What Is a European Central Bank?

The European Central Bank, referred to as the European Central Bank, is headquartered in Frankfurt, Germany, and was established on June 1, 1998. It is responsible for the financial and monetary policies of the European Union's Eurozone. It was formally established on July 1, 1998 in accordance with the provisions of the 1992 Maastricht Treaty. It is a financial institution established to adapt to the issuance and circulation of the euro, and is also a product of European economic integration.

European Central Bank

(European Central Bank)

European Central Bank referred to as the European Central Bank, headquartered in Germany

The European Central Bank was established on June 1, 1998

After the first phase was officially launched in 1990,

European Central Bank

European Central Bank is the first in the world

Administration (General Administration)

Banknote (board)

Communications (office)

Lawyer to Executive Board

European Central Bank representation in Washington

Economics (General Administration)

Financial Stability and Supervision

Human Resources, Budget and Organization (General Administration)

Information System (General Administration)

Internal Audit (Bureau)

International and European Relations (General Directorate)

The General Council can be considered a transitional body. Representatives of the General Council include 15 Eurozone countries and 12 non-Eurozone countries. Other members of the European Central Bank's executive board chair, members of the European Council and the European Commission can attend meetings of the general council. But they do not have the right to vote.

One is the six members of the Executive Committee of the European Central Bank, and the other is the twelve central bankers who join the member states of the euro zone. The term of office of the central bank governors of the member states shall be at least 5 years. Each member of the management board has one vote. If the number of votes is equal to the number of votes for and against, the vote of the president of the European Central Bank is decisive. The management committee shall vote at least two-thirds of the required number. If this minimum requirement is not met, the president of the European Central Bank may convene a special meeting to make a decision.

Member of the Executive Committee of the European Central Bank

Mario Draghi, European Central Bank President, Italian, former Bank of Italy Governor, took over in November 2011.

Constantio, Deputy Governor of the European Central Bank, Portuguese

Lauten Schleig, Executive Member of the European Central Bank, Deputy Governor of the Bank of Germany

Yves Mersch, European Central Bank Executive Member, Luxembourg Central Bank Governor

Cole (Benoit Coeure), executive member of the European Central Bank, senior official of the French Ministry of Finance

Pratt, European Central Bank executive member, European Central Bank senior economist, Belgian

Back row (left to right): Yves Mersch, Peter Praet, Benoît Curé

Front row (left to right): Sabine Lautenschläger, Mario Draghi (President), Vítor Constâncio (Vice-President)

The Council is the main decision-making body of the European Central Bank. It consists of six members of the Executive Board, plus the governors of the 15 euro area countries of the National Central Bank.

Responsibility is to adopt guidelines and take the necessary decisions to ensure that the execution of tasks is delegated to the euro area that sets monetary policy. This includes deciding on the target of the relevant currency, key interest rates, supply reserve euros, and establishing decisions to implement the guidelines.

Council meetings are usually held twice a month at Eurotower in Frankfurt, Germany. But interest rates are discussed only once.

At the first meeting, the council assesses the development of economic and monetary policy and holds a monetary policy resolution every six weeks. At its second meeting, the council will discuss key issues related to other goals and responsibilities of the European Central Bank and the euro area.

The General Council also contributes to the advisory function of the European Central Bank; collects statistical data; prepares the European Central Bank's annual report; establishes the necessary rules, standardized accounting and reporting to coordinate the conduct of business; the key to establishing mandatory measures,

According to the Statute, the General Council will be dissolved once all EU member states implement a single currency.

The function is to "maintain the stability of the currency", manage leading interest rates, currency reserves and issuance, and formulate

Some critics argue that the European Central Bank's autonomy is insufficient.

Some critics believe that the goals set by the European Central Bank are unreasonable,

[Associated Press, Frankfurt, Germany, April 7] The European Central Bank today raised its dominant interest rate by 0.25 percentage points, highlighting its determination to curb inflation.

The European Central Bank raised the euro zone's dominant interest rate from the current 1% to 1.25%. Since May 2009, the European Central Bank has implemented a record low interest rate of 1%.

The move highlights the dilemma facing the European Central Bank. The European Central Bank is trying to develop a unified monetary policy for a region that includes 17 economies.

Because the European Central Bank's mission is to curb inflation (while the Fed is also committed to job creation), it will tighten the money, even if doing so will put more pressure on mortgage-backed consumers and the so-called fringe nation's collapsed real estate market .

The European Central Bank is concerned that inflation will remain above its 2% target. In March, euro zone inflation was as high as 2.6%.

[Deutsche News Agency, Frankfurt, April 7] European Central Bank President Jean-Claude Trichet today s remarks after the bank s first interest rate hike in almost three years made people think the institution may be possible in the next few months Continue to raise interest rates.

Raising interest rates by 25 basis points to 1.25% is in line with analysts' forecasts. The European Central Bank had previously expressed concern about growing inflation.

Trichet said at a news conference after the rate hike was announced that the European Central Bank is determined to curb inflation and that the bank is continuing to "very closely monitor" new pressures from prices.

