European Central Bank [ECB]

The European Central Bank (ECB) is the central bank for the 20 European Union countries that have adopted the euro, collectively known as the eurozone. Established in 1998 and headquartered in Frankfurt, the ECB’s primary mandate is maintaining price stability, defined as inflation below but close to 2% over the medium term. Unlike the Fed’s dual mandate, the ECB focuses primarily on inflation. The ECB Governing Council, comprising six Executive Board members and 20 national central bank governors, meets every six weeks to set monetary policy. Key tools include setting three key interest rates (deposit facility, main refinancing, marginal lending), conducting asset purchase programs, and providing long-term loans to banks (TLTROs). During the eurozone debt crisis, ECB President Draghi’s promise to do ‘whatever it takes’ stabilized markets. The ECB launched negative interest rates in 2014 and massive quantitative easing in 2015. Managing monetary policy for diverse economies from Germany to Greece presents unique challenges.