Description
The European Central Bank (ECB) is the central bank of the Eurozone, a monetary union of 19 EU member states which employ the euro. Established by the Treaty of Amsterdam, the ECB is one of the world's most important central banks and serves as one of seven institutions of the European Union, being enshrined in the Treaty on European Union (TEU). The bank's capital stock is owned by all 27 central banks of each EU member state. The current President of the ECB is Christine Lagarde. Headquartered in Frankfurt, Germany, the bank formerly occupied the Eurotower prior to the construction of its new seat.
The primary objective of the ECB, mandated in Article 2 of the Statute of the ECB, is to maintain price stability within the Eurozone. Its basic tasks, set out in Article 3 of the Statute, are to set and implement the monetary policy for the Eurozone, to conduct foreign exchange operations, to take care of the foreign reserves of the European System of Central Banks and operation of the financial market infrastructure under the TARGET2 payments system and the technical platform (currently being developed) for settlement of securities in Europe (TARGET2 Securities). The ECB has, under Article 16 of its Statute, 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.
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 capital is €11 billion held by the national central banks of the member states as shareholders. The initial capital allocation key was determined in 1998 on the basis of the states' population and GDP, but the capital key has been adjusted. Shares in the ECB are not transferable and cannot be used as collateral.
