Question

Compare the similarities and differences in term of the structure and independence of the European System of Central Banks (ESCB) and the Federal Reserve System.

Answer 1

Structure of each
Federal Reserve Structure	ECB Structure
Board of Governors:	European Central Bank :
Seven Members Appointed by the President of USA	The ECB was established as the core of the Euro-system and the ESCB. The ECB has legal personality under public international law
Serve 14 year terms
Responsibilities: Adjust the discount rate and the reserve requirements, something rarely done since it is very costly to administer	Responsibilities: to implement monetary policy for the euro area in accordance with the guidelines specified and decisions taken by the Governing Council
The Federal Open Market Committee (FOMC):	Euro-system:
The seven members of the Board of Governors	The Euro-system comprises the ECB and the NCBs of those countries that have adopted the euro. The Euro-system and the ESCB will co-exist as long as there are EU Member States outside the euro area
Five representatives from the regional Federal Reserve Banks serve one-year terms on a rotating basis
Responsibilities :Open Market Operations, Buying and Selling of Treasury Securities	Responsibilities : To adopt the guidelines and take the decisions necessary to ensure the performance of the tasks entrusted to the Euro-system , To formulate monetary policy for the euro area
The Federal Reserve Banks	European System of Central Banks
The member banks	The ESCB comprises the ECB and the national central banks (NCBs) of all EU Member States whether they have adopted the euro or no
Independence of each
Federal Reserve Structure	ECB Structure
Independent government agency	High level of independence
Reports four times a year to Congress	European Institutions have no authority over ECB
President can remove a member	Lack of transparency