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As the European Central Bank celebrates its silver jubilee, Boris Wojciech, a member of the bank’s board of governors, said on Friday that rising consumer prices remains a thorny issue.

“The momentum of inflation is still going on, especially core inflation and food components,” Vojic, who is the governor of the Croatian Central Bank, added during a presentation in Croatia. And “Bloomberg” quoted him as saying that it is still too early to draw conclusions about the slowdown in bank lending, although the financial sector turmoil is gradually receding.

It should be noted that the European Central Bank raised interest rates since last July seven consecutive times in an unprecedented series, in order to counter the continued rise in the inflation rate, and this step by the European Central Bank came after years of zero and negative interest rates.

High interest rates lead to an increase in the cost of loans, with which it is possible to reduce demand and confront high inflation rates, and thus the European Central Bank seeks to achieve its higher goal, which is price stability in the euro area in the medium term by keeping the inflation rate at 2 percent.

In the past years, the European Central Bank has proven its ability to act, as it was able to overcome crises such as the financial crisis, the debt crisis, and the Corona crisis, and after 25 years of its founding, the bank is still struggling to achieve its pivotal goal, which is to achieve stability in the euro, the single European currency.

Nine years ago, Christine Lagarde, current president of the European Central Bank and former head of the International Monetary Fund, hailed ECB officials as “crisis heroes”. And by virtue of her current position at the head of the European Central Bank, the French politician herself has become a crisis manager.

And in early June, the twenty-fifth anniversary of the founding of the European Central Bank, and it is currently struggling with constantly high inflation in order to achieve its very special goal, which is the stability of the euro for millions of citizens in the 20 countries that apply the single European currency.

The history of the European Central Bank began in the summer of 1998 by reaching a typical European consensual solution, which is not to assign the presidency of the new joint central bank, which is based in the German city of Frankfurt, to a figure from Germany or France, the two largest economies in the eurozone. This post goes to Dutchman Wim Duisenberg.

Regardless of the struggle that took place over the major positions in the bank, the Europeans were able, through its establishment, to implement one of the most important projects in their economic history in a very rational manner.

On May 25, 1998, the governments of the then eleven member states of the eurozone appointed the president and vice president of the European Central Bank and the other four members of the bank’s executive board. Their appointment took effect on June 1, 1998, marking the establishment of the Bank.

In turn, the founding president of the European Central Bank, Duisenberg, left no room for doubt about the purpose that meant the nascent institution in the first place, which is to gain citizens’ confidence that the single currency would be at the same degree of stability as it enjoyed before it the German mark, the French franc, and the gulden, Dutch molehills, and others.

“The euro is your currency, and you can be confident that it will maintain its value,” Duisenberg wrote to independent central bankers in the guest books of central bank chiefs in the euro countries.

In the recent past, the European Central Bank was on a date with a new difficult task, when the inflation rate in October 2022 began to accelerate, reaching a record value of 10.6 percent, a value that is very far from the 2 percent target that the European Central Bank seeks. To be achieved in the medium term in order to stabilize the euro. The Bank countered this development with a series of interest rate hikes.

However, the inflation rate continued to rise, driven primarily by increases in energy and food prices in the aftermath of the Russian war on Ukraine, which made central bank officials repeatedly ask themselves critically whether they had stuck too long to the cheap money policy that included buying government bonds. In billions of euros after the financial crisis in 2007/2008.

On the internal level, the Bank faced difficulties represented by a defect in the design of the currency unit, and this defect is due to the fact that the Europeans applied a common currency, without having a common fiscal and monetary policy.

The former chief economist at the European Central Bank, Otmar Issing, said in an interview with the German News Agency in November (November) 2021 that the heterogeneity of the euro countries and, consequently, their divergence of interests poses a huge problem for the common monetary policy. Although national central bankers do not have to represent national interests on the ECB’s board, Issing argues that “when government bond buying plays such a dominant role in ECB policy, then it becomes very difficult to set national interests aside.”

Whether the crisis is a financial crisis, a debt crisis, or the Corona pandemic crisis, the European Central Bank, which worked as a crisis-fighting team, showed creativity in using countermeasures in facing such crises. Bank officials masterfully prepared various bond-buying programs, provided banks with cheap loans, reduced the interest rate to a record level of “zero percent” and imposed negative interest on deposits in a way that made banks complain of punitive interest and made savers feel that their deposits are subject to confiscation.

Now we are witnessing the struggle with inflation and the fears of many people that they do not have enough money for their necessary expenses. And Isabelle Schnabel, a member of the Executive Board of the European Central Bank, confirmed last fall that “people can count on the European Central Bank to bring inflation back down again,” and said, “We will do our job, and we will work for price stability.”