Key Roles and Functions of the ESCB and Eurosystem

Primary Objectives of the ESCB and Eurosystem

The Treaty on European Union establishes the primary purpose of the European System of Central Banks (ESCB) as maintaining price stability and supporting the general economic policies in the Community.

All Member States of the European Union would adopt the euro. The Eurosystem is responsible for carrying out the functions of the ESCB:

• To define and implement the single monetary policy.
• To perform foreign currency transactions consistent with the established foreign exchange policy.
• To hold and manage the official foreign reserves of Member States.
• To promote the proper functioning of the payment systems in the euro area.
• To contribute towards the proper management of the prudential supervision policies of the credit institutions and the stability of the financial system.
• To authorize the issue of banknotes in the euro area.

Functions as a Member of the ESCB

• Defining and implementing the Eurosystem’s monetary policy, with the principal aim of maintaining price stability across the euro area.
• Carrying out foreign exchange transactions consistent with the provisions of Article 111 of the TEU, and holding and managing the State’s official currency reserves.
• Promoting the proper working of payment systems in the euro area.
• Issuing legal tender banknotes.

Functions as a National Central Bank

• Holding and managing currency and precious metal reserves not transferred to the ECB.
• Promoting the proper working and stability of the financial system and, without prejudice to the functions of the ECB, of national payment systems.
• Supervising solvency and compliance with the specific rules of credit institutions, other entities, and financial markets for which it has been assigned supervisory responsibility.
• Placing coins in circulation and performing, on behalf of the State, all such other functions entrusted to it in this information.
• Providing treasury services and acting as a financial agent for government debt.
• Advising the Government and preparing the appropriate reports and studies.