The European Central Bank
How the ECB manages monetary policy for 20 countries using a single currency, the crises that have tested it, and the democratic accountability gap it creates.
The ECB's Mandate and Structure
The European Central Bank, headquartered in Frankfurt, sets monetary policy for the 20 eurozone countries. Its primary mandate is price stability, defined as inflation close to but below 2%. Unlike the US Federal Reserve, which has a dual mandate of price stability and maximum employment, the ECB's treaty mandate focuses narrowly on inflation. This design reflected German insistence on anti-inflationary discipline when the euro was created.
The ECB's Governing Council, comprising the six Executive Board members and the central bank governors of all eurozone states, makes interest rate decisions. The ECB is deliberately insulated from political pressure: its independence is enshrined in the EU treaties, and neither national governments nor EU institutions can instruct it. This independence makes it one of the most powerful unelected institutions in Europe.
