General framework for European

monetary policy
Since 1 January 1999 the National Bank has played an active part in the
determination and implementation of the Eurosystems monetary policy.
The Eurosystem consists of the European Central Bank and the national
central banks of the countries which have the euro as their currency. The
primary objective of that monetary policy is the maintenance of price
stability in the euro area.

Institutional framework of monetary policy

In 1992 the countries of the European Economic Community concluded the
Maastricht Treaty that established the completion of an Economic and Monetary
Union (EMU) as a formal objective and set a number of convergence criteria. The
monetary policy of the EMU is conducted by the Eurosystem, which is made up
of the ECB and the NCBs of the EU Member States whose currency is the euro.

Monetary policy decision-making

The Eurosystems conduct of monetary policy is based on two principles:
Decisions are taken centrally by the ECB Governing Council and are
implemented on a decentralised basis by the national central banks.

Monetary policy implementation

In order to achieve its primary objective of maintaining price stability, the
Eurosystem steers short-term money market rates by signalling its monetary
policy stance through its decisions on key interest rates and by managing the
liquidity situation in the money market.

Monetary policy strategy

The Maastricht Treaty stipulates that the primary objective of the monetary policy
conducted by the ECB Governing Council is to maintain price stability. The
Governing Council has defined a strategy which comprises a quantified definition
of price stability and two pillars: an economic analysis and a monetary analysis.