After 10 years, ECB stands vigilant over world's second largest economic area.
Ten years into the job, the European Central Bank can celebrate its success at making the euro zone's economy and currency one of the strongest in the world. The fiercely independent bank opened a decade ago Sunday and will mark the anniversary with celebrations Monday.
The ECB has slowly become a global heavyweight, not least by keeping a cool head during the recent financial market crisis when it steered a different course from the U.S. Federal Reserve and the Bank of England by refusing to slash interest rates.
It has also skirted political rows between major euro nations Germany and France, insisting that it must make decisions without kowtowing to national finance ministries -- a radical change for many European economies where central banks were traditionally under the thumb of politicians.
But the ECB now faces some of its biggest challenges as the euro economy faces an uncertain outlook this year. A recent boom is trickling away and inflation has surged recently, to 3.6 percent in March and again in May -- well above the stated goal of 2 percent.
Keeping inflation low is the ECB's main priority. "Stable prices are essential," ECB President Jean-Claude Trichet wrote in the foreword of a special 10th anniversary edition of the ECB's monthly bulletin, released this week.
The goal, he added, was to "protect the value of the incomes of all, and particularly of the most vulnerable and the poorest of our fellow citizens." And, he said, price stability would stimulate sustainable economic growth and job creation.
The launch of euro cash in 2002 has seen the slow rollout of a euro economy that now stretches across 15 nations, with several others lining up to join. Once euro-sceptic Denmark is now hinting it may change its mind and join up, although Britain and Sweden -- which voted against the euro in a 2003 referendum -- are still holding out. All other EU newcomers in eastern Europe plan to switch to the euro in the future.
Although EU officials criticize persisting differences across the bloc, trade and travel across the region has become far easier, helping to add 15 million new jobs in the last six years. The euro is used by 323 million people with a gross domestic product of more than 4 trillion euros ($6.2 trillion).
The ECB was founded with 11 members: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. Since then, Greece, Slovenia, Cyprus and Malta have joined, with Slovakia expected to enter next year.
"After 500 years of fighting (wars), the creation of the euro and the ECB was a remarkable political achievement, requiring these fiercely independent and proud countries to surrender a huge amount of political autonomy," said William Dunkelberg, the chair of the Global Interdependence Center and a professor of economics, at Temple University in Philadelphia.
He said the trade-off was clear to European nations because doing business without changing currencies at the border or risking exchange rate fluctuations would boost growth and incomes. Still, the ECB -- as all central banks -- has its work cut out for it.
A slew of economic reports pointing to a recession in the U.S. have seen the dollar slump against the euro, making European exports more costly for American customers. But the strong euro cannot keep back the full brunt of soaring oil prices. Energy and food prices are starting to hurt consumers' wallets.
Ten years into the job, the European Central Bank can celebrate its success at making the euro zone's economy and currency one of the strongest in the world. The fiercely independent bank opened a decade ago Sunday and will mark the anniversary with celebrations Monday.
The ECB has slowly become a global heavyweight, not least by keeping a cool head during the recent financial market crisis when it steered a different course from the U.S. Federal Reserve and the Bank of England by refusing to slash interest rates.
It has also skirted political rows between major euro nations Germany and France, insisting that it must make decisions without kowtowing to national finance ministries -- a radical change for many European economies where central banks were traditionally under the thumb of politicians.
But the ECB now faces some of its biggest challenges as the euro economy faces an uncertain outlook this year. A recent boom is trickling away and inflation has surged recently, to 3.6 percent in March and again in May -- well above the stated goal of 2 percent.
Keeping inflation low is the ECB's main priority. "Stable prices are essential," ECB President Jean-Claude Trichet wrote in the foreword of a special 10th anniversary edition of the ECB's monthly bulletin, released this week.
The goal, he added, was to "protect the value of the incomes of all, and particularly of the most vulnerable and the poorest of our fellow citizens." And, he said, price stability would stimulate sustainable economic growth and job creation.
The launch of euro cash in 2002 has seen the slow rollout of a euro economy that now stretches across 15 nations, with several others lining up to join. Once euro-sceptic Denmark is now hinting it may change its mind and join up, although Britain and Sweden -- which voted against the euro in a 2003 referendum -- are still holding out. All other EU newcomers in eastern Europe plan to switch to the euro in the future.
Although EU officials criticize persisting differences across the bloc, trade and travel across the region has become far easier, helping to add 15 million new jobs in the last six years. The euro is used by 323 million people with a gross domestic product of more than 4 trillion euros ($6.2 trillion).
The ECB was founded with 11 members: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. Since then, Greece, Slovenia, Cyprus and Malta have joined, with Slovakia expected to enter next year.
"After 500 years of fighting (wars), the creation of the euro and the ECB was a remarkable political achievement, requiring these fiercely independent and proud countries to surrender a huge amount of political autonomy," said William Dunkelberg, the chair of the Global Interdependence Center and a professor of economics, at Temple University in Philadelphia.
He said the trade-off was clear to European nations because doing business without changing currencies at the border or risking exchange rate fluctuations would boost growth and incomes. Still, the ECB -- as all central banks -- has its work cut out for it.
A slew of economic reports pointing to a recession in the U.S. have seen the dollar slump against the euro, making European exports more costly for American customers. But the strong euro cannot keep back the full brunt of soaring oil prices. Energy and food prices are starting to hurt consumers' wallets.
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