This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.nytimes.com/2019/07/02/business/what-does-ecb-do-president.html
The article has changed 3 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| Christine Lagarde Is Picked as E.C.B.’s New President. What Does the Bank Do? | Christine Lagarde Is Picked as E.C.B.’s New President. What Does the Bank Do? |
| (30 minutes later) | |
| 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. | 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. |
| [After grueling negotiations, the E.U. selected its top leaders on Tuesday. See who they are.] | [After grueling negotiations, the E.U. selected its top leaders on Tuesday. See who they are.] |
| 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. | 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. |
| 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. | 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. |
| 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. | |
| As part of its rescue effort, the central bank later started pumping huge numbers of euros into the region’s economy in a program similar to the so-called quantitative easing employed by the Fed. By the end of 2018, European policymakers had spent €2 trillion, about $2.25 trillion, in such stimulus. Some of the region’s richer countries opposed, and mounted legal challenges to, the program over what they complained were backdoor subsidies, but the central bank persevered. As a result, it bolstered its status by establishing itself as a lender of last resort in the common-currency area. | |
| [As the outgoing head of the E.C.B., Mario Draghi is considered to have saved the euro.] | [As the outgoing head of the E.C.B., Mario Draghi is considered to have saved the euro.] |
| The E.C.B.’s role as a supervisor of all eurozone banks will almost certainly be pivotal if the global financial system faces another crisis. The central bank will play an especially critical role should there be a downturn in the global or European economies that chips away at the value of the region’s banks’ assets and makes their own borrowing and lending more expensive. | The E.C.B.’s role as a supervisor of all eurozone banks will almost certainly be pivotal if the global financial system faces another crisis. The central bank will play an especially critical role should there be a downturn in the global or European economies that chips away at the value of the region’s banks’ assets and makes their own borrowing and lending more expensive. |
| Ms. Lagarde has deep experience managing a major multilateral lender. The International Monetary Fund, which she has led since 2011, advised countries on the handling of their banking sectors in the aftermath of the global financial and eurozone crises. | Ms. Lagarde has deep experience managing a major multilateral lender. The International Monetary Fund, which she has led since 2011, advised countries on the handling of their banking sectors in the aftermath of the global financial and eurozone crises. |
| The E.C.B. may have to come to the rescue, for instance, if Italy’s troubled economy, the eurozone’s third-largest, encounters more problems as its government continues to spend beyond its means and accumulate debt. Ms. Lagarde’s performance during the eurozone crisis, when the monetary fund teamed up with the E.C.B. and the European Commission to bail out troubled countries, will come in handy. But it could also hamper her efforts, given that officials in some of those countries still resent the hawkish stance she took toward their struggles. | The E.C.B. may have to come to the rescue, for instance, if Italy’s troubled economy, the eurozone’s third-largest, encounters more problems as its government continues to spend beyond its means and accumulate debt. Ms. Lagarde’s performance during the eurozone crisis, when the monetary fund teamed up with the E.C.B. and the European Commission to bail out troubled countries, will come in handy. But it could also hamper her efforts, given that officials in some of those countries still resent the hawkish stance she took toward their struggles. |