874f6eab650e|title=Monetary policy}}</ref>
* Managing '''foreign exchange operations'''
* '''Maintaining the payment system''' to promote smooth operation of the financial market infrastructure under the T2 payments system<ref name="BBC ECB">{{cite news |url=http://news.bbc.co.uk/1/hi/business/business_basics/86006.stm|title=The powers of the European Central Bank |last=Fairlamb |first=David |date=12 February 2003 |access-date=16 October 2007 |work=BBC News |author2=Rossant, John}}</ref> and being currently developed technical platform for the settlement of securities in Europe ([[TARGET2-Securities]]).
* '''Consultative role:''' by law, the ECB's opinion is required on any national or EU legislation that falls within the ECB's competence.
* '''Collection and establishment of''' '''statistics'''
* '''International cooperation''' 
* '''Issuing banknotes:''' the ECB holds the exclusive right to authorise the issuance of [[euro banknotes]]. Member states can issue [[euro coins]], but the amount must be authorised by the ECB beforehand (upon the introduction of the euro, the ECB also had exclusive right to issue coins).<ref name="BBC ECB" /> 
* '''Financial stability and prudential policy'''
* '''Banking supervision:''' since 2013, the ECB has been put in charge of supervising systemically relevant banks.

===Monetary policy tools===
The principal monetary policy tool of the European central bank is collateralised borrowing or repo agreements.<ref name="Euro debt crisis">{{cite web|date=19 August 2011|title=All about the European debt crisis: In SIMPLE terms|url=http://www.rediff.com/business/slide-show/slide-show-1-all-about-european-debt-crisis-in-simple-terms/20110819.htm|access-date=28 October 2011|work=rediff business|publisher=rediff.com}}</ref> The collateral used by the ECB is typically high quality public and private sector debt.<ref name="Euro debt crisis" />

All lending to credit institutions must be collateralised as required by Article 18 of the Statute of the ESCB.<ref>THE EUROPEAN CENTRAL BANK HISTORY, ROLE AND FUNCTIONS BY HANSPETER K. SCHELLER SECOND REVISED EDITION 2006, {{ISBN|92-899-0022-9}} (print) {{ISBN|92-899-0027-X}} (online) page 87 at the pdf online version</ref>

The criteria for determining "high quality" for public debt have been preconditions for membership in the European Union: total debt must not be too large in relation to a gross domestic product, for example, and deficits in any given year must not become too large.<ref name="Euro debt working paper" /> Though these criteria are fairly simple, a number of accounting techniques may hide the underlying reality of fiscal solvency—or the lack of the same.<ref name="Euro debt working paper" />
{| class="wikitable"
|+Monetary policy instruments of the ECB (November 2024)
!Type of instrument
!Name of instrument
!Maintenance period
!Rate
!Volume (millions)
|-
| rowspan="2" |'''Standing facilities'''
(rate corridor)
|Marginal lending facility 
|Overnight
|3.65%
|
|-
|Deposit facility
|Overnight
| 3.25%
|
|-
| rowspan="3" |'''Refinancing operations'''
(collateralized repos)
|Main refinancing operations (MROs)
|7 days
|3.4%
|6,660
|-
|Long-term refinancing operations (LTROs)
|3 months up to 3 years
|Average MRO rate
|12,990
|-
|Targeted-Long Term Refinancing Operations (TLTROs)
|Up to 4 years
| DFR
|29,160
|-
| rowspan="6" |'''Asset purchases'''
|Asset-backed securities purchase programme (ABSPP)
|n/a
|n/a
|7,428
|-
|Covered bonds purchase programme (CBPP)
|n/a
|n/a
|254,896
|-
|Corporate sector purchase programme (CSPP)
|n/a
|n/a
|292,299
|-
|Public sector purchase programme (PSPP)
|n/a
|n/a
|2,143,646
|-
|Pandemic emergency purchase programme (PEPP)
|n/a
|n/a
|1,619,343
|-
|Securities markets programme (SMP) - Terminated
|n/a
|n/a
|1,330
|-
|'''Reserve requirements'''
|Minimum reserves
|6 weeks
|1%
|161,936
|}

===Difference with US Federal Reserve===
In the [[Federal Reserve Bank|United States Federal Reserve Bank]], the Federal Reserve buys assets: typically, bonds issued by the Federal government.<ref name="Bernanke">{{cite web|first=Ben S.|last=Bernanke|date=1 December 2008|title=Federal Reserve Policies in the Financial Crisis|url=http://www.federalreserve.gov/newsevents/speech/bernanke20081201a.htm|access-date=23 October 2011|publisher=Board of Governors of the Federal Reserve System|location=Greater Austin Chamber of Commerce, Austin, Texas|format=Speech|quote=To ensure that adequate liquidity is available, consistent with the central bank's traditional role as the liquidity provider of last resort, the Federal Reserve has taken a number of extraordinary steps.}}</ref> There is no limit on the bonds that it can buy and one of the tools at its disposal in a financial crisis is to take such extraordinary measures as the purchase of large amounts of assets such as [[commercial paper]].<ref name="Bernanke" /> The purpose of such operations is to ensure that adequate liquidity is available for the functioning of the financial system.<ref name="Bernanke" />

The [[Eurosystem]], on the other hand, uses collateralized lending as a default instrument. There are about 1,500 eligible banks which may bid for short-term [[repurchase agreement|repo contracts]].<ref>In practice, 400–500 banks participate regularly. <br />{{citation|first1=Samuel|last1=Cheun|title=The collateral frameworks of the Eurosystem, the Federal Reserve System and the Bank of England and the financial market turmoil|date=December 2009|url=http://www.ecb.int/pub/pdf/scpops/ecbocp107.pdf|publisher=ECB|access-date=24 August 2011|first2=Isabel|last2=von Köppen-Mertes|first3=Benedict|last3=Weller}}</ref> The difference is that banks in effect borrow cash from the ECB and must pay it back; the short durations allow interest rates to be adjusted continually. When the repo notes come due the participating banks bid again. An increase in the number of notes offered at auction allows an increase in liquidity in the economy. A decrease has the contrary effect. The contracts are carried on the asset side of the European Central Bank's balance sheet and the resulting deposits in member banks are carried as a liability. In layman's terms, the liability of the central bank is money, and an increase in deposits in member banks carried as a liability by the central bank, means that more money has been put into the economy.{{efn|The process is similar, though on a grand scale, to an individual who every month charges $10,000 on his or her credit card, pays it off every month, but also withdraws (and pays off) an additional $10,000 each succeeding month for transaction purposes. Such a person is operating "net borrowed" on a continual basis, and even though the borrowing from the credit card is short-term, the effect is a stable increase in the money supply. If the person borrows less, less money circulates in the economy. As people borrow more, the money supply increases. An individual's ability to borrow from his or her credit card company is determined by the credit card company: it reflects the company's overall judgment of its ability to lend to all borrowers, and also its appraisal of the financial condition of that one particular borrower. The ability of member banks to borrow from the central bank is fundamentally similar.{{citation needed|date=September 2015}} }}

To qualify for participation in the auctions, banks must be able to offer proof of appropriate collateral in the form of loans to other entities. These can be the public debt of member states, but a fairly wide range of private banking securities are also accepted.<ref name="The ECB and the Eurosystem">{{cite journal|last=Bertaut|first=Carol C.|year=2002|title=The European Central Bank and the Eurosystem|url=http://www.bos.frb.org/economic/neer/neer2002/neer202e.pdf|journal=New England Economic Review|issue=2nd quarter|pages=25–28|access-date=8 December 2010|archive-date=19 October 2012|archive-url=https://web.archive.org/web/20121019052919/http://www.bos.frb.org/economic/neer/neer2002/neer202e.pdf|url-status=dead}}</ref>  The fairly stringent membership requirements for the European Union, especially with regard to [[sovereign debt]] as a percentage of each member state's gross domestic product, are designed to ensure that assets offered to the bank as collateral are, at least in theory, all equally good, and all equally protected from the risk of inflation.<ref name="The ECB and the Eurosystem" />

==Organisation==
The ECB has four decision-making bodies, that take all the decisions with the objective of fulfilling the ECB's mandate:
* the Executive Board,
* the Governing Council,
* the General Council,
* the Supervisory Board.

