European System of Central Banks

Since not all the EU states have joined the Euro, the ESCB could not be used as the monetary authority of the eurozone. For this reason the Eurosystem (which excludes all the NCBs which have not adopted the Euro) became the institution in charge of those tasks which in principle had to be managed by the ESCB. In accordance with the treaty establishing the European Community and the Statute of the European System of Central Banks and of the European Central Bank, the primary objective of the Eurosystem is to maintain price stability (in other words control inflation). Without prejudice to this objective, the Eurosystem shall support the general economic policies in the Community and act in accordance with the principles of an open market economy.

The basic tasks to be carried out by the Eurosystem are:

• to define and implement the monetary policy of the eurozone;
• to conduct foreign exchange operations;
• to hold and manage the official foreign reserves of the Member States; 
• and to promote the smooth operation of payment systems.

In addition, the Eurosystem contributes to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system. The ECB has an advisory role vis-a-vis the Community and national authorities on matters which fall within its field of competence, particularly where Community or national legislation is concerned. Finally, in order to undertake the tasks of the ESCB, the ECB, assisted by the NCBs, has the task of collecting the necessary statistical information either from the competent national authorities or directly from economic agents.