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Monetary Policy

Monetary Policy Strategy

The Eurosystem is responsible for conducting monetary policy in the euro area, with the primary objective of ensuring price stability.

Monetary policy, i.e. the policy of setting the key interest rates of the ECB, is conducted by the Governing Council of the European Central Bank (ECB). Monetary policy decisions are usually made in the first meeting of the Governing Council every month, with a view to achieving the primary objective, and are publicised in a press conference with the President of the ECB.

The Eurosystem’s monetary policy strategy was formulated by the Governing Council in 1998 and reaffirmed in the evaluation carried out in May 2003. This strategy includes:

(1) A quantitative definition of price stability. The Governing Council aims at maintaining inflation rates in the euro area below but close to 2% over the medium term.

(2) Two analytical approaches:

  • An economic analysis to discuss current economic and financial developments and their short- to medium-term impact on inflation. In this context, ECB and Eurosystem staff projections are published four times a year.
  • A monetary analysis to assess general liquidity conditions by taking into account developments in M3, its components and counterparts, in order to cross-check indications on inflation developments from economic analysis over an extended horizon. 

The role of the Bank of Greece

The Bank of Greece, being an integral part of the Eurosystem:

  • Participates in the formulation of the monetary policy of the Eurosystem. The Governor of the Bank of Greece is a member of the ECB Governing Council, which makes decisions on monetary policy.
  • Participates in the implementation of the monetary policy of the Eurosystem. The Bank of Greece provides liquidity to, and accepts deposits from, credit institutions in the context of the monetary policy of the Eurosystem.
  • Informs the Greek public on monetary policy in the euro area through its regular publications (Annual Report, Monetary Policy Report).

ELA Agreement

Euro area credit institutions can receive central bank credit not only through monetary policy operations but exceptionally also through emergency liquidity assistance (ELA).

ELA means the provision by a Eurosystem national central bank (NCB) of:

(a) central bank money and/or
(b) any other assistance that may lead to an increase in central bank money to a solvent financial institution, or group of solvent financial institutions, that is facing temporary liquidity problems, without such operation being part of the single monetary policy.

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