U.S. Federal Reserve and European Monetary System
US and European Money Systems
US Federal Reserve
With the passage of the Federal Reserve Act, the Congress of the United States of America established the primary monetary objectives of the institution. The primary goals of The Act are as follows: 1) To maximize employment; 2) to foster stable prices; and 3) to establish long-term interest rates. The dual mandate, as it is often called, of the Federal Reserve (aka "The Fed") encompasses the first two of these objectives. The duties of the Federal Reserve have increased over the past several decades and now encompass the following:
Implementing the monetary policy of the U.S.;
Regulating and supervising banking institutions;
Ensuring a stable national financial system;
Providing financial services as a central bank to the U.S. government, domestic depository; institutions, and foreign official institutions;
Researches and publishes about the national economy;
To address the problem of banking panics, in part by supervising and regulating banking institutions;
To strike a balance between private interests of banks and the centralized responsibility of government;
To protect the credit rights of consumers;
To manage the nation's money supply through...
" (ECB, 2007) Operational efficiency is held to be the most important of all the principles of operation for the ECB and can be defined as "the capacity of the operational framework to enable monetary policy decision to feed through as precisely and as fast as possible to short-term money market rates. These in turn, through the monetary policy transmission mechanism, affect the price level." (ECB, 2007) Equal treatment and harmonization
Monetary Policy and International Exchange Rate Monetary Policy A factor leading to an increase in a supply of money is a rise in a demand for the bank reserves influencing an increase in the money supply. To prevent a rise in the money supply, the central bank will purchase bonds to increase the quantity of non-borrowed reserves in the economy thereby shifting the amount of money reserves to the right preventing the
Spain was, at one point, held up as a model of the benefits of regional integration. Its economy, and construction sector in particular, was booming, and the government was running a surplus. However, the underlying lack of balance in the Spanish economy was a problem that derived from regional integration and would soon leave Spain with a massive long-term economic problem, perhaps evidenced most dramatically by the 57.7% youth unemployment
The UK needs to build good economic relationships with emerging markets even more than with its EU neighbors. China is already highly competitive in manufacturing and is gaining competitiveness in high-technology manufacturing. India is a leader in Information Technology and, being an English speaking country, also has the ability to be globally competitive in Professional Services. Latin American and Southeast Asian economies, such as Brazil or Indonesia, will become increasingly
(Minford; Walters, 2004, p. 306) (xii) Competition to the U.S. dollar: In the likelihood of UK joining the EMU and adopting the single currency, the threat posed by the only international competitor to the U.S. dollar, the euro, would become real. Therefore, the U.S., at least would not encourage such a move and witness a downturn to its currency, the only true international currency. (Minford; Walters, 2004, p. 306) However,
The contributions of U.S. In these cases were only U.S.$5 billion to South Korea, U.S.$3 billion to Indonesia and zero to Thailand. (Examining the case for an Asian Monetary Fund) Alternatively, the East Asian economies like Japan and Singapore entailed bilateral assistance to the crisis hit regional economies in some other forms. Secondly, the East Asian crisis appeared to have accorded due emphasis on prevalence of 'demand' by dominating regional
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