European Central Bank (ECB) Logo

The European Central Bank grew out of the monetary union plan drafted in 1988-1989 by a committee led by Jacques Delors, then president of the European Commission. In July 1990, European Community members removed capital movement restrictions. The Maastricht Treaty, signed on 7 February 1992, created the legal basis for a single currency and an independent supranational central bank.

In January 1994, the European Monetary Institute was established to coordinate EU monetary policy, develop technical standards, and lay the groundwork for the ECB. Alexandre Lamfalussy became its first president, followed by Wim Duisenberg in July 1997. On 2 May 1998, EU leaders confirmed that 11 countries, including Germany, France, Italy, Spain, and the Netherlands, were ready to enter the euro area.

On 1 June 1998, the ECB replaced the European Monetary Institute, with Duisenberg as its first president and Frankfurt am Main as headquarters. On 1 January 1999, the euro began as a cashless currency, exchange rates for 11 national currencies were fixed, and the ECB took control of monetary policy for over 300 million people. Euro banknotes and coins entered circulation on 1 January 2002.

The ECB’s first tests came with the euro’s fall to $0.83 in October 2000, and then with the 2008-2009 financial crisis, when it cut rates in tandem with the Federal Reserve and supplied fixed-rate liquidity to banks. In 2010-2012, it used the Securities Markets Program, LTRO loans of over €1 trillion, Mario Draghi’s July 2012 pledge to preserve the euro, and the OMT program. In November 2014, the ECB gained direct supervision over major eurozone banks.