European Central Bank (ECB) is one the European Union’s most powerful and notable institutions. The central bank is responsible for formulating monetary policy for the 28 member states. Its responsibilities often put it at the center stage of political discussion in Europe, with the institution’s decision being closely monitored by all major economies of the world.

The ECB has two major functions. The central bank implements EU’s economic and monetary policy. The bank also manages the euro. The main aim of the ECB is to stabilize prices within the union and to support economic growth across the member states.

The bank’s main activities involve setting the interest rates, which it uses when lending to commercial banks inside the Eurozone. It’s also involved in managing the Eurozone’s foreign currency reserves and the production of euro banknotes.  For small transactions, currency transactions can take place in private banks but those looking to speculate in larger values will require a cTrader demo account in order to learn the intricacies of the forex markets.

The bank’s composition

The ECB was established in 1998 and it began operating in 1999, when a majority of EU members adopted the euro. Since its foundation, the ECB has worked together with the national central banks of the member states. The collaboration forms the European System of Central Banks.

The governing bodies involved in the bank’s decision making include: the Governing Council, the Executive Board and the General Council. The bank’s current president is Mario Draghi, who’s eight-year term as the president will end in 2019.

Improving accountability

In order for the ECB to maintain price stability and sound economic management, it has to retain political and financial independence. The bank regularly publishes reports and gives an annual address to the European Parliament, the European Commission, the council of the European Union and the European Council. This ensures a certain level of accountability, although the bank has faced criticism in the past.

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