• ECB President Christine Lagarde will receive around 200 guests on Wednesday in Frankfurt, including two of her predecessors: Jean-Claude Trichet and Mario Draghi.
  • Created on 1 June 1998, a few months before the introduction of the euro, the ECB's compass is to maintain price stability, which is now defined by a level of inflation of 2% over the medium term.
  • Against the backdrop of energy and imported goods prices that have surged since the post-Covid-19 recovery and the war in Ukraine, euro area annual inflation stood at 7% in April.

The party will be tarnished a little by rising prices. The European Central Bank celebrates this Wednesday its first quarter century of existence marked by the crises that have forced it to push the limits of its action.

Around 200 guests are expected from 18.15 pm in the steel and glass tower of the main bank monetary institution in Frankfurt. There will be music by Debussy and a birthday cake cut by ECB President Christine Lagarde and two of her predecessors, Jean-Claude Trichet and Mario Draghi.

Lagarde sees reasons to "rejoice"

But the party is taking place as inflation in the eurozone is at a record high – still 7% in April – against a backdrop of energy prices and imported goods that have surged since the post-Covid-19 recovery and the war in Ukraine.

Nevertheless, "we have good reason to rejoice at the ECB," Lagarde told Dutch TV channel Buitenhof. "25 years ago, our objective was to ensure price stability, better European sovereignty and to show more solidarity: we have kept our commitments on these three aspects," she said.

Created on 1 June 1998, a few months before the introduction of the single currency, the ECB's compass is to maintain price stability, which is currently defined by a level of inflation of 2% over the medium term. Inflation has averaged 2.05% over the past 25 years.

But behind this good overall note, the institution has seen all the colors. It has had to come to terms with the imperfections of the monetary union leading to existential crises, such as the threat of seeing the euro implode in the 2010s, during the public debt crisis in the European Union. A long phase of sluggish inflation followed, followed by the surge in prices experienced for more than a year.

An unprecedented rate hike

Having long believed that the return of inflation would be temporary, the ECB ended up having to fight it via an unprecedented increase in its key rates, by 3.75 points since July, agreeing in this way to eat away at growth.

On the other hand, its arsenal has expanded over the years beyond the classic weapon of interest rates: public and private debt purchase programs flirting with the ban on financing sovereign states and waves of giant loans to banks, all to support European economies at arm's length.

The construction site of the digital euro

The institute has also made some disastrous mistakes. In 2011, Jean-Claude Trichet raised rates while a crisis was brewing. His successor Mario Draghi will correct the course as soon as he arrives, later winning laurels of "Super Mario", saviour of the euro zone. But the solitary management of the Italian ended up creating discord within the Governing Council, where the bosses of the national central banks sit. Christine Lagarde has since closed ranks.

As for the euro, used by nearly 350 million Europeans in 20 countries, it will "survive many years to come," says Christine Lagarde. It will also be transformed: the digital euro project is launched to set up a new means of payment in response to the multiplication of cryptocurrencies.

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