Eurosystem and ESCB

The euro area is composed of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. The Eurosystem is composed of these countries' national central banks (NCBs) and the ECB. The role of the Eurosystem is to administer the euro and the monetary policy of the euro area.
 
The European System of Central Banks (ESCB) consists of the NCBs participating in the Eurosystem as well as of the NCBs of those EU member states that have not yet introduced the single currency. These countries are Bulgaria, the Czech Republic, Croatia, Denmark, Great Britain, Hungary, Lithuania, Poland, Romania and Sweden.
 
The ECB is answerable for ensuring that the Eurosystem's responsibilities are met, either through the operations of the ECB itself or through the respective national central bank. For their part, the euro area national central banks (NCBs) take care of the tasks that fall to the ESCB and the Eurosystem. The NCBs contribute through, for example, participation in the many committees. The national central banks also have national responsibilities that lie outside the Eurosystem.
 
Through the provisions of the Treaty establishing the European Community, the Eurosystem is granted absolute independence for executing its duties. The ECB, the Eurosystem's national central banks and the members of their decision-making bodies may not seek or take instruction from any outside body.
 
The prime objective of the Eurosystem is the maintenance of price stability. It also aims to support the EU's general economic policy, as long as this is not in with the objectives of price stability.
 
The tasks of the Eurosystem are:
 
  • Implementation of monetary policy within the euro area
  • Conducting foreign exchange operations and the holding and managing of the official foreign currency reserves of the euro area countries
  • Authorisation of the issue of euro banknotes
  • Promotion of the smooth operation of payment systems
  • Compilation of statistics
  • Monitoring of developments in the banking and financial sectors
  • Ensuring the smooth flow of communication between the ESCB and the supervisory authorities