General framework for European monetary policy

Since 1 January 1999 the National Bank has played an active part in the determination and implementation of the Eurosystem’s monetary policy. The Eurosystem consists of the European Central Bank and the national central banks of the countries which have the euro as their currency. The primary objective of that monetary policy is the maintenance of price stability in the euro area.

  • In 1992 the countries of the European Economic Community concluded the Maastricht Treaty that established the completion of an Economic and Monetary Union (EMU) as a formal objective and set a number of convergence criteria. The monetary policy of the EMU is conducted by the Eurosystem, which is made up of the ECB and the NCBs of the EU Member States whose currency is the euro.

  • The Eurosystem’s conduct of monetary policy is based on two principles: Decisions are taken centrally by the ECB Governing Council and are implemented on a decentralised basis by the national central banks.

  • In order to achieve its primary objective of maintaining price stability, the Eurosystem steers short-term money market rates by signalling its monetary policy stance through its decisions on key interest rates and by managing the liquidity situation in the money market.

  • The Maastricht Treaty stipulates that the primary objective of the monetary policy conducted by the ECB Governing Council is to maintain price stability. The Governing Council has defined a strategy which comprises a quantified definition of price stability and two pillars: an economic analysis and a monetary analysis.