 The European Central Bank and the Euro system explained. This is Sara. Sara is currently travelling around Europe. She finds it very convenient to buy things with Euros in many different places without having to change money. And it's easy for her to compare prices across different countries. Sara wonders who's looking after the Euro. Well, that's the job of the European Central Bank based in Frankfurt and the central banks of the countries that use the Euro. All together, they form the Euro system. The main task of the ECB is to define and implement monetary policy for the Euro area. This means maintaining price stability. In other words, keeping inflation rates at 2% over the medium term. The ECB views inflation symmetrically, meaning that high inflation and low inflation are equally as negative. But what does all this have to do with Sara? Persistently low inflation harms the economy, but so does high inflation. High inflation means that prices rise rapidly. So over time, Sara would get fewer goods and services for the same amount of money. So the Euro system works hard to bring inflation back to its 2% target over the medium term. The ECB has several monetary policy tools that it can use. The most common of these are the decisions it takes on key interest rates. This, among other tools, influences the financing conditions for the Euro area economy. But who makes these decisions? Important decisions are taken by the governing council of the European Central Bank. This body is made up of all the heads of the national central banks of the Euro area countries and the members of the European Central Bank's executive board. But council members don't represent their own country. They vote in a fully independent capacity in the interests of the Euro area as a whole. And decisions are taken collegially with each member having a say. So it's not just the president of the European Central Bank taking decisions alone. The Euro system also has several other tasks such as ensuring the smooth operation of payment systems, making it faster, safer and easier to make cashless Euro payments throughout Europe. Holding and managing official reserves in foreign currencies and other assets and collecting and compiling a wide range of statistics. The European Central Bank is also responsible for authorizing the issuance of Euro banknotes, some of which will end up in Sara's pocket. And since 2013, the ECB has supervised the European banks to make sure they're doing their job correctly and can resolve any problems they encounter. So as Sara continues her trip around Europe, she now has a clear idea of what and who is behind the Euro. And she understands how the European Central Bank and the national central banks affect people in the Euro area wherever they live, study, travel or work.