The functions of the ESCB
The Treaty establishes the ESCB's primary purpose as that of maintaining price stability, and, notwithstanding the former, "supporting the Community's general economic policies".
The Treaty refers to the ESCB and not to the Eurosystem because its drafting was based on the premise that all the EU Member States would adopt the euro. Until this occurs, the Eurosystem will carry out the functions entrusted to the ESCB.
Based on its primary purpose, the basic functions it carries out are:
- Definition and implementation of the sole monetary policy;
- carrying out currency transactions consistent with the established currency exchange policy (it should be noted that the ultimate sovereignty over currency exchange policy continues to lie with the governments and, therefore, the definition of the guidelines for currency exchange policy and the possible formulation of specific agreements in this respect corresponds to the European Council. Nevertheless, the ECB must be consulted on these issues, to ensure that the currency exchange policy is compatible with the prime objective of price stability).
- Hold and manage the official currency reserves of the Member States (without prejudice to holding and managing the official currency operating funds on behalf of the Member States);
- promote the proper functioning of the payment systems in the Eurozone;
- contribute towards the proper management of the prudential supervision policies of the credit entities and the stability of the financial system (it should be noted that the Treaty establishes that the European Council, following consultation with the ECB, may entrust the latter with specific tasks in this area);
- authorise the issue of bank notes in the Eurozone.
Additionally, the ECB must be consulted on community proposals or national initiatives that fall within the scope of its responsibilities.
Finally, within the area of international and European co-operation, the ECB maintains close links with the institutions, organisations and forums, both in the EU and internationally, whenever required for the duties assigned to the Eurosystem.