4 Explain the following terms. Outline briefly what each does. European Central Bank Bank of England World Bank

GCSE: Business Studies

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European Central Bank

The European Central Bank Was established by the European Union in 1998 and is Headquartered in Frankfurt, Germany.
The primary Objective of the European Central Bank is to keep inflation low maintaning price stablity in the Eurozone. As
the european central Bank is the central bank for the Euro keeping price stablity would mean maintaining the Euro's
purchasing power in the Euro area. The European central bank has been described as "The ultimate Guardian of the Value
of Money." Money Drives its value from its purchasing power, the value of goods that you are able to buy with it, So the
Job of the European Central bank is mainly to make sure that the amount of money circulating in an economy is properly
balanced agaisnt the value of goods that it can purchase and so the value of the currency can be protected. The do this
by using Monetary Policy and conducts Monetary policy within the Euro area. Some of the tasks would be issueing bank notes.
conducting operations in the foreign exchange market, it holds and manages reserves of forigen currencies and buys and
sells currencies as it feels appropiate. The European Central Bank may also help to make sure that Credit unions are
sufficently trust worthy and overall it preserves the stablity of the Whole Financial System. The European Central Bank
works co-ordinatley with close co-operation with the National Central Banks of the Euro area together which form the
"Euro System." The memebers of the euro system would have regular meetings to co-ordinate and discuss their activites.
The National Central banks are the shareholders of the European Central Bank, shares are attributed according to the
population and GDP (gross domestic product) of each country and this doesnt mean that larger members have a greater say
in European Central bank decisions than smaller memebers do. Largely the European Central Bank tries to make the best
decisions in the interest of all Euro area citizens. Due to the European Central bank prices in the Eurozone remain stable.

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