The primary objective of the ECB’s monetary policy is to maintain price stability. The ECB aims at inflation rates of below, but close to, 2% over the medium term.

To better understand, ECB's approach, we are enclosing some useful definitions :

Monetary policy strategy :

The general approach to the conduct of monetary policy. The monetary policy strategy of the ECB comprises a quantitative definition of the primary objective of price stability and an analytical framework based on two pillars - economic analysis and monetary analysis - which forms the basis of the Governing Council's overall assessment of the risks to price stability and of its monetary policy decisions. It also provides the framework for explaining monetary policy decisions to the public.

Monetary policy transmission mechanism  :

The process through which monetary policy decisions, e.g. the interest rate decisions taken by the Governing Council in the case of the euro area, affect the economy in general and the price level in particular.

Monetary financial institution (MFI)  :

Financial institutions which together form the money-issuing sector of the euro area. These include the Eurosystem, resident credit institutions (as defined in Community law) and all other resident financial institutions whose business is to receive deposits and/or close substitutes for deposits from entities other than MFIs and, for their own account (at least in economic terms), to grant credit and/or invest in securities. The latter group consists predominantly of money market funds.

The role of the ECB has taken a major turn with the EU Enlargement. The following ten countries signed the Accession Treaty with a view to joining the EU on 1 May 2004 : the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, and on 1 January 2007: Bulgaria and Romania. Turkey is another official candidate for accession.

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