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A brief euro glossary
  • Euro = The name of the currency used in the Euro area, approved by the European Council in Madrid on 15 and 16 December 1995.

  • Euro area = The euro area encompasses those member states of the European Union in which the euro has been adopted as the single currency and in which a single monetary policy is conducted under the responsibility of the decision making bodies of the European Central Bank. The euro area currently comprises Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, and Finland. Slovenia - the latest addition to the Euro area - joined other member states on 1st of January, 2007.

    Denmark, Sweden and the Great-Britain are members of the European Union, but do not conduct the single monetary policy.

  • Euro symbol (€) = The graphic symbol for the euro was inspired by the Greek letter epsilon and refers to the first letter of the word ’Europe’. The parallel lines represent the stability of the euro. The official abbreviation for the euro is EUR, which has been registered with the International Organization for Standardization (ISO) and is used for business, financial, and commercial purposes.

  • European Central Bank (ECB) = The European Central Bank was established on 1 June 1998 and is situated in Frankfurt am Main, Germany. It ensures that the tasks conferred upon the Eurosystem and the European System of Central Banks (ESCB) are implemented either through its own activities pursuant to the Statute of the ESCB and ECB or through the national central banks. The ESCB comprises the ECB and the national central banks of the member states.

  • Eurosystem = The Eurosystem comprises the European Central Bank (ECB) and the national central banks of member states that have adopted the euro in Stage Three of Economic and Monetary Union (EMU). There are currently 12 national central banks in the Eurosystem. The Eurosystem is governed by the Governing Council and the Executive Board of the ECB and has assumed the task of carrying out the single monetary policy for the euro area since 1 January 1999. Its primary objective is to maintain price stability.

  • European System of Central Banks (ESCB) = The European System of Central Banks (ESCB) comprises the ECB and the national central banks of all 15 member states of the European Union. It includes, in addition to the members of the Eurosystem, the national central banks of those member states that have not adopted the euro. The ESCB is governed by the Governing Council, the Executive Board, and the General Council of the ECB.

  • Economic and Monetary Union (EMU) = The Treaty establishing the European Community sets out a three-stage process for achievement of Economic and Monetary Union in the European Union. Stage One of EMU started in July 1990 and ended on 31 December 1993. It was mainly characterised by the dismantling of all internal barriers to the free movement of capital within the European Union. Stage Two began on 1 January 1994. It provided for, inter alia, the establishment of the European Monetary Institute (the forerunner of the European Central Bank), the prohibition of financing of the public sector by the central banks and of privileged access to financial institutions for the public sector, and the avoidance of excessive deficits. Stage Three started on 1 January 1999 with the transfer of monetary competence to the Eurosystem and the introduction of the euro.

  • Decision-making bodies of the ECB =

    •  The Governing Council comprises all the members of the Executive Board and the governors of the national central banks of those member states that have adopted the euro.

    • The Executive Board comprises the President and the Vice-President of the ECB and four other members appointed by the heads of state or government of the member states that have adopted the euro.

    • The General Council comprises the President and the Vice-President of the ECB and the governors of all the national central banks of the member states of the European Union.

  • European Commission = The European Commission is the executive body of the European Union. It acts as the guardian of the EU treaties to ensure that EU legislation is applied correctly, prepares policy initiatives and presents legislation suggestions, and serves as an authority in certain fields. As regards economic policy, the Commission provides recommendations for economic guidelines and reports matters relating to economic development and economic policy to the Council of the European Union. It monitors the public economy status of the member states and makes reports on this to the Council. The Commission has 25 members, one from each country (joined EU before 1.1.2007).
  • European Parliament = The European Parliament consists of 785 representatives chosen by the member states’ (27) citizens. The Parliament participates in the legislative process, although its powers vary depending on the procedure used to issue EC regulations. In EMU, the Parliament acts mainly as an advisory body. However, the Treaty establishing the European Community determines certain procedures relating to the ECB’s democratic accountability to the European Parliament (such as for provision of annual reports, general discussion about monetary policy, and hearings in the Parliament’s appropriate committees).

Source: ECB

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