The euro and the European Central Bank

The formation of a monetary union by 11 European countries has received a lot of notice from the press since January 1, 1999, when the union's common currency, the euro, was officially introduced. To facilitate adoption of a single currency, these same countries have established a central bank that sets a common monetary policy for the members of the monetary union. In this article, Jeff Wrase gives some background on the European monetary union, outlines the procedure for introduction of the euro, and describes the workings of the European Central Bank. He also compares and contrasts the operations of the ECB with those of our own central bank, the Federal Reserve System.