The European Council
The European Council is the most important political body of the European Union; its meetings are often referred to as a European Summit. It is made up from the head of government from each of the Union’s member states plus the President of the European Commission. The summit meetings are chaired by the member state which has the Presidency of the Council of the European Union (this is rotated every six months).
The Council has no formal powers, but it deals with major issues and any decisions made will define future agendas and debate.
The European Council of Ministers
The European Council of Ministers, otherwise known as the Council of the European Union, is made up from one minister from each member state. The country holding the Presidency of the EU has the responsibility to set the agenda. It is the more powerful of the two legislative chambers, the other one is the European Parliament.
The government minister attending the council will depend upon the topic being discussed, for example, finance ministers (the Chancellor of the Exchequer in the UK) would attend a discussion about the role of the European Central Bank and the credit crunch and agriculture ministers would attend a meeting about the Common Agricultural Policy.
The European Parliament
The European Parliament is composed of 785 MEPs who are directly elected by the 342 million voters in the member states every five years. The number of seats that each country has is based upon the size of its population.
The European Commission
The European Commission is responsible for proposing legislation, implementing decisions, upholding the EU’s treaties and the general day-to-day running. All new legislation starts life as a proposal by the Commission before being passed onto the other bodies to be passed into law.
The Commission is made up from 27 Commissioners; there is one per state although they do not represent their country in the Commission. The President of the Commission delegates positions to the Commissioners once they have been nominated.
The European Central Bank
The European Central Bank (ECB) is the central bank responsible for monetary policy in the 16 member States of the Eurozone. It was established in 1998, but it did not become fully operational until the euro came into existence on 1st January 1999. It is based in Frankfurt, Germany.
The Governing Council of the ECB set maintaining price stability within the Eurozone as the primary objective of the ECB. They defined price stability as inflation, using the Harmonised Index of Consumer Prices, of below, but close to, 2%. There are no other economic objectives of the ECB.
What are the secondary objectives of the Bank of England?
The main functions of the ECB, in addition to maintaining price stability, are:
- To define and implement monetary policy for the Eurozone through the setting of interest rates.
- Support the economic policies of the Eurozone members.
- Conduct foreign exchange operations in euro.
- Issuing euro bank notes.
- Ensure smooth operation of the banking system.
The ECB is modelled upon the German Bundesbank, which had an excellent record on combating inflation. It has independence from member countries and EU institutions. It is given a separate budget from the member countries’ central banks.
The Governing Council is the main decision-making body of the ECB. It is made up of the six members of the Executive Board and the governors of the national central banks of the 16 euro area countries. It is responsible for formulating monetary policy for the euro area. This includes decisions relating to monetary objectives, key interest rates, the supply of reserves in the Eurosystem and the establishment of guidelines for the implementation of those decisions.
The Governing Council usually meets twice a month in Frankfurt. At the first meeting each month, the Governing Council assesses economic and monetary developments and makes its monthly monetary policy decision. At its second meeting, the Council discusses issues related to other tasks and responsibilities of the ECB. The minutes of these meetings are not published, but the monetary policy decision is explained in detail at a press conference held shortly after the first meeting each month.
The Executive Board of the European Central Bank is responsible for implementing the decisions of the Governing Council. It also prepares for the twice monthly meetings of the Governing Council. Members of the Executive Board are nominated by agreement between the heads of government of the Eurozone countries for a non-renewable eight-year term. The ECB’s board members do not represent a particular country, nor are they responsible for keeping track of economic conditions in one country. Instead, all board members are jointly responsible for monetary policy for the entire Euro area. The board consists of a President, Vice-President and four members.
The Court of Justice of the European Communities
European Court of Justice (ECJ) is the highest court of the EU. It has the final say on matters of EU law in order to ensure its equal application across all member states.