Question

Please show all the steps and calculations

List and discuss 3 differences and 3 similarities between how the Fed and ECB are structured and operate.

Answer 1

The central bank of the United States of America is the Federal Reserve. Its mandate is to carry out monetary policy in order to increase wages, to stabilise markets (i.e. to manage inflation) and to moderate long-term interest rates. Its domain is exclusively concerned with the United States' economy and currency. It was established in 1913, after the financial crisis known as the Panic of 1907, by an act of Congress.

The Maastricht Treaty, which established the single currency , the euro, among the signatories of the Agreement, formed the European Central Bank. This was a subset of the members of the European Union, which only included those members who had opted to accept the common currency. This include, for instance, Germany , France , Italy, but not Great Britain. Today, the eurozone is made up of 19 of the 28 European Union Member Nations.

Established in 1998, the European Central Bank has its headquarters in Frankfurt. Its leadership consists of revolving representatives from the central banks owned by its constituent nations, such as the Bundesbank, De Nederlandsche Bank, and Banque de France. It runs on consensus, like the rest of the EU. The ECB's individual member central banks were responsible for their own monetary policies prior to the formation of the ECB, since all had their own currencies. The ECB, as member of the eurozone, has prime responsibility for overseeing the monetary policy of the region. The ECB has a more conservative mission, in comparison to the US Federal Reserve, to monitor and regulate inflation and long-term interest rates. It does not have as one of its priorities to increase jobs. These goals are laid down in the Maastricht Treaties and, without subsequent diplomatic consent, can not be revised.