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Chapter 10. What Moves the Markets: Basi... > The European Central Bank

The European Central Bank

The Fed's counterpart in Europe is the European Central Bank (ECB). The highest decision-making body in the ECB is the Governing Council, which consists of the six members of the executive board and the 12 governors of the national banks. The Council, like its counterpart at the Fed, determines the interest rates banks are charged for obtaining currency from their national bank. And like the Fed, this number is closely watched.

The ECB executive board is appointed with the agreement of the 12 nations using the euro. The head official, akin to the Federal Reserve Chairman, is the president. The ECB works with banks that are closely tied to Europe (Great Britain, Denmark, and Sweden) but that don't use the euro. This umbrella organization of cooperation is called the Eurosystem. With the addition of 10 new members into the European Union in 2004, the monetary union is scheduled to expand into a market of 400 million.


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