See also:

• The European System of Central Banks (ESCB)
• The European Central Bank (ECB)
• Countries that have joined the euro area

EUROSYSTEM

The Eurosystem consists of the European Central Bank (ECB) and the national central banks of the European Union Member States that have adopted the euro (currently 16 countries, 17 countries as of 1 January 2011 when Estonia joins the euro area). The decision-making body of the Eurosystem is the ECB Council.

The Eurosystem has four basic tasks:

  To implement the monetary policy adopted by the ECB Governing Council, which involves decisions concerning the ECB's key interest rates (the minimum bid rates for main refinancing operations, interest rates on marginal lending and deposit facilities) and also decisions related to monetary policy goals and the supply of monetary reserves, if necessary. The implementation of monetary policy is the responsibility of the ECB Executive Board, which establishes relevant guidelines for national central banks. For instance, once a week the Executive Board makes a decision concerning the allocation of liquidity to the banking sector via main refinancing operations.
  To perform foreign currency transactions and manage the official reserves of the euro area countries.
  To ensure the smooth operation of payment and settlement systems. In addition, the Eurosystem helps to conduct financial supervision by advising legislators within its competence and compiling monetary and financial statistics.

The Eurosystem is independent. When performing the tasks of the Eurosystem, the ECB and national central banks must not seek or follow instructions from the EU institutions, national governments or any other authorities. Similarly, the EU institutions and national governments must not attempt to influence the members of the bodies of the ECB or national central banks in their duties.

National central banks participate in the implementation of the single monetary policy of the euro area. They conduct monetary policy operations, such as the allocation of central bank funds to credit institutions, and guarantee the settlement of domestic and cross-border non-cash payments. Moreover, they are responsible for the management of foreign currency reserves on their own behalf and as the representatives of the ECB.

Other duties of the national central banks include the collection of statistical data as well as issuing and handling euro banknotes in their respective countries. The central banks also fulfil duties beyond the scope of the Statutes, except when the ECB Governing Council finds such duties to be in conflict with the tasks of the Eurosystem.

The national central banks may also perform duties unrelated to monetary policy within the framework of national legislation. For instance, some central banks participate in banking supervision and/or are the principal banks for their governments.