On Tuesday, European officials nominated Christine Lagarde, the International Monetary Fund’s current leader, to succeed Mario Draghi as European Central Bank president. Here’s a primer on the institution Ms. Lagarde has been chosen to lead.
What is the European Central Bank?
The European Central Bank, which has its headquarters in Frankfurt, sets monetary policy and supervises banking for the 19 countries that use the common European currency, the euro. In many ways, it operates much like the Federal Reserve in the United States, printing money, setting benchmark interest rates and encouraging people to spend or save depending on the needs of the region’s economy. A key element of its job is to maintain price stability and keep inflation in check across a swath of Europe that stretches from the Nordic nations to the Mediterranean.
How big is the eurozone economy and which countries participate in it?
If the eurozone were a country, it would have the world’s second-largest economy after the United States. Its 19 member states account for 340 million people. Membership is open, meaning that, if other European Union countries wanted to join and met the relevant criteria, they could. The current members are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.
What was the central bank’s role in the eurozone debt crisis?
As an economic malaise in Greece and other European countries threatened the euro’s future in 2012, Mr. Draghi said he would do “whatever it takes” to save the currency. The pronouncement established the E.C.B.’s commitment to preserving the euro, a significant moment for the bloc and for the global economy. Many people said the policy that Mr. Draghi was prepared to enact, known as Outright Monetary Transactions, effectively saved the euro without the bank ever having to employ it.
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