ECB (European Central Bank)
European Central Bank is the central bank of 19 countries of Eurozone. It is based in Frankfurt ( Germany ) . It is responsible for setting interest rates and implementing monitory policy in world’s second largest economy. It came in existence when euro introduced and countries transferred their monitory policy to ECB. It was originally started with 11 countries. Eight countries joined after it started. Lithuania is latest addition in European Central Bank which joined in 2015. Countries who have joined ECB are following.
- Republic of Slovenia
- ECB is in charge of inflation control in those countries who use Euro as their primary currency.
- It supervise financial transactions and other major functions of countries to stable the Eurozone economy.
- It has authority to increase or hike interest rate. It manage Forex reserves to keep euro’s exchange rate stable.
- It supervise financial markets.
- It authorize members bank to print currency notes.
- Monitor inflation.
- Promoting the smooth operation of payments across the banks.
- It carries out other tasks in banking, macro economics and financial system.
ECB & Gold
European Central Bank and Gold has very deep relation.
- ECB reserves gold as a guarantee of payment to depositors. It is one of the rare bank in the world whose currency is backed by gold.
- ECB controls Euro which has highest share in Dollar Index, Dollar Index and relation we all know.
- While setting interest rate it directly controls euro which indirectly controls dollar and gold price effects worldwide.
- Gold price are deeply connected with euro.
- World’s second most powerful central bank which could drive price of gold.
- It can sell or buy bulk gold from market which usually drives price of gold higher or lower according to action of central bank.
- Board: ECB team is pretty wide compare to FOMC, European Central Bank board has four members. One president, One vice president, and four other members. These six members are appointed for eight years. Their main task is to control inflation and implement monitory policy. They are main driver of monetary policy. They are main engineer of Eurozone and usually they are major decision makers.
- Council: Governing council has all board members with all those central banks heads who have adopted euro as their main currency. They also have their say in monitory policy.