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Agenda
Introduction
European Central Bank
Federal Reserve System
Summary: ECB and FED
Michael Elbert
Central Banks
Michael Elbert
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Key Characteristics
Michael Elbert
Agenda
Introduction
European Central Bank
Federal Reserve System
Summary: ECB and FED
Michael Elbert
ECB History
See ECB History Video:
http://www.ecb.int/ecb/educational/movies/history/html/index.en.html
1972 1979
3 Stages:
Stage 1: 1990 1994
Stage 2: 1994 1999
Stage 3: Since 1999
First attempt of
European
monetary
cooperation:
European
Monetary System
(EMS)
Treaty on the
European Union
Snake in the
Tunnel
1944 1973
4 Stages:
Stage 1: 1979 1983
Stage 2: 1983 1987
Stage 3: 1987 1992
Stage 4: 1992 1993
Michael Elbert
Convergence Criteria
Government finance
Exchange rate:
Inflation rate:
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Eurozone
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ECB Independence
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Agenda
Introduction
European Central Bank
Federal Reserve System
Summary: ECB and FED
Michael Elbert
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Functions
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Function:
Set the Federal Funds Rate
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Bankers Bank
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Maximum employment
Moderate long-term interest rates
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Discount window
Instrument that allows MFIs (Monetary Financial
Institutions) to borrow money from the Fed usually on a
short-term basis
Reserve requirements
sets the minimum reserves each MFI must of customer
deposits and notes
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Agenda
Introduction
European Central Bank
Federal Reserve System
Summary: ECB and FED
Michael Elbert
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Eurosystem
1998
1914
Federal Open Market Committee (FOMC),12
the ECB Executive Board (6 members) and the New York Fed, and 4 of the 11 other reserve
Governors of the 16 NCBs of the Eurosystem
appointed for 8 years by national governments; approved by the Congress; Bank Presidents
ratified by European Parliament
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Eurosystem
Decision-making style
Role of monetary
aggregates and asset prices
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Eurosystem
a.
b.
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c.
d.
Speeches
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Conclusion
Rule-based
= one response to every economic
situation
Discretionary
= come to a decision
case-by-case
+ consistency
+ plausibility
+ predictable
+ quick decisions !?
+ flexible
+ best reaction !?
ECB &
- a new central bank and
currency
- a heterogeneous area
Fed & $
- an established central
bank and currency
- a homogeneous area
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