The European Central Bank (ECB) - What is it?
Who is in charge at the ECB?
While a small group of just six people form the Executive Board, which runs the daily management of the ECB, monetary policy decisions for the whole Eurozone are taken by a group of 25 persons called the Governing Council.
The European Central Bank is based in Frankfurt (Germany) and is governed by an Executive Board made of 6 members, including the President (currently Christine Lagarde) and one Vice-President (currently Luis de Guindos).
The Executive Board is in charge of the daily management of the ECB: they decide on many internal things, such as human resources and institutional communications.
But decisions about monetary policy which affect the economy most (e.g. interest rate or quantitative easing) are decided by a much larger group of people including the Executive Board and one representative of each national central bank of the 19 countries (called governors). This larger group of 25 persons is called the ECB Governing Council. This is meant to ensure decisions on monetary policy reflect all the different perspectives and economic needs from each country’s central bank.
The ECB Governing Council meets every six weeks and makes decisions by majority-based votes, although in practice the votes are secret, so no one really knows how decisions are made.
So how are those people chosen to sit in the Governing Council? There are two ways to be appointed. For members of the ECB’s Executive Board, they are appointed by the European Council (the EU body that brings together all heads of States) after consulting the European Parliament, which holds a symbolic vote on the proposed candidate. Governors of national central banks are appointed according to national law, and therefore the process differs for each country.
While the ECB’s Governing Council is making the decisions on monetary policy, those decisions are implemented jointly by all the national central banks and the ECB together. For example, all national central banks take an active role in the quantitative easing programme, by purchasing public debts from their national governments.