European System of Central Banks

European System of Central Banks
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The European System of Central Banks (ESCB) is a supranational body for financial regulation of the European Union, comprising the European Central Bank (ECB) and the national central banks of all EU countries.

### History

The introduction of the ESCB under the third stage of European Economic and Monetary Union was decided in the Treaty of Maastricht in 1992 and implemented on 1 January 1999.

### Governance

The functioning and objectives of the ESCB are governed by the FEU Treaty and the Statute of the ESCB, which is annexed to the FEU Treaty as Protocol No 4. The primary monetary policy objective of the ESCB is to ensure price stability. If this is achieved, it will support the general economic policy in the European Union as a secondary objective.

### Composition

The ESCB should not be confused with the Eurosystem. While the ESCB covers all EU countries, the Eurosystem includes, in addition to the ECB, only the national central banks of the euro area states, i.e., the states that have adopted the euro as their currency.

### Functions

Since not all EU Member States have accepted a single currency, the ESCB cannot perform the functions of a monetary institution. This function is therefore implemented by the Eurosystem, which includes only the national central banks of the Eurozone countries, fulfilling this task, which should normally be carried out by the ESCB.

### Relationship with the Eurosystem

The ESCB and the Eurosystem will exist in parallel as long as there are member states of the European Union that have not accepted the euro as their currency.