===Decision-making bodies===

====Executive Board====
[[File:Jean-Claude Trichet - World Economic Forum Annual Meeting Davos 2010.jpg|thumb|upright|[[Jean-Claude Trichet]], the second President of the European Central Bank]]
The [[Executive Board of the European Central Bank|Executive Board]] is responsible for the implementation of monetary policy (defined by the Governing Council) and the day-to-day running of the bank.<ref name="Governing Council2">{{cite web|url=http://www.ecb.int/ecb/orga/decisions/govc/html/index.en.html|title=ECB: Governing Council|date=1 January 2002|work=ECB|publisher=ecb.int|access-date=28 October 2011}}</ref> It can issue decisions to national central banks and may also exercise powers delegated to it by the Governing Council.<ref name="Governing Council2" /> Executive Board members are assigned a portfolio of responsibilities by the President of the ECB.<ref>{{Cite web|url=https://www.ecb.europa.eu/ecb/pdf/orga/distributionofresp_EB.pdf|title=Distribution of responsibilities among the Members of the Executive Board of the ECB}}</ref> The executive board normally meets every Tuesday.

It is composed of the President of the Bank (currently [[Christine Lagarde]]), the vice-president (currently [[Luis de Guindos]]) and four other members.<ref name="Governing Council2" /> They are all appointed by the [[European Council]] for non-renewable terms of eight years.<ref name="Governing Council2" /> Members of the executive board of the ECB are appointed "from among persons of recognised standing and professional experience in monetary or banking matters by common accord of the governments of the Member States at the level of Heads of State or Government, on a recommendation from the Council, after it has consulted the European Parliament and the Governing Council of the ECB".<ref>Article 11.2 of the ESCB Statute</ref>

[[José Manuel González-Páramo]], a Spanish member of the executive board since June 2004, was due to leave the board in early June 2012, but no replacement had been named as of late May.<ref name=MW01>Marsh, David, [http://www.marketwatch.com/story/cameron-irritates-as-euros-high-noon-approaches-2012-05-28 "Cameron irritates as euro’s High Noon approaches"], ''MarketWatch'', 28 May 2012. Retrieved 29 May 2012.</ref> The Spanish had nominated Barcelona-born Antonio Sáinz de Vicuña – an ECB veteran who heads its legal department – as González-Páramo's replacement as early as January 2012, but alternatives from Luxembourg, Finland, and Slovenia were put forward and no decision made by May.<ref>{{cite web |url=http://blogs.ft.com/money-supply/tag/jose-manuel-gonzalez-paramo/#axzz1wP9yAdBr |title=Tag: José Manuel González-Páramo |newspaper=[[Financial Times]] Money Supply blog entries |date=23 January 2012 |access-date=14 September 2014}}</ref> After a long political battle and delays due to the European Parliament's protest over the lack of gender balance at the ECB,<ref>{{cite news |url=https://www.reuters.com/article/us-eu-parliament-mersch-idUSBRE89O0KA20121025|title=EU parliament vetoes Mersch, wants woman for ECB |last=Davenport |first=Claire |work=U.S. |access-date=3 October 2018 |language=en-US}}</ref> Luxembourg's [[Yves Mersch]] was appointed as González-Páramo's replacement.<ref>{{cite web |url=https://www.bloomberg.com/news/2012-11-22/mersch-named-to-ecb-post-after-longest-euro-appointment-battle.html |title=Mersch Named to ECB After Longest Euro Appointment Battle |date=23 November 2012 |work=Bloomberg |access-date=14 September 2014}}</ref>

In December 2020, [[Frank Elderson]] succeeded to [[Yves Mersch]] at the ECB's board.<ref>{{Cite web|title=Frank Elderson officially appointed member of executive boar...|url=https://agenceurope.eu/en/bulletin/article/12620/7|access-date=2021-03-07|website=agenceurope.eu}}</ref><ref>{{Cite web|title=Benoeming Nederlander Frank Elderson in directie ECB stap dichterbij|url=https://nos.nl/l/2357869|access-date=2020-11-25|website=nos.nl|date=24 November 2020 |language=nl}}</ref>

====Governing Council====
The [[Governing Council of the European Central Bank|Governing Council]] is the main decision-making body of the [[Eurosystem]].<ref>{{cite web |url=http://www.ecb.int/ecb/educational/facts/orga/html/or_016.en.html |title=ECB: Decision-making bodies |access-date=14 September 2014 |archive-url=https://web.archive.org/web/20130206095156/http://www.ecb.int/ecb/educational/facts/orga/html/or_016.en.html |archive-date=6 February 2013 |url-status=dead}}</ref> It comprises the members of the executive board (six in total) and the governors of the National Central Banks of the euro area countries (20 as of 2023).

According to Article 284 of the TFEU, the President of the [[Economic and Financial Affairs Council]] (ECOFIN) and a representative from the [[European Commission]] may attend the meetings as observers, but they lack voting rights.

Since January 2015, the ECB has published on its website a summary of the Governing Council deliberations ("accounts").<ref>{{cite press release |url=https://www.ecb.europa.eu/press/accounts/2016/html/index.en.html |title=Monetary policy accounts published in 2016|date=17 December 2019}}</ref> These publications came as a partial response to recurring criticism against the ECB's opacity.<ref>{{cite news |url=https://www.ft.com/content/7e58a3ea-d1bc-11e2-9336-00144feab7de?ftcamp=published_links/rss/comment/feed//product |title=The ECB must open itself up |work=Financial Times |date=10 June 2013 |language=en-GB |access-date=23 September 2018 |url-access=subscription}}</ref> However, in contrast to other central banks, the ECB still does not disclose individual voting records of the governors seating in its council.

