The European Central Bank, based in Frankfurt, is the central bank of the 21 EU countries that use the euro. Its main task is to keep prices stable, which it defines as inflation of 2% over the medium term, mainly by setting interest rates. It is independent of governments.
- Acronym
- ECB
- Seat
- Frankfurt am Main, Germany
- Established
- 1 June 1998; EU institution since the Treaty of Lisbon (2009)
- Members
- Executive Board of 6 members; Governing Council of the 6 Executive Board members and the governors of the 21 euro area national central banks
- Head
- Christine Lagarde, President since 1 November 2019 (term ends 31 October 2027)
- Legal basis
- Articles 13 and 3 TEU; Articles 127 to 134 and 282 to 284 TFEU; Protocol No 4 on the Statute of the ESCB and the ECB
The European Central Bank (ECB) is responsible for monetary policy in the euro area, the group of EU countries that use the euro: 21 countries since Bulgaria joined on 1 January 2026. The treaty gives it one primary objective: price stability. The ECB aims for inflation of 2% over the medium term. Its main tool is the level of its key interest rates, which influences the cost of loans and the return on savings across the euro area. Since 2014, the ECB has also supervised the largest banks in the euro area.
Decisions on interest rates are taken by the Governing Council. It brings together the six members of the Executive Board and the governors of the national central banks of the euro area countries. Board members vote at every meeting; the governors vote in monthly rotation, because there are more governors than voting rights. The Executive Board runs the bank day to day.
The President, the Vice-President and the four other Board members are appointed by the European Council by qualified majority, after consulting the European Parliament and the Governing Council. They serve a single eight-year term that cannot be renewed. The treaty forbids the ECB and national central banks from seeking or taking instructions from governments or EU institutions. In exchange, the ECB reports to the European Parliament: its President appears before MEPs four times a year.
Example
On 10 September 2026, the Governing Council raised its three key interest rates by 0.25 percentage points, citing inflation pressures linked to the conflict in the Middle East. The deposit facility rate rose to 2.50%. At its next meeting, on 29 October 2026, it kept rates unchanged and said it would decide meeting by meeting.
Debates and limits
The limits of the ECB’s mandate are contested. Large government bond purchase programmes, used to counter low inflation and financial crises, have been challenged in court. The Court of Justice of the EU found the main programme lawful in 2018. On 5 May 2020, Germany’s Federal Constitutional Court ruled that the ECB had not shown the programme was proportionate and had therefore exceeded its competences. Supporters of the ECB argue that such tools were needed to fulfil its price stability mandate; critics argue that they blur the line between monetary policy and the financing of governments, which the treaty prohibits.
Independence itself is debated. Supporters say it protects the currency from short-term political pressure. Critics argue that an unelected body takes decisions with large effects on growth, jobs and savings, with limited democratic control.