ECB definition

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When traders talk about the ECB, they are referring to the European Central Bank, the central bank for the eurozone.

Like its counterparts the Federal Reserve (known as the Fed) and Bank of England (BOE), the ECB is in charge of setting monetary policy. Unlike many other central banks, though, the ECB’s remit covers several countries: those who use the euro as their currency. It has to work with the national banks of the countries that it governs in order to maintain the euro’s stability and inflation.

In contrast to other major central banks, the ECB is a fairly new institution, having been formed in Germany in 1998 (it is 85 years younger than the Fed, and 304 years younger than the BOE).

The ECB’s policy decisions are hugely important to traders, as they have a major impact on the value of the euro and European companies.

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