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Wim Duisenberg, first President of the ECB. The European Central Bank is the de facto successor of the European Monetary Institute (EMI). [7] The EMI was established at the start of the second stage of the EU's Economic and Monetary Union (EMU) to handle the transitional issues of states adopting the euro and prepare for the creation of the ECB and European System of Central Banks (ESCB). [7]
The General Council performs the tasks which the ECB took over from the EMI and which, owing to the derogation of one or more member states, still have to be performed in Stage Three of Economic and Monetary Union (EMU). The General Council also contributes to: ECB's advisory functions; Collection of statistical information
The national central banks apply the monetary policy of the ECB. [2] The primary objective of the Eurosystem is price stability. [3] Secondary objectives are financial stability and financial integration. [4] The mission statement of the Eurosystem says that the ECB and the national central banks jointly contribute to achieving the objectives. [5]
However, the ECB's strategy has been called into question. The central bank's measures and decisions have been criticised over the years. The ECB recurrently failed to completely offset the inflationary implications of its sovereign debt purchases, though it constructed its monetary policies with the assumption that its primary purpose was to ...
The question of supervising the European banking system arose long before the financial crisis of 2007-2008.Shortly after the creation of the monetary union in 1999, a number of observers and policy-makers warned that the new monetary architecture would be incomplete, and therefore fragile, without at least some coordination of supervisory policies among euro members.
The concept of supranational central banking took a globally significant dimension with the Economic and Monetary Union of the European Union and the establishment of the European Central Bank (ECB) in 1998. In 2014, the ECB took an additional role of banking supervision as part of the newly established policy of European banking union.
The European Commission designed 3 different levels of objectives for the Capital Markets Union, from the global economic goals to the more concrete necessity for the construction of an integrated financial system. These economic objectives frame the six intervention areas encompassed by the action plan. [22]
The ECB's Governing Council established that the purchases were to be made to the extent they were "necessary and proportionate" to achieve the "objectives of the mandate". [12] On 4 June 2020, the ECB decided to extend this program and added €600 billion to it, for a total of €1350 billion. [13]