{| class="wikitable"
|+Members of the Governing Council (as of May 2025)<ref>{{cite web |url=http://www.ecb.int/ecb/orga/decisions/govc/html/index.en.html |title=Members of the Governing Council |archive-url=https://web.archive.org/web/20040717041849/http://www.ecb.int/ecb/orga/decisions/govc/html/index.en.html |archive-date=17 July 2004 |url-status=dead |access-date=29 May 2025}}</ref>
!
!Name
!Role
! colspan="2" align="Center" |Terms of office
|-
! rowspan="6" align="Center" |Executive Board
|{{Flagicon|France}} [[Christine Lagarde]]
|President
|1 November 2019
|31 October 2027
|-
|{{Flagicon|Spain}} [[Luis de Guindos]]
|Vice President
|1 June 2018
|31 May 2026
|-
|{{flagicon|Italy}} [[Piero Cipollone]]
|Member of the Executive Board
|1 November 2023
|31 October 2031
|-
|{{Flagicon|Netherlands}} [[Frank Elderson]]
|Member of the Executive Board
Vice-chair of the Supervisory board
|15 December 2020
|14 December 2028
|-
|{{Flagicon|Ireland}} [[Philip R. Lane]]
|Member of the Executive Board & Chief Economist
|1 June 2019
|31 May 2027
|-
|{{Flagicon|Germany}} [[Isabel Schnabel]]
|Member of the Executive Board
|1 January 2020
|31 December 2027
|-
! rowspan="20" |National Governors
|{{Flagicon|Belgium}} {{Interlanguage link|Pierre Wunsch|lt=|nl||fr|Pierre Wunsch|qid=|vertical-align=sup}}
|
|2 January 2019
|January 2029
|-
|{{Flagicon|Germany}} [[Joachim Nagel]]
|
|1 January 2022
|January 2030
|-
|{{Flagicon|Estonia}} [[Madis Müller]]
|
|June 2019
|June 2026
|-
|{{Flagicon|Ireland}} [[Gabriel Makhlouf]]
|
|1 September 2019
|1 September 2026
|-
|{{Flagicon|Greece}} [[Yannis Stournaras]]
|
|June 2020
|June 2026
|-
|{{Flagicon|Spain}} [[José Luis Escrivá]]
|
|6 September 2024
| 5 September 2030
|-
|{{Flagicon|France}} [[François Villeroy de Galhau]]
|
|1 November 2015
|November 2027
|-
|{{Flagicon|Croatia}} [[Boris Vujčić]]
|
|8 July 2012
|July 2030
|-
|{{Flagicon|Italy}} [[Fabio Panetta]]
|
|1 November 2023
|31 October 2028
|-
|{{Flagicon|Cyprus}}  [[Christodoulos Patsalides]]
|
|11 April 2024
|April 2029
|-
| {{Flagicon|Latvia}} [[Mārtiņš Kazāks]]
|
|21 December 2019
|21 December 2025
|-
|{{Flagicon|Lithuania}} [[Gediminas Šimkus]]
|
|7 April 2021
|6 April 2026
|-
|{{Flagicon|Luxembourg}} [[Gaston Reinesch (economist)|Gaston Reinesch]]
|
|January 2013
|January 2031
|-
|{{Flagicon|Malta}} [[Edward Scicluna]]
|
|1 January 2021
|30 December 2025 
|-
|{{Flagicon|Netherlands}} [[Klaas Knot]]
|
|1 July 2011
|May 2025
|-
|{{Flagicon|Austria}} [[Robert Holzmann]]
|
|1 September 2019
|31 August 2025
|-
|{{Flagicon|Portugal}} [[Mário Centeno]]
|
|July 2020
|June 2025
|-
|{{Flagicon|Slovenia}} ''TBA''
|
|
|
|-
|{{Flagicon|Slovakia}} [[Peter Kažimír]]
|
|1 June 2019
|1 June 2025
|-
|{{Flagicon|Finland}} [[Olli Rehn]]
|
|12 July 2018
|12 July 2025
|}

====General Council====
The General Council is a body dealing with transitional issues of euro adoption, for example, fixing the exchange rates of currencies being replaced by the euro (continuing the tasks of the former EMI).<ref name="Governing Council2"/> It will continue to exist until all EU member states adopt the euro, at which point it will be dissolved.<ref name="Governing Council2"/> It is composed of the President and vice-president together with the [[European System of Central Banks#Member banks|governors of all of the EU's national central banks]].<ref name="ENA Com">{{cite web |title=Composition of the European Central Bank |publisher=CVCE |url=http://www.cvce.eu/collections/unit-content/-/unit/en/d5906df5-4f83-4603-85f7-0cabc24b9fe1/ae7780e3-050b-4a5e-914e-e1599d6f04dc |access-date=18 February 2014}}</ref><ref name="ECB GC">{{cite web | title=ECB: General Council | publisher=European Central Bank | url=https://www.ecb.europa.eu/ecb/orga/decisions/genc/html/index.en.html | access-date=4 January 2015 }}</ref>

====Supervisory Board====
The [[ECB Supervisory Board]] meets twice a month to discuss, plan and carry out the ECB's supervisory tasks.<ref name="SupBoard">{{cite web|url=https://www.ecb.europa.eu/ecb/orga/decisions/ssm/html/index.en.html|title=Supervisory Board|publisher=European Central Bank|access-date=3 December 2015}}</ref> It proposes draft decisions to the Governing Council under the non-objection procedure. It is composed of Chair (appointed for a non-renewable term of five years), Vice-chair (chosen from among the members of the ECB's executive board) four ECB representatives and representatives of national supervisors. If the national supervisory authority designated by a Member State is not a national central bank (NCB), the representative of the competent authority can be accompanied by a representative from their NCB. In such cases, the representatives are together considered as one member for the purposes of the voting procedure.<ref name="SupBoard"/>

It also includes the Steering Committee, which supports the activities of the supervisory board and prepares the Board's meetings. It is composed by the chair of the supervisory board, Vice-chair of the supervisory board, one ECB representative and five representatives of national supervisors. The five representatives of national supervisors are appointed by the supervisory board for one year based on a rotation system that ensures a fair representation of countries.<ref name="SupBoard"/>

===Capital subscription===
{{Politics of the European Union}}
The ECB is governed by European law directly, but its set-up resembles that of a corporation in the sense that the ECB has shareholders and stock capital. Its initial capital was supposed to be €5 billion<ref>Article 28.1 of the ESCB Statute</ref> and the initial capital allocation key was determined in 1998 on the basis of the member states' populations and GDP,<ref name="capital"/><ref>Article 29 of the ESCB Statute</ref> but the key is adjustable.<ref>Article 28.5 of the ESCB Statute</ref> The euro area NCBs were required to pay their respective subscriptions to the ECB's capital in full. The NCBs of the non-participating countries have had to pay 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&nbsp;billion.{{citation needed|date=July 2016}} The capital is held by the national central banks of the member states as shareholders. Shares in the ECB are not transferable and cannot be used as collateral.<ref>Article 28.4 of the ESCB Statute</ref> The NCBs are the sole subscribers to and holders of the capital of the ECB.

Today, ECB capital is about €11 billion, which is held by the national central banks of the member states as shareholders.<ref name="capital"/> The NCBs' shares in this capital are calculated using a capital key which reflects the respective member's share in the total population and gross domestic product of the EU. The ECB adjusts the shares every five years and whenever the number of contributing NCBs changes. The adjustment is made on the basis of data provided by the European Commission.

