Question

Compare the structure and independence of the European System of Central Banks and the Federal Reserve System.

Answer 1

The European Central Bank and the Federal Reserve System are among the most influential central banks of the globe. However they differ in their general structure, independence, goals and monetary policy instruments.

The major decision-making body of ECb is its Governing Council, who provides directions on the Euro-system. Its structure includes the presidents of the 16 National Central Banks, ECB's president and vice-president and four members of the Executive Board of ECB. Unlike the ECB, the Fed includes 3 main bodies- Board of Governors; Federal Open Market Committee (FOMC), twelve Federal Reserve Banks (FRBs)

ECB and Fed - both are independent institutions with a decentralized structure. They apply basic monetary tools such as open market operations, reserve requirements, but are characterized by many differences in several fields. ECB and the Fed have different goals and different ways to achieve these goals. The main objective of the ECB is to achieve price stability; while Fed has their targets to achieve flexible, safe and stable monetary stability and financial system.