Europäische Zentralbank (EZB) - einfach erklärt!

Summary

The European Central Bank (ECB), founded in 1998 and based in Frankfurt, aims to ensure price stability in the Eurozone by controlling inflation, ideally keeping it under 2%. It uses tools such as the interest rate to influence the economy—raising it slows down spending and investment, while lowering it stimulates the economy. The ECB also supports EU economic policies and strives for stable financial markets and economic growth. Its three main organs—the Executive Board, the Governing Council, and the Extended Governing Council—work together to manage monetary policy. The ECB operates independently of political influence.

Takeaways

• 😀 The European Central Bank (ECB) was founded in 1998 and is based in Frankfurt, Germany.
• 😀 The ECB's primary goal is to maintain price stability and avoid large fluctuations in the value of money, ensuring the purchasing power of the Euro.
• 😀 Price stability is considered achieved when the inflation rate in the Eurozone is around 2% annually.
• 😀 A higher inflation or deflation can harm the economy by encouraging consumers to delay spending, which impacts investments.
• 😀 In addition to price stability, the ECB has secondary objectives such as supporting EU economic policies, promoting economic growth, and ensuring low unemployment.
• 😀 One of the ECB's main tools to achieve these goals is adjusting the key interest rate (the 'Leitzins').
• 😀 Raising the key interest rate makes borrowing more expensive for banks, reducing credit, consumption, and investment, leading to lower inflation.
• 😀 Lowering the key interest rate makes borrowing cheaper, stimulating more credit, consumption, and investment, leading to higher inflation.
• 😀 The ECB can thus control the money supply and influence the economy by increasing or decreasing the key interest rate.
• 😀 The ECB is politically independent, meaning it is not subject to political control and can operate freely in fulfilling its mandate.
• 😀 The ECB is organized into three bodies: the Executive Board, the Governing Council, and the General Council, each with specific functions in decision-making and policy implementation.

Q & A

When was the European Central Bank (ECB) founded?

The European Central Bank was founded in 1998.

Where is the headquarters of the European Central Bank located?

The European Central Bank is headquartered in Frankfurt am Main, Germany.

What is the primary goal of the European Central Bank?

The primary goal of the ECB is to maintain price stability, preventing large fluctuations in the value of money and ensuring the purchasing power of the euro.

What is considered a successful achievement of the ECB's goal of price stability?

Price stability is considered achieved if the inflation rate in the Eurozone is kept around 2% per year.

Why is an inflation rate above 2% or deflation undesirable for the economy?

An inflation rate above 2% or deflation leads consumers to speculate on falling prices, which discourages investments and could negatively impact economic growth.

What are some of the secondary objectives of the European Central Bank?

Secondary objectives include supporting the economic policies of the EU and its national governments, ensuring sustainable economic growth, and achieving high employment levels with low unemployment.

What is the key instrument used by the ECB to influence the economy?

The ECB uses the key interest rate (the 'Leitzins') as its main instrument to influence the economy.

How does raising the key interest rate affect the economy?

Raising the key interest rate makes borrowing more expensive for banks, leading to fewer loans, decreased consumption, reduced investment, and a drop in demand, which helps reduce inflation.

What happens when the ECB lowers the key interest rate?

Lowering the key interest rate makes borrowing cheaper for banks, leading to more loans, increased consumption, higher investment, and a rise in demand, which can boost inflation.

What are the responsibilities and tasks of the European Central Bank as defined by the EU Treaty?

The ECB's responsibilities include conducting monetary policy, promoting smooth payment systems, stabilizing financial markets, and advising or cooperating with national and international authorities.

How is the European Central Bank structured?

The ECB is divided into three main organs: the Executive Board, the Governing Council, and the General Council. The Executive Board implements the decisions of the Governing Council, the Governing Council is the main decision-making body, and the General Council advises on expanding the Eurozone.

Is the European Central Bank politically independent?

Yes, the European Central Bank is politically independent and not subject to political control, allowing it to act freely.