All national central banks (NCBs) that own a share of the ECB capital stock as of 1 February 2020 are listed below. Non-Euro area NCBs are required to pay up only a very small percentage of their subscribed capital, which accounts for the different magnitudes of Euro area and Non-Euro area total paid-up capital.<ref name="capital">{{cite web|title=Capital Subscription|url=http://www.ecb.int/ecb/orga/capital/html/index.en.html|publisher=European Central Bank|access-date=1 February 2020}}</ref>

{{static row numbers}} 
{| class="wikitable sortable static-row-numbers static-row-header-text"
|-
! NCB
! Capital Key (%)
! Paid-up Capital (€)
|-
| [[National Bank of Belgium]]
| align=right | 2.9630
| align=right | 276,290,916.71
|-
| [[Croatian National Bank]]
| align=right | 0.6595
| align=right | 71,390,921.62
|-
| [[Deutsche Bundesbank]]
| align=right | 21.4394
| align=right | 1,999,160,134.91
|-
| [[Bank of Estonia]]
| align=right | 0.2291
| align=right | 21,362,892.01
|-
| [[Central Bank of Ireland]]
| align=right | 1.3772
| align=right | 128,419,794.29
|-
| [[Bank of Greece]]
| align=right | 2.0117
| align=right | 187,585,027.73
|-
| [[Bank of Spain]]
| align=right | 9.6981
| align=right | 904,318,913.05
|-
| [[Bank of France]]
| align=right | 16.6108
| align=right | 1,548,907,579.93
|-
| [[Banca d'Italia|Bank of Italy]]
| align=right | 13.8165
| align=right | 1,288,347,435.28
|-
| [[Central Bank of Cyprus]]
| align=right | 0.1750
| align=right | 16,318,228.29
|-
| [[Bank of Latvia]]
| align=right | 0.3169
| align=right | 29,549,980.26
|-
| [[Bank of Lithuania]]
| align=right | 0.4707
| align=right | 43,891,371.75
|-
| [[Central Bank of Luxembourg]]
| align=right | 0.2679
| align=right | 24,980,876.34
|-
| [[Central Bank of Malta]]
| align=right | 0.0853
| align=right | 7,953,970.70
|-
| [[De Nederlandsche Bank]]
| align=right | 4.7662
| align=right | 444,433,941.0
|-
| [[Oesterreichische Nationalbank]]
| align=right | 2.3804
| align=right | 221,965,203.55
|-
| [[Banco de Portugal]]
| align=right |  1.9035 
| align=right | 177,495,700.29 
|-
| [[Bank of Slovenia]]
| align=right | 0.3916
| align=right | 36,515,532.56
|-
| [[National Bank of Slovakia]]
| align=right | 0.9314
| align=right | 86,850,273.32
|-
| [[Bank of Finland]]
| align=right | 1.4939
| align=right | 136,005,388.82
|-
| '''Euro area total'''
| align=right | '''81.9881'''
| align=right | '''7,610,421,092.94'''
|-
| [[Bulgarian National Bank]]
| align=right | 0.9832
| align=right | 3,991,180.11
|-
| [[Czech National Bank]]
| align=right | 1.8794
| align=right | 7,629,194.36
|-
| [[Danmarks Nationalbank]]
| align=right | 1.7591
| align=right | 7,140,851.23
|-
| [[Hungarian National Bank]]
| align=right | 1.5488
| align=right | 6,287,164.11
|-
| [[National Bank of Poland]]
| align=right | 6.0335
| align=right | 24,492,255.06
|-
| [[National Bank of Romania]]
| align=right | 2.8289
| align=right | 11,483,573.44
|-
| [[Sveriges Riksbank]]
| align=right | 2.9790
| align=right | 12,092,886.02
|-
! '''Non-Euro area total'''
! align=right | '''18.0119'''
! align=right | '''73,117,104.33'''
|-
! '''Net total'''
! align=right | '''100.0000'''
! align=right | '''7,683,538,197.27'''
|}

===Reserves===
In addition to capital subscriptions, the NCBs of the member states participating in the euro area provided the ECB with foreign reserve assets equivalent to around €40&nbsp;billion. The contributions of each NCB is in proportion to its share in the ECB's subscribed capital, while in return each NCB is credited by the ECB with a claim in euro equivalent to its contribution. 15% of the contributions was made in gold, and the remaining 85% in US dollars and UK pounds sterling.{{citation needed|date=July 2016}}

===Languages===
The internal working language of the ECB is English, and press conferences are held in English. External communications are handled flexibly: English is preferred (though not exclusively) for communication within the ESCB (i.e. with other central banks) and with financial markets; communication with other national bodies and with EU citizens is normally in their respective language, but the ECB website is predominantly English; official documents such as the Annual Report are in the official languages of the EU (generally English, German and French).<ref>{{cite news|title=Translation Adds Complexity to European Central Bank's Supervisory Role: ECB Wants Communication in English, But EU Rules Allow Use of Any Official Language|first=Todd|last=Buell|date=29 October 2014|access-date=11 October 2015|newspaper=The Wall Street Journal|url=https://www.wsj.com/articles/translation-adds-complexity-to-european-central-banks-supervisory-role-1414580925}}</ref><ref>{{cite web|page=26|title=The Application of multilingualism in the European Union Context|publisher=ECB|date=February 2006|access-date=11 October 2015|url=http://www.ecb.europa.eu/pub/pdf/scplps/ecblwp2.pdf|first=Phoebus|last= Athanassiou}}</ref>

In 2022, the ECB publishes for the first time details on the nationality of its staff,<ref>{{cite web | url=https://www.ecb.europa.eu/pub/annual/html/ecb.ar2021~14d7439b2d.en.html#toc93 | title=Annual Report 2021 | date=28 April 2022 |publisher=European Central Bank| last1=Bank | first1=European Central }}</ref> revealing an over-representation of Germans and Italians along the ECB employees, including in management positions.

===Independence===
The European Central Bank (and by extension, the Eurosystem) is often considered as the "most independent central bank in the world".<ref>{{Cite press release|url=https://www.ecb.europa.eu/press/key/date/1997/html/sp970513.en.html|title=The European Central Bank: independent and accountable|website=European Central Bank|date=13 May 1997|language=en|access-date=5 November 2017}}</ref><ref>{{Cite press release|url=https://www.ecb.europa.eu/press/key/date/1999/html/sp990504.en.html|title=The role of the Central Bank in the United Europe|website=European Central Bank|date=4 May 1999|language=en|access-date=5 November 2017}}</ref><ref>{{Cite journal|last1=Papadia|first1=Francesco|last2=Ruggiero|first2=Gian Paolo|date=1 February 1999|title=Central Bank Independence and Budget Constraints for a Stable Euro|journal=Open Economies Review|language=en|volume=10|issue=1|pages=63–90|doi=10.1023/A:1008305128157|s2cid=153508547|issn=0923-7992}}</ref><ref>{{Cite news|url=https://www.wsj.com/articles/SB902443500523452500|title=Is the ECB Too Independent?|last=Wood|first=Geoffrey|work=The Wall Street Journal|access-date=5 November 2017|language=en-US}}</ref> In general terms, this means that the Eurosystem tasks and policies can be discussed, designed, decided and implemented in full autonomy, without pressure or need for instructions from any external body. The main justification for the ECB's independence is that such an institutional setup assists the maintenance of price stability.<ref name="Independence">{{cite web |url=http://www.ecb.int/ecb/orga/independence/html/index.en.html |title=Independence |publisher=European Central Bank |access-date=1 December 2012}}</ref><ref>{{cite journal |url=https://www.ecb.europa.eu/explainers/tell-me-more/html/ecb_independent.en.html |title=Why is the ECB independent? |website=European Central Bank |date=12 January 2017 |language=en |access-date=5 November 2017|last1=Bank |first1=European Central }}</ref>

