We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Unconventional Monetary Policies of the Economic and Monetary Union - Essay Example

Comments (0)
An essay "Unconventional Monetary Policies of the Economic and Monetary Union" reports that the main body presiding over the decisions of the Union is the Eurosystem which consists of the governors of the European Central Bank and National Central Banks of the seventeen member countries…
Download full paper
Unconventional Monetary Policies of the Economic and Monetary Union
Read TextPreview

Extract of sample
Unconventional Monetary Policies of the Economic and Monetary Union

Download file to see previous pages... The main body presiding over the decisions of the Union is the Eurosystem which consists of the governors of the European Central Bank (ECB) and National Central Banks (NCBs) of the seventeen member countries (European Central Bank, 2004). While the ECB has only a major share in deciding the policies of the EMU, it bears the whole of the responsibility of implementation of the EMU’s policies. The Governing Council of the EMU comprises the people voting over the prospective policies of the EMU. Each person has one vote of the common weight. Members of the council include the President, Vice-President and the four directors of the ECB, and the governors of the NCBs of each of the seventeen member countries thereby rendering the total number of Governing Council members twenty-three. Primary Objective The main objective of the EMU as described in article 105 of the Maastricht Treaty (Jenkins & Economist Intelligence Unit, 1992, p. 466) is the maintenance of price stability. The article goes on to state that “Without prejudice to the objective of price stability, the ECB shall support the general economic policies in the Community with a view to contributing to the achievement of the Community”. The reasoning for the selection of this objective can be traced to the incentive for the formation of the ECB, which was the fear of rising in inflation due to the dominance of the Germans over the European economic landscape. Hence the EMU has a stated primary objective of keeping the average growth, over the Union countries, of the Harmonised Index of Consumer Prices below two percent (Buti & Sapir, 2002). Monetary Policy In order to pursue this objective the EMU has to choose between the two main macroeconomic approaches. It can either concentrate on an Inflation Targeting approach where a clearly defined objective of numerical indicators of levels of inflation is to be pursued or it can adopt a monetary targeting framework where it expands its resources on influencing the monetary aggregate. So far the strategies adopted by the EMU have been described by economists as inclusive of certain aspects of both types of approach; a two-pillar approach. The first pillar in this approach is the money stock manipulation while the second pillar comprises the inflation control strategies. It has been evident for at least a decade that the monetary aggregate indicators do not correspond to the inflation rates which the monetary control purportedly affects (Bofinger, Reischle, & Scha?chter, 2001). The basis for this approach is the economic relation of the money stock to price stability represented by the Quantity Theory Equation (Mayer, 1990, p. 132): ?m = ?p + ?y – ?v Where ?: Change from one year to the next m: Money stock p : Price level y : Real GDP v : Velocity of stock However the equation and the corresponding monetary theory assume that the monetary base represents the M3 aggregate. This assumption has turned out to be incorrect from the experience of the Euro area economies in the past decade.  ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
Economic and Monetary Union in Europe
This system also guarantees deferred payment”. In the 1940’s America and Britain tried to introduce an international monitory system under the label of Bretton Woods. Bretton Woods system failed to prosper because of many reasons. However, during the latter part of the twentieth century, European countries succeeded in integrating the European world.
5 Pages(1250 words)Assignment
European Economic and Monetary Union (EMU)-Italy
However, the Economic and Monetary Union of these European nations have created the recent economic crisis, which commenced in 2008. Italy, as one of its Member States, has been facing a serious economic downturn, and it is projected to last until the next two consecutive years.
6 Pages(1500 words)Term Paper
Unconventional Monetary Policies
In the wake of policy rates approaching and ultimately getting stuck in their lower bounds, such central banks have had their balance sheets replace the interest rates as the instrument of the main policy. The result of the above move was that the estimated models over the economic crisis period with short-term interest rates.
14 Pages(3500 words)Term Paper
Monetary policy in EMU (European monetary Union)
The rationale behind the formation of this association was creation of a strong single European market that would be beneficial for the wholesome economic development of all the member countries, to promote social unity among the people and most importantly, to enhance the prominence of Europe in the global economy (University of Iowa College of Law Center for International Finance and Development, 2013).
6 Pages(1500 words)Essay
Economic and Monetary Union
Discussion of the prospects for European monetary union has often focused on whether the European Union is an optimal currency area for Britain and, if not, how long it might take to become one and whether there might be unacceptable costs to some part of the territory along the way.
5 Pages(1250 words)Case Study
European Monetary Union
Under a permanent fixed exchange rate regime, it has been simultaneously iterated that nations reflecting the practice are provided greater price stability than if there is a fluctuating exchange rate between participating nations. This simply means that shocks in different regions within the bloc can cancel each other out and whatever disturbance is set to occur, it becomes relatively smaller since the area is increased (Salvatore 2001).
4 Pages(1000 words)Assignment
Economic and Monetary Union Essay
This paper has investigated no evidence that anything has altered around 1999. Episode nearby the euro cash changeover at the end of 2001 and in the opening of 2003 retail worth adjustment frequencies up and down and increased substantially. While the scale of the price adjustment also both up and down was less significant than otherwise.
20 Pages(5000 words)Essay
The Future Gulf Currency Union
According to states Hebous (2006), the use of a single monetary system can lead to benefits such as low transaction costs, efficient trade, and low trade risks among the member. He points out the successes of the US and Euro-zone monetary unions as case for
3 Pages(750 words)Essay
Evaluate the potential effectiveness of ECB's monetary policy decision on the recent quantitative easing programme within the Rurozone economy
The monetary finance is a policy set in place to see the supply of money in the market does not exceed its demand (Senn, 1999). This is only achievable through setting of interest charges on loans offered. When you increase the charges at which loans are offered,
3 Pages(750 words)Essay
Unconventional monetary policies and their impact on the economy
Below is a discussion of the policies and their effects. Lending to banks involves provision of funds to a group of banks that face liquidity constraint, especially when the banks do not have alternative sources of funds. The banks’
3 Pages(750 words)Essay
Let us find you another Essay on topic Unconventional Monetary Policies of the Economic and Monetary Union for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us