The European Central Bank is one of the important institutions of the European Union based in Frankfurt (Germany). The European Central Bank is responsible for the development and implementation of the economic and monetary policy of the European Union. Its main purpose is: 1. to ensure price stability and 2. To maintain a stable financial system by controlling financial markets and institutions.

The European Central Bank cooperates with the central banks of 27 EU member states. Together they form the European System of Central Banks. Central banks of 19 countries cooperate closely within the Euro area, which declared the euro as the official currency and constitutes the Eurosystem.

Powers of the European Central Bank are as follows:

1. Setting the interest rates in the eurozone and controlling money supply;
2. Managing the eurozone’s foreign currency reservesand buying or selling currencies to balance exchange rates;
3. Ensuring that financial markets and institutions are well supervised by national authorities, and that payment systems work well;
4. Authorizing production of euro banknotes by eurozone central banks;
5. Monitoring price trends and assessing risks to price stability.

The European Central Bank is comprised of the President and Vice-President of the European Central Bank and the governors of the national central banks of the member countries. The Central Bank is completely independent and neither it nor the national central banks or their governing bodies have the right to seek or receive recommendations from any other EU body. EU institutions and governments are obliged to respect this principle.