In practice, the ECB's independence is pinned by four key principles:<ref>{{cite web |url=http://transparency.eu/ecb|title=Transparency International EU – The global coalition against corruption in Brussels |website=transparency.eu |language=en |access-date=5 November 2017 |date=28 March 2017}}</ref>

* '''Operational and legal independence''': the ECB has all required competences to achieve its price stability mandate{{Citation needed|date=August 2020}} and thereby can steer monetary policy in full autonomy and by means of high level of discretion. The ECB's governing council deliberates with a high degree of secrecy, since individual voting records are not disclosed to the public (leading to suspicions that Governing Council members are voting along national lines.<ref name="Heinemann Hüfner 2003 p.">{{cite journal | last1=Heinemann | first1=Friedrich | last2=Hüfner | first2=Felix P. | title=Is the View from the Eurotower Purely European? - National Divergence and ECB Interest Rate Policy | journal=SSRN Electronic Journal | publisher=Elsevier BV | year=2003 | issn=1556-5068 | doi=10.2139/ssrn.374600 | page=| s2cid=12675305 | url=https://ub-madoc.bib.uni-mannheim.de/376/1/dp0269.pdf }}</ref><ref>Jose Ramon Cancelo, Diego Varela and Jose Manuel Sanchez-Santos (2011) 'Interest rate setting at the ECB: Individual preferences and collective decision making', ''Journal of Policy Modeling'' 33(6): 804–820. [[doi:10.1016/j.jpolmod.2011.08.017|DOI]].</ref>) In addition to monetary policy decisions, the ECB has the right to issue legally binding regulations, within its competence and if the conditions laid down in Union law are fulfilled, it can sanction non-compliant actors if they violate legal requirements laid down in directly applicable Union regulations. The ECB's own legal personality also allows the ECB to enter into international legal agreements independently from other EU institutions, and be the party of legal proceedings. Finally, the ECB can organise its internal structure as it sees fit. 
* '''Personal independence:''' the mandate of ECB board members is purposefully very long (8 years) and Governors of national central banks have a minimum renewable term of office of five years.<ref name="Independence" /> In addition, ECB board members are vastly immune from judicial proceedings.<ref>{{Cite web|url=https://www.ecb.europa.eu/pub/pdf/scplps/ecblwp4.pdf?581a2ecf674a6554f5af698f5bf54019|title=PRIVILEGES AND IMMUNITIES OF THE EUROPEAN CENTRAL BANK|date=2007|website=European Central Bank}}</ref> Indeed, removals from the office can only be decided by the [[Court of Justice of the European Union]] (CJEU), under the request of the ECB's Governing Council or the executive board (i.e. the ECB itself). Such a decision is only possible in the event of incapacity or serious misconduct. National governors of the Eurosystem's national central banks can be dismissed under national law (with a possibility to appeal) in case they can no longer fulfil their functions or are guilty of serious misconduct.
* '''Financial independence''': the ECB is the only body within the EU whose statute guarantees budgetary independence through its own resources and income. The ECB uses its own profits generated by its monetary policy operations and cannot be technically insolvent. The ECB's financial independence reinforces its political independence. Because the ECB does not require external financing and symmetrically is prohibited from [[Monetary financing|direct monetary financing]] of public institutions, this shields it from potential pressure from public authorities.
*'''Political independence''': 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. Symmetrically, EU institutions and national governments are bound by the treaties to respect the ECB's independence. It is the latter which is the subject of much debate.

===Democratic accountability===
In return to its high degree of independence and discretion, the ECB is accountable to the [[European Parliament]] (and to a lesser extent to the European Court of Auditors, the European Ombudsman and the Court of Justice of the EU (CJEU)). Although the accountability mechanisms are not enshrined in EU law, several practices were established following a resolution of the European Parliament adopted in 1998,<ref>{{Cite web|title=Report on democratic accountability in the third phase of European Monetary Union – Committee on Economic and Monetary Affairs and Industrial Policy – A4-0110/1998|url=http://www.europarl.europa.eu/sides/getDoc.do?type=REPORT&reference=A4-1998-0110&language=EN|access-date=8 October 2018|website=europarl.europa.eu|language=en}}</ref> which were informally agreed by the ECB, and incorporated into the Parliament's rule of procedure.<ref>{{Cite web|title=The evolution of the ECB's accountability practices during the crisis|url=https://www.ecb.europa.eu/pub/economic-bulletin/articles/2018/html/ecb.ebart201805_01.en.html|access-date=8 October 2018|website=European Central Bank|date=9 August 2018|language=en}}</ref> In 2023, the European Parliament and the ECB made these accountability arrangements were made more formal by signing an exchange of letter.<ref>[https://www.ecb.europa.eu/pub/pdf/other/Exchange_of_Letters_ECB_European_Parliament_central_banking230605~87aa8ed4a3.en.pdf Exchange of letters between the ECB and the European Parliament]  (5 June 2023)</ref>

The accountability framework involves five main mechanisms:<ref>{{Cite web|title=Accountability|url=https://www.ecb.europa.eu/ecb/orga/accountability/html/index.en.html|access-date=2020-11-25|website=European Central Bank|date=20 August 2020|language=en}}</ref>

* '''Annual report:''' the ECB is bound to publish reports on its activities and has to address its annual report to the [[European Parliament]], the [[European Commission]], the [[Council of the European Union]] and the [[European Council]] .<ref name="ECB Acc">{{cite web|title=Accountability|url=http://www.ecb.int/ecb/orga/accountability/html/index.en.html|access-date=15 October 2007|publisher=European Central Bank}}</ref> The report is presented to the European parliament at the occasion of a specific hearing with the ECB's vice-president at the ECON committee.
* '''Annual parliamentary resolution:''' in return, the European Parliament evaluates the past activities to the ECB via its own annual resolution on the European Central Bank's report (which is essentially a non-legally-binding list of resolutions). Since 2016, the ECB replies to the Parliament's suggestions in an annex to its annual report.
* '''Quarterly hearings  (known as the "Monetary Dialogue"):''' the [[European Parliament Committee on Economic and Monetary Affairs|Economic and Monetary Affairs Committee of the European Parliament]] organises a hearing with the ECB every quarter,<ref>{{Cite web|title=Monetary dialogue {{!}} ECON Policies {{!}} ECON {{!}} Committees {{!}} European Parliament|url=http://www.europarl.europa.eu/committees/en/econ/monetary-dialogue.html|access-date=6 October 2017|website=europarl.europa.eu|language=en}}</ref> allowing members of parliament to address oral questions to the ECB president.
* '''Parliamentary questions:''' all Members of the European Parliament have the right to address written questions<ref>{{Cite web|title=Questions to the ECB {{!}} Documents {{!}} ECON {{!}} Committees {{!}} European Parliament|url=http://www.europarl.europa.eu/committees/en/econ/questions-ecb.html|access-date=6 October 2017|website=europarl.europa.eu|language=en}}</ref> to the ECB president. The ECB president provides a written answer in about six weeks.
* '''Appointments:''' The European Parliament is consulted during the appointment process of executive board members of the ECB.<ref name="BF EB">{{cite web|year=2005|title=Executive Board|url=http://www.banque-france.fr/fileadmin/user_upload/banque_de_france/Eurosysteme_et_international/Directoire_GB.pdf|access-date=23 July 2012|publisher=[[Banque de France]]}}</ref> However the Parliament's vote is only consultative, and in practice, the Parliament's opinion – when negative – has been ignored by the European Council.<ref>{{Cite web |date=2012-10-30 |title=Mersch's ECB candidacy survives MEPs' 'No' vote |url=https://www.politico.eu/article/merschs-ecb-candidacy-survives-meps-no-vote/ |access-date=2023-10-24 |website=POLITICO |language=en}}</ref>
* '''Legal proceedings:''' the ECB's legal personality allows civil society or public institutions to file complaints against the ECB to the Court of Justice of the EU.

