High inflation and risk of recession widen ECB dilemma
- September 1, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
High inflation and risk of recession widen ECB dilemma
Subject : International relations
Section: International body
Context:
Eurozone (EZ) inflation jumped to another record high and will soon hit double-digit territory, herald in gast ring of big interest rate hikes even as a painful recession appears increasingly certain
Concept:
Eurozone (EZ)
- The eurozone (EZ) is a monetary union of 19 member states of the European Union (EU).
- They have adopted the euro (€) as their primary currency and sole legal tender.
European Central Bank (ECB)
The European Central Bank (ECB) manages the euro and frames and implements EU economic & monetary policy. Its main aim is to keep prices stable, thereby supporting economic growth and job creation.
- Role: To manage the euro, keep prices stable and conduct EU economic & monetary policy
- President: Christine Lagarde
- Members: ECB President and Vice-President and governors of national central banks from all EU countries
- Established in: 1998
- Location: Frankfurt (Germany)
Composition
The ECB President represents the Bank at high-level EU and international meetings. The ECB has the 3 following decision-making bodies:
Governing Council – the main decision-making body.
Consists of the Executive Board (see below) plus the governors of the national central banks from eurozone countries.
Executive Board – handles the day-to-day running of the ECB.
Consists of the ECB President and Vice-President and 4 other members appointed for 8-year terms by the leaders of the eurozone countries.
General Council – has more of an advisory & coordination role.
Consists of the ECB President and Vice-President and the governors of the central banks from all EU countries.