THE EUROPEAN CENTRAL BANK AND THE EUROZONE CRISIS MANAGEMENT

The Euro is the single currency shared by 17 of the European Union's Member States, which together make up the Euro area. Since its introduction, in January 2002, it became the second most traded currency in the world after the United States dollar. With the launch of the Euro, the monetary policy became the responsibility of the independent European Central Bank, which was created for that purpose, and of the national central banks of the Member States, having adopted the Euro. However, the accumulation of massive and unsustainable deficits and public debt levels in a number of peripheral economies threatened the Eurozone's viability by the end of its first decade, triggering a Eurozone sovereign debt crisis. The institutional mechanisms surrounding the Euro have also been an integral part of the crisis. On this line, the European Monetary Union is supported on one side by treaties and multilateral agreements including the Maastricht Treaty, the Stability and Growth Pact and the Lisbon Strategy and, on the other side, by the European Central Bank. The combination of these institutions has produced a mix of monetary, fiscal and labour market policies with powerful social implications. And, what started as a debt crisis in Greece in late 2009 has evolved into a broader economic and political crisis in the Eurozone and European Union. In this framework, the purpose of my paper is to analyze the roots of the Eurozone crisis, as the biggest challenge since the Euro adoption and the European Central Bank’s response to it. Therefore the objectives are: identification of the reasons that stand behind the crisis, then observing how the crisis has affected the functioning of the European Central Bank and the Euro, and how it was forced to respond and, finally, focusing on the future and the challenges that lie ahead.