Organisation

The European System of Central Banks

The European System of Central Banks (ESCB) comprises

• the European Central Bank (ECB) and
• the national central banks (NCBs) of all 27 EU Member States.

This means that the ESCB includes the national central banks of those EU Member States that have not yet adopted the euro, be it due to their special status (Denmark, United Kingdom) or because they have a derogation. The latter currently applies to Sweden as well as 8 of the 12 Member States that have joined the EU since May 2004. This means in consequence: these countries still have their own national currency, for which they still conduct their own monetary policy and their respective central banks keep for the time being their monetary sovereignty. This also means, of course, that they are not involved in the performance of the core activities of Monetary Union, such as the conduct of the monetary policy for the euro area.

The non-euro area NCBs are nevertheless committed to the principles of monetary policies which aim at price stability. Furthermore, ESCB membership implies at varying degrees active cooperation with the Eurosystem in several fields of activity, such as participation in the TARGET payment system and support in the collection of statistics. In addition, the European Exchange Rate Mechanism II (ERM II) provides a framework for monetary and exchange rate policy cooperation with the Eurosystem. The institutional forum for such cooperation is the General Council of the ECB.

The legal basis for the ESCB is the Treaty establishing the European Community (EC Treaty) and the Statute of the European System of Central Banks and of the European Central Bank (ESCB Statute). The Treaty entrusts the ESCB in general with the performance of the central banking functions for the euro. The ESCB Statute defines more specifically the relative roles and functions of the ECB and the NCBs, respectively.

For the text of the EC Treaty and the ESCB Statute annexed to it, see www.ecb.europa.eu/ecb/legal/1341/1342