It can be seen that the European Central Bank is sending a signal that interest rates will rise again in the next few months, most likely in June.

[AFP, Frankfurt, April 7] European Central Bank President Trichet said today that the bank's first increase in interest rates since July 2008 does not mean that it will continue to take this measure in the future.

"We have not decided today to increase interest rates one after the other," he said. "We will continue to make appropriate decisions to stabilize prices as we did in the past." ^[3]

The stock market, which was deeply affected by the Greek factors, ushered in a substantial good that was not seen for many days yesterday. At 20:45 on November 3, Beijing time, the European Central Bank unexpectedly announced that it would lower the euro zone benchmark interest rate by 25 basis points to 1.25%. This is the new president of the European Central Bank, the Italian

The European Central Bank is offering another "strike" on Wednesday. On the same day, the bank for the first time in the history of lending hundreds of billions of euros to the European banking system by providing a three-year unlimited cap loan, which is expected to ease the credit crunch caused by the European debt crisis.

According to data released by the European Central Bank on the evening of the 21st Beijing time, the three-year loan tender on that day received responses from a total of 523 banks, and eventually lent 489 billion euros in funds, far exceeding market expectations.

At the EU summit on the 9th of this month, the European Central Bank announced that it will launch a three-year emergency loan mechanism called the "Long-term Refinancing Operation" (LTRO) and relaxed the standard of loan collateral that banks need to provide in order to ease banks The industry is facing tremendous financing pressure now and for some time to come. Recently, due to the loan reluctance triggered by the European debt crisis, the European banking industry is experiencing tight liquidity and rising borrowing costs. Many small banks are highly dependent on the European Central Bank for financing.

O'Neill, chairman of Goldman Sachs Asset Management, said in an interview with the Shanghai Securities News on Wednesday that the market is very concerned about the scale of the LTRO financing operation. "The larger the amount of funds lent out, the better the stock market is." The latest measures by the European Central Bank have helped to significantly reduce the tail risk of Europe's recurrence of "Lehman" incidents.

Many people regard the launch of a three-year unlimited cap loan mechanism as a "disguised" quantitative easing (QE) measure because the central bank does not restrict banks from using this money to buy government bonds issued by euro-zone countries. French President Sarkozy even publicly suggested that banks use cheap loans obtained from central banks to buy high-interest government bonds issued by euro-zone countries and arbitrage them.

Over the past few days, the yields of government bonds in Italy, Spain, and France have generally fallen, which is partly attributed to good expectations of the central bank's introduction of LTRO financing measures.

However, many analysts have also pointed out that considering that banks are currently avoiding high-risk eurozone government bonds, most banks will be reluctant to buy risky eurozone heavily indebted countries again unless there is an urgent funding chain. National debt. Moreover, many European banks are under pressure to increase capital adequacy ratios.

The immediate response from the financial markets illustrates the problem well. European stock markets surged and fell after the European Central Bank announced the results of the financing tender on Wednesday. As of 23:45 on the 21st, Beijing time, the stock markets in Britain, France, and Germany all fell slightly, and stock markets such as France rose more than 2% in early trading. ^[6]

European banks are about to get the "stern love" they so desperately need. Despite some stress tests, investors continue to use the calculations used by lenders to calculate the capital adequacy ratios of these banks. What is needed today is a strong supranational oversight agency, one that will not be driven by its own interests, as national regulators, allow banks to falsify financial data. One step forward, the European Central Bank.

So far, the work of the European Central Bank has been limited to monetary policy in the euro area, which has 17 member states. However, as the European Commission clearly stated in its official proposal on September 12, the European Union will establish a "Single European Monitoring Mechanism" (SSM) to directly supervise all eurozone banks, and the European Central Bank will play a key role in this. One of the areas proposed by the committee that deserves further coordination is the internal risk model used to set the risk weight of bank assets.

At present, banks can use the so-called "standard method" to determine the risk weight of their assets. This method is designed by the global regulator Basel Committee. It gives a certain amount of questions about the possibility of a default in the asset pool. Assumptions. But this method is rarely used in the largest banks. They prefer the "internal rating method" because they can use their own assumptions. This would stimulate banks to set up overly optimistic assumptions, because then they would need to hold less capital.

Take the trading portfolio of the European Investment Bank as an example. According to JP Morgan estimates, if these banks use a standardized method to calculate 60% of their market risk-weighted assets, the result is that Deutsche Bank and Barclays will have capital gaps of $ 6.2 billion and $ 8.7 billion, respectively. This does not mean that any of their banks really misreported their risk-weighted assets. However, investors cannot judge or reliably compare different lenders. So far, national regulators have a great incentive to turn a blind eye to these apparently overly optimistic assumptions, because then their own taxpayers will not have any capital gap.

The European Central Bank can and should solve this problem. It has enough momentum to ensure the robustness of the model, and the euro area's European stability mechanism is ready to rectify any lender's capital shortage. It will allow the European Banking Union to develop rapidly. ^[7]