The tasks of the European System of Central Banks (ESCB) and the Eurosystem are laid down in the Treaty on the Functioning of the European Union. They are specified in the Statute of the European System of Central Banks and of the European Central Bank. The Statute is a protocol attached to the Treaty.
The Treaty on the Functioning of the European Union generally refers to the ESCB rather than to the Eurosystem, since it was drawn up on the premise that all EU Member States would eventually adopt the euro. The Eurosystem is made up of the ECB and the national central banks (NCBs) of the EU Member States whose currency is the euro, whereas the ESCB comprises the ECB and the NCBs of all EU Member States (Article 282(1) of the Treaty). As long as there are EU Member States whose currency is not the euro, it will be necessary to make a distinction between the Eurosystem and the ESCB.
Article 127(1) of the Treaty defines the primary objective of the Eurosystem:
"The primary objective of the European System of Central Banks […] shall be to maintain price stability".
It continues as follows: "Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union as laid down in Article 3 of the Treaty on European Union."
The European Union has multiple objectives (Article 3 of the Treaty on European Union), which include the sustainable development of Europe based on balanced economic growth and price stability, and a highly competitive social market economy, aiming at full employment and social progress. Consequently, price stability is not only the primary objective of the ECB’s monetary policy, but also an objective of the European Union as a whole. Thus, the Treaty on the Functioning of the European Union and the Treaty on European Union establish a clear hierarchy of objectives for the Eurosystem, making it clear that price stability is the most important contribution that monetary policy can make to achieving a favourable economic environment and a high level of employment.
Basic tasksAccording to Article 127(2) of the Treaty on the Functioning of the European Union, the basic tasks to be carried out through the Eurosystem are:
- the definition and implementation of monetary policy for the euro area;
- the conduct of foreign exchange operations;
- the holding and management of the official foreign reserves of the euro area countries (portfolio management);
- the promotion of the smooth operation of payment systems.
In addition, on the basis of Article 127(6) of the Treaty on the Functioning of the European Union and of the Council Regulation (EC) No 1024/2013 (the “SSM Regulation”), the ECB is responsible for specific tasks concerning the prudential supervision of credit institutions established in participating Member States. It carries out these tasks within a Single Supervisory Mechanism composed of the ECB and the national competent authorities. Banking supervision website
- Banknotes: the ECB has the exclusive right to authorise the issuance of banknotes within the euro area.
- Statistics: in cooperation with the NCBs, the ECB collects statistical information necessary in order to fulfil the tasks of the ESCB, either from national authorities or directly from economic agents.
- Financial stability and supervision: the Eurosystem contributes to the smooth conduct of policies by the competent authorities as regards the prudential supervision of credit institutions and the stability of the financial system.
- International and European cooperation: the ECB maintains working relations with relevant institutions, bodies and fora, both within the EU and at the global level, in respect of the tasks entrusted to the Eurosystem.