ECB and ESCB

The European Central Bank (ECB, external link) is the central bank of the euro area and a member of the European System of Central Banks (ESCB), forming the core of the Eurosystem. It was established on 1 June 1998 and is headquartered in Frankfurt am Main, Germany.

The ECB is responsible for implementing monetary policy in the euro area. It is also responsible for the prudential supervision of credit institutions in the euro area and participating Member States outside the euro area, within the framework of the Single Supervisory Mechanism, which also includes the relevant national competent authorities.

The European System of Central Banks (ESCB) consists of the ECB and the national central banks of all EU Member States. The CNB is part of the ESCB.

The Eurosystem has existed since 1 January 1999 and consists of the ECB and the national central banks of the euro area Member States.

The euro area comprises EU Member States that have adopted the euro.

The primary objective of the ESCB, as set out in the Treaty on the Functioning of the EU, is to maintain price stability. Without prejudice to this objective, the ESCB supports the general economic policies of the EU with the aim of contributing to the achievement of the EU’s objectives as defined in Article 3 of the Treaty on the European Union, namely to promote peace, the EU’s values and the well-being of its people; to provide EU citizens with an area of freedom, security and justice; to establish an internal market and an economic and monetary union; and to uphold the EU’s values and interests in relations with external partners.

The primary tasks of the ESCB under the Treaty are: to define and implement the Union’s monetary policy; to conduct foreign exchange operations in accordance with the provisions of the Treaty; to hold and manage the official foreign reserves of the Member States; and to promote the smooth operation of payment systems.

The ECB’s decision-making bodies

The Executive Board consists of six members – the President, Vice-President and four other members – all appointed for eight-year terms by the European Council acting by qualified majority. The European Council acts on a recommendation from the ECOFIN Council and after consulting the European Parliament and the ECB Governing Council. In this case, only representatives of euro area Member States are entitled to vote in the Council of the EU and in the European Council.

The Executive Board implements monetary policy in accordance with the general guidelines and decisions adopted by the Governing Council. It is also responsible for preparing the meetings of the Governing Council.

The first President of the ECB was Wim Duisenberg; from 1 November 2003, Jean-Claude Trichet headed the ECB, followed by Mario Draghi from 1 November 2011. Christine Lagarde has been the President of the ECB since 1 November 2019.

The Governing Council is the ECB’s main decision-making body. It comprises the members of the Executive Board and the governors of the national central banks of the euro area. The governor of the CNB is not a member of the Governing Council; he will become one only once the Czech Republic adopts the euro.

The Governing Council sets the monetary policy in the euro area and takes decisions on intermediate monetary objectives, key interest rates and the supply of reserves.

The Governing Council meets twice a month; monetary policy decisions are taken at the first meeting of each month.

The General Council contributes to the ECB’s advisory functions. Its members include the President of the ECB, the Vice-President of the ECB, and the governors of the central banks of all EU Member States, including the governor of the CNB. In addition to regular meetings assessing the current economic developments in the EU, its members regularly comment on draft European and national legislation in all EU Member States relating to areas within the ECB’s remit, including the supervision of credit institutions and the stability of the financial system.

The General Council met four times a year until 2025; from 2026, it meets twice a year. Meetings may also be held by teleconference.

The Supervisory Board is the ECB’s main body for overseeing significant banks in the euro area. Its primary task is to ensure a safe and resilient financial system. It submits its proposals to the Governing Council. The members of the Supervisory Board include the Chair (appointed for a five-year term without the possibility of renewal), the Vice-Chair (selected from the members of the ECB Executive Board), four ECB representatives and representatives of the national supervisory authorities of euro area countries. The Supervisory Board meets once every three weeks.

Cooperation between the CNB and the ECB

Cooperation between the CNB and the European Central Bank began during the preparations for the Czech Republic’s accession to the EU.

Since 1 May 2004, the CNB has been part of the European System of Central Banks. The CNB manages relations with the ESCB and the ECB in accordance with the requirements arising from the Treaty and the Statute of the ESCB and of the ECB. CNB Governor Aleš Michl has participated in General Council meetings as a full member since July 2022 and may be accompanied by one other person. If necessary, he may be represented by an alternate, currently CNB Deputy Governor Eva Zamrazilová. CNB representatives serve as members in 13 ESCB committees; two CNB staff members have been appointed to each of these committees by the Bank Board. CNB representatives also participate in the working groups and task forces of these committees.

List of ESCB Committees

There are 19 committees within the ESCB covering various areas of activity. The CNB participates in the following 14 committees:

  1. Accounting and Monetary Income Committee (AMICO)
  2. Banknote Committee (BANCO)
  3. International Relations Committee (IRC)
  4. Market Infrastructure and Payments Committee (MIPC)
  5. Market Operations Committee (MOC)
  6. Monetary Policy Committee (MPC)
  7. External Communications Committee (ECCO)
  8. Financial Stability Committee (FSC)
  9. Human Resources Committee (HRC)
  10. Internal Auditors Committee (IAC)
  11. Information Technology Committee (ITC)
  12. Legal Committee (LEGCO)
  13. Statistics Committee (STC)
  14. Climate Change Forum (CCF)

Subscribed capital

The ECB’s subscribed capital amounts to EUR 10.83 billion.

Under Article 29 of the Statute of the ESCB and of the ECB, the shares of national central banks in the ECB’s capital subscription key are determined in equal measure by each Member State’s share in the EU’s population and GDP.

National central banks of the Eurosystem are required to pay up their share of the subscribed capital in full. National central banks of non-euro area countries were required to pay 3.75% of their share of the subscribed capital. In the case of the Czech National Bank, this amounts to approximately EUR 7.97 million.