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Discuss by collecting and analyzing historical data and by giving up-to-date real life example(s) from the American, UK or Europ - Essay Example
Finance & Accounting
Pages 10 (2510 words)
Analysis of American and European Central Banks Introduction: To answer this issue properly there is a requirement for a country-specific measure as well as data to be obtained from the central bank. Many economists have developed measures of CBI from various legal indicators, some of which are conferred in this essay…
The large scale of these interferences has brought intense public inspection of the Federal Reserve's institutional and power structure. Particularly, many have questioned why the Fed has the liberty to engage in such proceedings without the explicit approval from president or the Congress. This political interruption of independence is generally referred to as the independence of central bank. This essay focuses on assessing why Congress made the Fed’s independent when it created it in 1913. The important point to remember is that giving the central bank independence is the greatest way for governments to tie their own hands and put an end to them from misusing economic policies for temporary political causes. In the year of 1913, Congress purposefully formed the Federal Reserve as an independent and self-governing central bank, which formed a fundamental tension: how to guarantee that the Fed remains answerable to the voters without losing its independence. Over the years, there have been various changes in the structure of Fed to improve its credibility, independence, answerability, and transparency. These changes have guided to a healthier institutional design that ultimately renders policy believable and based on sound financial reasoning, as against politics. ...
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