What are Recent ECB Policies and are They Working? Group 4: Sam, Michael, Veronika, Julia, Ibrahim, Rafia

Treaty on Functioning of the European Union Article 3 1. The Union shall have exclusive competence in the following areas: (c) monetary policy for the Member States whose currency is the euro

Introduction The ECB is an official EU institution at the heart of the Eurosystem and the Single Supervisory Mechanism. Over 2,500 staff In Frankfurt, Germany A range of tasks in close cooperation with the national central banks within the Eurosystem Banking supervision: with the national supervisors within the Single Supervisory Mechanism

Introduction European Central Bank The ECB was established as the core of the Eurosystem and the ESCB. The ECB and the national central banks together perform the tasks they have been entrusted with. The ECB has legal personality under public international law. European System of Central Banks (ESCB) The ESCB comprises the ECB and the national central banks (NCBs) of all EU Member States whether they have adopted the euro or not. Eurosystem comprises the ECB and the NCBs of those countries that have adopted the euro. . The main objective of the Eurosystem is to maintain price stability: safeguarding the value of the euro.

Introduction The Governing Council is the main decision-making body of the ECB. The European Central Bank and the national central banks together constitute the Eurosystem, the central banking system of the euro area. The main objective of the Eurosystem is to maintain price stability: safeguarding the value of the euro. The European Central Bank is responsible for the prudential supervision of credit institutions located in the euro area and participating non-euro area Member States, within the Single Supervisory Mechanism.

Introduction The ECB’s monetary policy: The primary objective is to maintain price stability. The ECB aims at inflation rates of below, but close to, 2% over the medium term. The definition of price stability: The ECB’s Governing Council has announced a quantitative definition of price stability:"Price stability is defined as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%."

Price Stability

Monetary Policy Monetary policy instruments open market operations standing facilities minimum reserve requirements for credit institutions asset purchase program

Interest Rates

Asset Purchase Program (QE) “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro.” Mario Draghi, July 2012 does ECB have a mandate? full-scale launched in March 2015, successively recalibrated in December 2015 and March 2016 monthly purchases €80 billion EURO possible adjustments to allow ECB to buy more bonds from individual companies

Controversy of the Policy

Controversy of the Policy