The main objectives of ECB are:
- Stability of prices in eurozone. ECB can do it through inflation, that is avoid an increasing of prices of goods and services. Imagine, if your salary is 1000 euros and you spend 500 euros per month to live, but suddenly the prices grow and buying the same things you spend 700 euros, that is because the inflation has increased. This is bad for you because your money costs less now. The ECB takes part here to control the inflation, the prices and therefore, your money.
- Maintain a high level of employment and an adequate economic growth. ECB can give advices to States about economic policies to control the employment and growth.
- Apply and secure the principle of an open market economy and free competition.
The European Central Bank is responsible for:
1. Defining and implementing monetary policy. For example, nowadays ECB is buying bonds to invest money in the economy because its aim is to get an inflation of 2%. It is important to mention that the ECB is a hole independence organ within the European Union. It has exclusive competence to carry out monetary policies and the dialogue between BCE and other organs are not binding.
2. Conducting foreign exchange operations. It also works with other central banks to co-operate between them in order to maintain the financial stability and prices all over the world. IMF (International Monetary Fund) and AMF (Arab Monetary Fund) are examples of it.
3. Holding and managing the euro area´s foreign currency reserves. This foreign currency reserve is very important because it guarantees that the BCE has enough liquidity to do any currency operation when it wants.
The ECB carries out other specific tasks in the areas of banking supervision, banknotes, statistics, macroprudential policy and financial stability as well as international and European cooperation.
Here you can read the press conference that Mario Draghi, President of the ECB, gives and the objectives that the ECB has during 2017 and how it is going to do to reach them.
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