In 2013, an interinstitutional agreement was reached between the ECB and the European Parliament in the context of the establishment of the ECB's Banking Supervision. This agreement sets broader powers to the European Parliament than the established practice on the monetary policy side of the ECB's activities. For example, under the agreement, the Parliament can veto the appointment of the chair and vice-chair of the ECB's supervisory board and may approve removals if requested by the ECB.<ref>{{cite web|title=Interinstitutional Agreement between the European Parliament and the European Central Bank on the practical modalities of the exercise of democratic accountability and oversight over the exercise of the tasks conferred on the ECB within the framework of the Single Supervisory Mechanism|date=30 November 2013 |url=https://www.ecb.europa.eu/ecb/legal/pdf/celex_32013q113001_en_txt.pdf}}</ref>

=== Transparency ===
In addition to its independence, the ECB is subject to limited transparency obligations in contrast to EU Institutions standards and other major central banks. Indeed, as pointed out by [[Transparency International]], "The Treaties establish transparency and openness as principles of the EU and its institutions. They do, however, grant the ECB a partial exemption from these principles. According to Art. 15(3) TFEU, the ECB is bound by the EU's transparency principles "only when exercising [its] administrative tasks" (the exemption – which leaves the term "administrative tasks" undefined – equally applies to the Court of Justice of the European Union and to the European Investment Bank).<ref>Braun, Benjamin, and Leo Hoffmann-Axthelm. ‘[https://transparency.eu/wp-content/uploads/2017/03/TI-EU_ECB_Report_DIGITAL.pdf Two Sides of the Same Coin: Independence and Accountability of the European Central Bank]’. Transparency International, March 2017.</ref>

In practice, there are several concrete examples where the ECB is less transparent than other institutions:
* '''Voting secrecy:''' while other central banks publish the voting record of its decision makers, the ECB's Governing Council decisions are made in full discretion. Since 2014, the ECB has published "accounts" of its monetary policy meetings,<ref>{{cite press release |url=https://www.ecb.europa.eu/press/pr/date/2014/html/pr140703_1.en.html |title=ECB to adjust schedule of meetings and to publish regular accounts of monetary policy discussions in 2015 |website=European Central Bank |date=3 July 2014 |language=en |access-date=5 November 2017}}</ref> but those remain rather vague and do not include individual votes.
* '''Access to documents:''' The obligation for EU bodies to make documents freely accessible after a 30-year embargo applies to the ECB. However, under the ECB's Rules of Procedure, the Governing Council may decide to keep individual documents classified beyond the 30 years.<!-- Art. 23.3 Rules of Procedure. See also CJEU in joined cases T-3/00 and T-337/04 -->
* '''Disclosure of securities:''' The ECB is less transparent than the Fed when it comes to disclosing the list of securities being held in its balance sheet under monetary policy operations such as QE.<ref>{{Cite web|url=http://bruegel.org/2017/11/the-eurosystem-too-opaque-and-costly/|title=The Eurosystem – Too opaque and costly? |website=bruegel.org|language=en-US|access-date=7 November 2017}}</ref>

==Location==
{{Main|Seat of the European Central Bank}}
[[File:Frankfurt EZB.Nordwest-2.20141228.jpg|thumb|The new ECB headquarters, which opened in 2014]]

The bank is based in [[Ostend (Frankfurt am Main)|Ostend]] (East End), [[Frankfurt am Main]]. The city is the largest financial centre in the [[Eurozone]] and the bank's location in it is fixed by the [[Amsterdam Treaty]].<ref>{{cite web |at=Protocol on the institutions with the prospect of enlargement of the European Union, Article 2, sole article, (i) |url=http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:11997D/TXT |access-date=4 January 2015 |title=Treaty of Amsterdam amending the Treaty on European Union, the Treaties establishing the European Communities and certain related acts |date=11 October 1997 |publication-date=23 December 2014}}</ref> The bank moved to a new purpose-built headquarters in 2014, designed by a Vienna-based architectural office, [[Coop Himmelbau]].<ref name="ECB-2007b">{{cite web |title=Winning design by Coop Himmelb(l)au for the ECB's new headquarters in Frankfurt/Main |access-date=2 August 2007 |publisher=European Central Bank |url=http://www.ecb.int/ecb/premises/html/image29.en.html |archive-url=https://web.archive.org/web/20070924213221/http://www.ecb.int/ecb/premises/html/image29.en.html |archive-date=24 September 2007}}</ref> The building is approximately {{convert|180|m|ft|0}} tall and is to be accompanied by other secondary buildings on a landscaped site on the site of the [[Großmarkthalle|former wholesale market]] in the eastern part of Frankfurt am Main. The main construction on a 120,000 m<sup>2</sup> total site area began in October 2008,<ref name="ECB-2007b" /><ref>{{cite press release |title=Launch of a public tender for a general contractor to construct the new ECB premises |date=10 July 2007 |access-date=2 August 2007 |publisher=European Central Bank |url=http://www.ecb.int/press/pr/date/2007/html/pr070710_3.en.html}}</ref> and it was expected that the building would become an architectural symbol for Europe. While it was designed to accommodate double the number of staff who operated in the former [[Eurotower (Frankfurt)|Eurotower]],<ref name="FT new building">{{cite news |last=Dougherty |first=Carter |title=In ECB future, a new home to reflect all of Europe |work=[[International Herald Tribune]] |access-date=2 August 2007 |url=http://www.iht.com/articles/2004/11/16/ecb_ed3_.php | url-status=dead | archive-date=19 September 2008 |archive-url=https://web.archive.org/web/20080919022915/http://www.iht.com/articles/2004/11/16/ecb_ed3_.php}}</ref> that building has been retained by the ECB, owing to more space being required since it took responsibility for banking supervision.<ref>{{cite web |publisher=European Central Bank |url=http://www.ecb.europa.eu/ecb/premises/intro/html/index.en.html |title=Overview |access-date=25 September 2019}}</ref>

== Debates surrounding the ECB ==
=== Debates on ECB independence ===
[[File:DSCI0115 Blockupy 2014 Transparent EZB.jpg|thumb|Demonstration of the [[Blockupy movement]] in front of the ECB (2014)]]
{{Essay-like|section|date=May 2020}}The debate on the independence of the ECB finds its origins in the preparatory stages of the construction of the EMU. The German government agreed to go ahead if certain crucial guarantees were respected, such as a European Central Bank independent of national governments and shielded from political pressure along the lines of the German central bank. The French government, for its part, feared that this independence would mean that politicians would no longer have any room for manoeuvre in the process. A compromise was then reached by establishing a regular dialogue between the ECB and the Council of Finance Ministers of the euro area, the Eurogroup.

