Its Origins, Development and Prospects
4. The euro’s architecture Having discussed the development of the euro and its underlying economic principles in the previous chapter we now turn to consider the euro’s architecture, in particular the European Central Bank (ECB) its principal institution and the Stability and Growth Pact (SGP). We begin by considering monetary policy in the euro area. 4.1 4.1.1 MONETARY POLICY IN THE EURO AREA The ECB’s Decision-making Bodies You will recall from our discussion in Chapter 3, section 3.1.3, that the Maastricht Treaty established that the second stage of economic and monetary union (EMU) would begin on 1 January 1994 with the creation of the European Monetary Institute (EMI). The EMI, a temporary body, was superseded by the European System of Central Banks (ESCB) and the ECB, both of which were established on 1 June 1998 by the ‘Statute of the European System of Central Banks and of the European Central Bank’. The Statute is a protocol, which is attached to the Maastricht Treaty. In Chapter 3, section 3.1.4 we also discussed how the third and ﬁnal stage of EMU began on 1 January 1999 when exchange rates were irrevocably ﬁxed for the former national currencies of the then-11 participating member countries of the euro area. When the euro was ofﬁcially launched responsibility for monetary policy in the euro area was transferred from the national central banks (NCBs) of euro-area member countries to the ECB. The ECB,27 with headquarters in Frankfurt am Main in Germany, has two main decision-making...
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