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Comparison Between European Central Bank and Federal Reserve Bank - Research Paper Example
Author : kimveum
Finance & Accounting
Pages 3 (753 words)
Name Finance and Accounting 28 September 2013 Comparison of European Central Bank and Federal Reserve Bank Printing Press The Federal Reserve Bank (FEB) and the European Central Bank (ECB) have the sole power to issue money. They print the money with respect to the national and European zone currencies, for U.S FED in dollars and ECB in Euros respectively…
Ideally, they enjoy the monopoly of controlling money supply and can use the money printing policy to manage the financial situation in their currency zones. Monetary Policy Objectives Comparing the two, FED can be described as having multiple objectives, while the ECB has a single mandate. By the Federal Reserve Act, FED is set to handle several compatible goals; price stability is given more emphasis, but employment and low inflation are also given an implicit rank among other economically concerned objectives. The article clause requires that in the process of sustaining a long-run expansion of the money and credit aggregates match up with the nation’s long-run potential to enhance production, it should ensure stable prices, maximum employment, and moderate long-term interest rates to be achieved (Gerdesmeier et al. 13). On the other hand, the Euro system focuses on its single responsibility of maintaining price stability. Signed in the treaty of the functioning of the EU in the Article 127, price stability is given an overriding importance to the employment and the balanced economic growth among the members of the union (“Objective” n.p.). Independence Concerning the level of political influence, ECB is considered free of any intercepts from its union members. ...
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