Since the foundation of the European currency union in 1998, the European Central Bank and the Federal Reserve System represent the most influential two central banks in the world.
In this comparison their general structure, tasks and objectives and monetary policy instruments are contrasted. The institutions and bodies of the banks are explained in the second chapter, to see the structural differences. While the ECB defined price stability as its primary objective, the Fed has several equal objectives. These objectives and further tasks of the central banks are described in the third chapter. To steer and implement their objectives and tasks, the central banks have monetary policy instruments at disposal, whereas open market operations and the minimum reserve system play a key role. These instruments are explained in chapter 4 in general and their arrangement and implementation at the example of the ECB. Then the Feds corresponding instruments are contrasted with the ECB, because in my opinion the ECB has a role model position, in this context. Then follows an elaboration of the instruments standing facilities and discount policy. These instruments are examined in two separate subchapters, due to the fact that the implementation of these instruments is only made by the ECB or the Fed.
In the last part I examined the reactions of the ECB and the Fed to compensate the risks of the current financial crisis. The attention is directed to the evaluation of the quality and effectiveness of the implemented monetary policy instruments. At the end the results are summarized.
Table of contents
List of figures
List of abbreviations
1 Introduction
2 Institutions and bodies
2.1 The European Central Bank
2.1.1 The Eurosystem and the European System of Central Banks
2.1.2 Decision-making bodies of the European Central Bank
2.2 The Federal Reserve System
2.2.1 Board of Governors
2.2.2 Federal Open Market Committee
2.2.3 Twelve Federal Reserve Banks
3 Tasks and objectives
3.1 Tasks and objectives of the European Central Bank
3.1.1 Price stability as the primary objective
3.1.2 Miscellaneous tasks of the European Central Bank
3.2 Tasks and objectives of the Federal Reserve System
4 Monetary policy instruments
4.1 Open market operations
4.1.1 Open market operations of the European Central Bank
4.1.1.1 Main refinancing operations 7a
4.1.1.2 Longer-term refinancing operations
4.1.1.3 Fine-tuning operations
4.1.1.4 Structural operations
4.1.2 Open market operations of the Federal Reserve System in comparison with the European Central Bank
4.2 Minimum reserve
4.2.1 General points
4.2.2 Minimum reserve policy of the European Central Bank
4.2.3 Minimum reserve Policy of the Federal Reserve System in comparison with the European Central Bank
4.3 Standing Facilities
4.4 Discount Policy
5 Monetary political actions during the crisis
5.1 Reactions of the Federal Reserve System
5.2 Reactions of the European Central Bank
5.3 Interest policy of the Federal Reserve System in comparison with the European Central Bank
6 Conclusion
Bibliography
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