==== Arguments in favour of independence ====
There is strong consensus among economists on the value of central bank independence from politics.<ref>{{Cite web|last=Vaitilingam|first=Romesh|date=May 13, 2019|title=Fed Appointments|url=https://www.igmchicago.org/surveys/fed-appointments/|url-status=live|archive-url=https://web.archive.org/web/20211204174401/https://www.igmchicago.org/surveys/fed-appointments/|archive-date=December 4, 2021|access-date=December 4, 2021|website=IGM Forum}}</ref><ref>{{Cite web|last=Rampell|first=Catherine|date=July 15, 2009|title=Petition for Fed Independence|url=https://economix.blogs.nytimes.com/2009/07/15/petition-for-fed-independence/|url-status=live|archive-url=https://web.archive.org/web/20210128110926/https://economix.blogs.nytimes.com/2009/07/15/petition-for-fed-independence/|archive-date=January 28, 2021|access-date=4 December 2021|website=NY Times}}</ref> The rationale behind are both empirical and theoretical. On the theoretical side, it's believed that time inconsistency suggests the existence of political business cycles where elected officials might take advantage of policy surprises to secure reelection. The politician up to the election will therefore be incentivized to introduce expansionary monetary policies, reducing unemployment in the short run. These effects will be most likely temporary. By contrast, in the long run, it will increase inflation, with unemployment returning to the natural rate negating the positive effect. Furthermore, the credibility of the central bank will deteriorate, making it more difficult to answer the market.<ref>{{Cite journal|last=Mishkin|first=Frederic|date=September 2006|title=Monetary Policy Strategy: How Did We Get Here?|url=http://www.nber.org/papers/w12515.pdf|journal=|language=en|location=Cambridge, MA|pages=w12515|doi=10.3386/w12515|s2cid=154595734}}</ref><ref>{{Cite book|last=European Central Bank.|url=https://data.europa.eu/doi/10.2866/908675|title=The case for central bank independence.|date=2020|publisher=Publications Office|location=LU|doi=10.2866/908675|isbn=9789289944243}}</ref><ref>{{Cite journal|last1=Barro|first1=Robert|last2=Gordon|first2=David|date=February 1983|title=Rules, Discretion and Reputation in a Model of Monetary Policy|url=http://www.nber.org/papers/w1079.pdf|journal=|language=en|location=Cambridge, MA|pages=w1079|doi=10.3386/w1079}}</ref> Additionally, empirical work has been done that defined and measured central bank independence (CBI), looking at the relationship of CBI with inflation.<ref>{{Cite journal|last1=Cukierman|first1=Alex|last2=Web|first2=Steven B.|last3=Neyapti|first3=Bilin|date=1992|title=Measuring the Independence of Central Banks and Its Effect on Policy Outcomes|url=https://doi.org/10.1093/wber/6.3.353|journal=The World Bank Economic Review|volume=6|issue=3|pages=353–398|doi=10.1093/wber/6.3.353|issn=0258-6770|url-access=subscription}}</ref>

==== The arguments against too much independence ====

===== An independence that would be the source of a democratic deficit. =====
According to Christopher Adolph, the alleged neutrality of central bankers is only a legal façade and not an indisputable fact.<ref name="Adolph, Christopher, 1976–2013">{{Cite book|last=Adolph |first=Christopher |title=Bankers, bureaucrats, and central bank politics : the myth of neutrality|date=2013|publisher=Cambridge University Press|isbn=978-1-139-61681-2|location=New York|oclc=844940155}}</ref>

'''The crisis: an opportunity to impose its will and extend its powers''':

– ''Its participation in the [[European troika|troika]]'': Thanks to its three factors which explain its independence, the ECB took advantage of this crisis to implement, through its participation in the troika, the famous structural reforms in the Member States aimed at making, more flexible the various markets, particularly the labour market, which are still considered too rigid under the [[ordoliberal concept]].<ref name="Delaume 2015 75">{{Cite journal|last=Delaume|first=Coralie|date=2015|title=Où va la Banque centrale européenne ?: De la technique à la politique, sans la démocratie|url=http://www.cairn.info/revue-le-debat-2015-5-page-75.htm|journal=Le Débat|language=fr|volume=187|issue=5|pages=75|doi=10.3917/deba.187.0075|issn=0246-2346|url-access=subscription}}</ref>

- ''[[Macro-prudential supervision]]'' : At the same time, taking advantage of the reform of the financial supervision system, the Frankfurt Bank has acquired new responsibilities, such as macro-prudential supervision, in other words, supervision of the provision of financial services.<ref>{{Cite journal|last=Fontan|first=Clément|date=2010|title=Chantiers de recherche transfert d'idée et résistances au changement : le cas de la banque centrale européenne après la crise.: Questionnement scientifique et objectifs de la thèse|journal=Politique Européenne|language=fr|volume=30|issue=1|pages=225|doi=10.3917/poeu.030.0225|issn=1623-6297|doi-access=free}}</ref>

-''Take liberties with its mandate to save the Euro'' : Paradoxically, the crisis undermined the ECB's ordoliberal discourse "because some of its instruments, which it had to implement, deviated significantly from its principles. It then interpreted the paradigm with enough flexibly to adapt its original reputation to these new economic conditions. It was forced to do so as a last resort to save its one and only raison d'être: the euro. This Independent was thus obliged to be pragmatic by departing from the spirit of its statutes, which is unacceptable to the hardest supporters of ordoliberalism, which will lead to the resignation of the two German leaders present within the ECB: the governor of the Bundesbank, Jens WEIDMANN<ref>{{Cite web|last=Raymond|first=Grégory|title=Jens Weidmann, l'homme qui dit "non" à toute l'Europe|url=https://www.huffingtonpost.fr/2012/08/30/jens-weidmann-bundesbank-draghi-merkel-euro_n_1843003.html|website=huffingtonpost.fr|date=31 August 2012}}</ref> and the member of the executive board of the ECB, Jürgen STARK.<ref>{{Cite web|agency=Reuters|date=11 September 2011|title=La démission de Jürgen Stark de la BCE vient au pire moment|url=https://www.lexpress.fr/archives/economie/2011/09/11/|website=lexpansion.lexpress.fr/}}</ref>

– ''Regulation of the financial system'' : The delegation of this new function to the ECB was carried out with great simplicity and with the consent of European leaders, because neither the Commission nor the Member States really wanted to obtain the monitoring of financial abuses throughout the area. In other words, in the event of a new financial crisis, the ECB would be the perfect scapegoat.<ref>{{Cite journal|last=Lebaron|first=Frédéric|date=2014|title=Quand le gardien du Temple devient le sauveur des marchés financiers|url=http://www.cairn.info/revue-savoir-agir-2014-1-page-5.htm|journal=Savoir/Agir|language=fr|volume=27|issue=1|pages=5–9|doi=10.3917/sava.027.0005|issn=1958-7856|url-access=subscription}}</ref>

