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European Central Bank
Context:
The ECB lowered its deposit rate from a record high of 4% to 3.75%, marking the first rate cut in five years.
More on News
- The ECB is expected to make further rate cuts in 2024, influenced by inflation outlook, economic data, and monetary policy transmission strength.
- The US Federal Reserve’s delay in policy easing could impact the ECB’s cautious approach, potentially weakening the euro and raising imported inflation.
About ECB Organisation
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- Established: June 1, 1998
- Headquarters: Frankfurt, Germany
- Objective
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- Price Stability: Maintain inflation rates below, but close to, 2% over the medium term.
- Functions
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- Monetary Policy: The central bank sets key interest rates, which significantly impact the money supply and inflation in the Eurozone.
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- Foreign Exchange Operations: It manages foreign reserves to stabilise the euro.
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- Issuance of Banknotes: The authority authorises the issuance of euro banknotes, ensures sufficient supply, and monitors circulation and authenticity.
- Governance Structure
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- Governing Council: The main decision-making body comprises the six Executive Board members and the governors of national central banks in the Eurozone countries.
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- Executive Board: The executive branch, comprising the President, Vice-President, and four other members.
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- General Council: Advisory body including the President and Vice-President of the ECB and governors of all EU member states’ national central banks.
- Recent Challenges and Initiatives
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- Economic Crisis Response: Addressed the 2008 financial crisis, Eurozone debt crisis, and COVID-19 economic impact.
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- Implemented measures like lowering interest rates, emergency liquidity assistance, and quantitative easing.
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- Climate Change: Integrating climate change considerations into monetary policy and financial stability assessments.
- Digital Euro: Exploring a digital euro to complement cash and respond to the digitisation of payments.