The Daily Update - ECB Happy Birthday

How time flies, it’s the European Central Bank’s 20th anniversary tomorrow and it appears the latest financial scare within its jurisdiction, in President Mario Draghi’s homeland Italy, has calmed for the moment. In fact, the rally in 10-year Italian government bonds which started yesterday is extending today, up a further 2.5 points, at the time of writing. Since 15th May the benchmark has moved between 1.94% and 3.13%, and currently trades at 2.65%, quite a week for the bond dealers involved.

Back to the ECB, which was founded 1st June 1998, seven months before the launch of the euro; formed from the European Monetary Institute, and residing in a rented tower block in downtown Frankfurt. Now the bank has banking supervision in 19 Eurozone countries, up from 11 originally and resides in a new EUR1.3bn headquarters building in central Frankfurt. Having developed its ability to guide the euro through many crises and using many new tools the bank has gained quite a reputation under Mario Draghi.

The job was never going to be easy and quite well summed up by ECB vice chair Vitor Constancio; “European Monetary Union was an hubristic endeavour from the start, full of unprecedented ambition in historical terms. The initial minimalist design didn’t do justice to the wide-ranging implications of the project. The framework is not yet complete and is still risking existential threats.”

So happy 20th birthday ECB, just an embryo in central banking terms. The Swedish Riksbank is the oldest central bank in the world at 350 years this year, and no before you say I don’t remember the opening day fondly(!), our very own BoE is 324 years old, while the ever powerful Federal Reserve is just 105 years old, just a toddler really.

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