- ''Capturing exchange rate policy'' : The event that will most mark the definitive politicization of the ECB is, of course, the operation launched in January 2015: the [[quantitative easing]] (QE) operation. Indeed, the Euro is an overvalued currency on the world markets against the dollar and the euro zone is at risk of deflation. In addition, Member States find themselves heavily indebted, partly due to the rescue of their national banks. The ECB, as the guardian of the stability of the euro zone, is deciding to gradually buy back more than EUR 1 100 billion Member States' public debt. In this way, money is injected back into the economy, the euro depreciates significantly, prices rise, the risk of deflation is removed, and Member States reduce their debts. However, the ECB has just given itself the right to direct the exchange rate policy of the euro zone without this being granted by the Treaties or with the approval of European leaders, and without public opinion or the public arena being aware of this.<ref name="Delaume 2015 75"/>

===== The arguments in favour of a counter power =====
In the aftermath of the euro area crisis, several proposals for a countervailing power were put forward, to deal with criticisms of a democratic deficit. For the German economist German Issing (2001) the ECB as a democratic responsibility and should be more transparent. According to him, this transparency could bring several advantages as the improvement of efficiency and credibility by giving the public adequate information. Others think that the ECB should have a closer relationship with the European Parliament which could play a major role in the evaluation of the democratic responsibility of the ECB.<ref name="Barbier-Gauchard, Amélie 1978-....">{{Cite book|last=Barbier-Gauchard, Amélie (1978–....).|title=La gouvernance économique de la zone euro : réalités et perspectives|date=15 May 2018|others=Sidiropoulos, Moïse., Varoudakis, Aristomène (1958–....)., De Grauwe, Paul (1946–....).|isbn=978-2-8073-2010-9|location=Louvain-la-Neuve|oclc=1041143371}}</ref> The development of new institutions or the creation of a minister is another solution proposed:

'''Towards democratic institutions ?'''

The absence of democratic institutions such as a Parliament or a real government is a regular criticism of the ECB in its management of the euro area, and many proposals have been made in this respect, particularly after the economic crisis, which would have shown the need to improve the governance of the euro area. For Moïse Sidiropoulos, a professor in economy: "The crisis in the euro zone came as no surprise, because the euro remains an unfinished currency, a stateless currency with a fragile political legitimacy".<ref>{{Cite web|date=2019|title=L'euro reste une monnaie inachevée|url=http://www.recherche.unistra.fr/index.php?id=30096|website=Université de Strasbourg}}</ref>

French economist [[Thomas Piketty]] wrote on his blog in 2017 that it was essential to equip the eurozone with democratic institutions. An economic government could for example enable it to have a common budget, common taxes and borrowing and investment capacities. Such a government would then make the euro area more democratic and transparent by avoiding the opacity of a council such as the Eurogroup.

Nevertheless, according to him "there is no point in talking about a government of the eurozone if we do not say to which democratic body this government will be accountable", a real parliament of the eurozone to which a finance minister would be accountable seems to be the real priority for the economist, who also denounces the lack of action in this area.<ref>{{Cite news|last=PIKETTY|first=Thomas|date=1 February 2017|title=Pour un gouvernement enfin démocratique de la zone euro|work=Le Monde|url=https://www.lemonde.fr/blog/piketty/2017/02/01/pour-un-vrai-gouvernement-de-la-zone-euro/|access-date=28 March 2020}}</ref>

The creation of a sub-committee within the current European Parliament was also mentioned, in the model of the Eurogroup, which is currently an under-formation of the ECOFIN Committee. This would require a simple amendment to the rules of procedure and would avoid a competitive situation between two separate parliamentary assemblies. The former President of the European Commission had, moreover, stated on this subject that he had "no sympathy for the idea of a specific Eurozone Parliament".<ref>{{Cite web|date=September 2014|title=RÉFORMER LA " GOUVERNANCE " EUROPÉENNE POUR UNE FÉDÉRATION D'ÉTATS NATIONS PLUS LÉGITIME ET PLUS EFFICACE|url=https://institutdelors.eu/wp-content/uploads/2018/01/reformergouvernanceue-bertoncini-vitorino-ne-ijd-sept14.pdf|website=Institut Jacques Delors}}</ref>

==== Debates on the role of central bank reserves in monetary policy ====
[[Paul De Grauwe|Paul de Grauwe]] and Yuemei Ji criticizes the prevailing role of central bank reserves in monetary policy.<ref>{{Cite journal |last1=De Grauwe |first1=Paul |last2=Ji |first2=Yuemei |date=2023 |title=Fighting Inflation More Effectively Without Transferring Central Banks' Profits to Banks |url=https://www.ssrn.com/abstract=4626501 |journal=SSRN Electronic Journal |language=en |doi=10.2139/ssrn.4626501 |issn=1556-5068}}</ref><ref>{{Cite web |last=de Grauwe |first=Paul |date=2023-09-04 |title=The role of central bank reserves in monetary policy: Bundesbank Invited Speakers Series |url=https://www.bundesbank.de/en/service/dates/the-role-of-central-bank-reserves-in-monetary-policy-913968 |access-date=2023-11-26 |website=Deutsche Bundesbank}}</ref> Due to past Quantitative Easing and refinancing operations (TLTROs), major central banks are currently operating in a regime of abundance of central bank reserves. As a result, when the ECB raised interest rates in response to the 2021-2023 inflation, it automatically led to a sharp increase in interest payments from the ECB to banks (while interest incomes from monetary portfolio remained stagnant leading to an unprecedented transfer of around 150 billions from the Eurosystem to commercial banks, which is nearly equivalent to the annual EU budget spending. Paul De Grauwe argues that these transfers lack economic rationale. Several Members of the European Parliament have also criticized the ECB for unduly boosting banks' profits.<ref>Written questions to the ECB by Pedro Marques, René Repasi, Paul Tang (S&D) and Rasmus Andresen, Henrike Hahn, Ville Niinistö, Ernest Urtasun ([https://www.europarl.europa.eu/doceo/document/ECON-QZ-752612_EN.pdf Z-000019/2023]), Manon Aubry ([https://www.europarl.europa.eu/doceo/document/ECON-QZ-745477_EN.pdf Z-000011/2023]), Bas Eickhout, Henrike Hahn, Rasmus Andresen, Ernest Urtasun ([https://www.europarl.europa.eu/doceo/document/ECON-QZ-746989_EN.pdf Z-746989_EN.pdf])</ref> 

==See also==
{{Portal bar|Banks|Europe}}
* [[European Banking Authority]]
* [[European Systemic Risk Board]]
* [[Open market operation]]
* [[Economic and Monetary Union of the European Union|Economic and Monetary Union]]
* [[Capital Markets Union]]
* [[European banking union]]
* [[List of central banks]]

==Notes==
{{notelist}}

==References==
{{Reflist}}

==External links==
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* {{Official website}}
* {{Bluesky}}

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[[Category:European Central Bank| ]]
[[Category:1998 establishments in the European Union]]
[[Category:Banks established in 1998]]
[[Category:Eurosystem]]
[[Category:Eurozone]]
[[Category:Institutions of the European Union]]
[[Category:Banks based in Frankfurt]]
[[Category:European System of Central Banks]]
[[Category:European Banking Supervision|+]]