Since 1 January, 1999 the European Central Bank (ECB) has been responsible for conducting monetary policy for the euro area - the world's largest economy after the United States.
The euro area came into being when responsibility for monetary policy was transferred from the national central banks of 11 EU Member States to the ECB in January 1999. Greece joined as the 12th member two years later, followed by Slovenia in 2007. Greece joined as the 12th member two years later, followed by Slovenia in 2007, and Cyprus & Malta in 2008. Slovakia will be next in January 2009. The creation of the euro area and a new supranational institution, the ECB, was a milestone in a long and complex process of European integration.
All the euro-using countries had to fulfil the convergence criteria before adopting the euro as their national currency, as will other EU Member States who follow suit in the future. The criteria set out the economic and legal preconditions for countries to participate successfully in Economic and Monetary Union.
European Central Bank
The legal basis for the single monetary policy is the Treaty establishing the European Community and the Statute of the European System of Central Banks and of the European Central Bank. The Statute established both the ECB and the European System of Central Banks (ESCB) as from 1 June, 1998. The ECB was established as the core of the Eurosystem and the ESCB. The ECB and the national central banks together perform the tasks they have been entrusted with. The ECB has legal personality under public international law.
European System of Central Banks
The ESCB comprises the ECB and the national central banks (NCBs) of all EU Member States whether they have adopted the euro or not.
Eurosystem
The Eurosystem comprises the ECB and the NCBs of those countries that have adopted the euro. The Eurosystem and the ESCB will co-exist as long as there are EU Member States outside the euro area.
Euro area
The euro area consists of the EU countries that have adopted the euro.
