When the euro was introduced as a unit of account for the initial eleven member countries deemed eligible to join the common currency on January 1, 1999, the European Central Bank officially assumed responsibility for the monetary policy of those countries. The mandate of the ECB was laid out in article 105(1) of the Treaty on European Union, namely “to maintain price stability.” The political independence of the ECB was guaranteed twofold: first, by requiring that the national central banks in each member country be formally independent from their national governments; and, second, by making the decision-making authority of the Governing Council of the ECB formally independent from the European Union. The only indication of the close connection between the institutions of the EU and the ECB is the treaty requirement that, “[w]ithout prejudice to the objective of price stability, the [Eurosystem] shall support the general economic policies in the Community,” such as “sustainable and non-inflationary growth” and a “high level of employment.” First and foremost, the objective of ECB monetary policy is price stability; only if it is confident that the growth of the money supply or a reduction in interest rates will not threaten price stability is it even expected to use its power to influence growth or employment.

In practice, the ECB has interpreted this mandate to mean that it should not pay attention to the exchange rate of the euro with respect to any other currency, whether that of another country in the European Union or in Europe, much less with respect to the dollar or yen.