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The European Central Bank was formed in June 1998 giving it a few months to prepare for the beginning of the launch of the euro as a replacement currency for the original group of 11 participating countries in Europe. The euro was launched in January 1999 as an electronic means of payment. Banknotes and coins came into circulation in 2002. The euro is now used by 18 of the 28 member states of the European Union.
The ECB's institutional framework is the European System of Central Banks which decides monetary policy in the countries in the currency union. The ECB is the core of the ESCB and its primary objective is price stability.
The ECB is based in Frankfurt. It sets interest rates and controls the money supply of the countries using the euro. It conducts foreign exchange operations and holds foreign exchange reserves. It promotes the smooth operation of payment systems. It has the exclusive right to authorise the issue of banknotes in the euro area. It collects statistics for the ESCB and respresents the euro area on a global level.
The European Central Bank produces this educational video to explain how it sees its role.
In June 2014, fears were rising of deflation in the eurozone and Mario Draghi, president of the ECB, cut a key interest rate to below zero and said the bank was also considering some kind of quantitative easing.