How The European Central Bank S Structure Is Managed Finance Essay - Free Essay Example

Sample details Pages: 5 Words: 1588 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? The European Central Bank (ECB) is the main central bank for the 15 countries that are part of the European System of Central Bank (ESCB) or the Eurosystem. The ESCB or Eurosystem consist of the ECB and all the central banks of the member states (national central banks). It has the following basic responsibilities, to define and implement the monetary policy of the community, to conduct foreign exchange operations in accordance with Article III of the Treaty, to hold and manage the official foreign reserve of the member states, and to promote the smooth operations of the payment systems (Issing, 2008, p. Don’t waste time! Our writers will create an original "How The European Central Bank S Structure Is Managed Finance Essay" essay for you Create order 54). The ECB was established on June 1, 1998 in Frankfurt am Main. Its main responsibilities, according to the Europa.eu, are to manage the European Unions (EU) single currency, the euro, to safeguard price stability for the EUs citizens and for framing and implementing the EUs economic and monetary policy (European Union, 2010). Omar Issing further states in his book entitle The Birth of the Euro, that the ECB has a monopoly on the issue of banknotes within the euro areaÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦it is empowered to collect the statistical data necessary for the conduct of monetary policy (Issing, 2008, p. 54). This monopoly enjoyed by the ECB is nothing short of the main focus of central banks in regulating the monetary system (money supply) of their country. But how does the ECB governs itself? How are decisions made by the ECB in achieving its objectives and responsibilities? And how does the ECB regulate the Eurosytem or ESCB? Governance of the ECB is done through the main decision making bodies that comprised its operation the Governing Council, the Executive Board and the General Council. Firstly, the Governing Council is the ECBs highest decision-making body and it comprised six (6) members of the Executive Board and the 15 central banks governors of the Eurosystem, a total of 21 members (Issing, 2008, p. 67). These members meet twice a month via telephone conferencing and usually in the month of August. The central task of the Governing is to adopt guidelines necessary for the operations of the Eurosystem and to formulate monetary policy for its community. Therefore, a country, once they entered the Eurosystem their responsibility for monetary policy passes from their national central bank to the ECB. Thus the single important function of the Governing Council is to ensure that the central objective of the ECB, price stability is achieved and this is accomplished as a result of using a single index (th e euro) for the entire European community (Issing, 2008, p. 68). Secondly, the Executive Board of the ECB comprises six (6) persons: the President, the Vice-President and four other members. It is considered to be the operational decision-making body of the ECB. Also its primary responsibility is to implement the monetary policy as defined by the Governing Council. And like the Governing Council, the Executive Board is a collegial body. A collegial body is an entity whose power and authority is vested in its members. Thus each member of the Executive Board has one vote, which the President has the deciding vote if there is a tie (Issing, 2008, p. 70). Otmar Issisng the author of the Birth of the Euro was a former member of the Executive Board from 1998 to May 2006 in the capacity of Directorates General, Economics and Research. Finally, the third decision-making arm of the ECB is the General Council. It comprises the President and Vice-President of the ECB and all the governors of the central banks of the member state. Other members of the Executive Board may sit with the General Council and participate in its operation but they cannot vote. The General Council assumes the role of the former European Monetary Institute (EMI) formed in Jan 1994 which had no monetary policy powers. Today nothing has changed concerning its mandate which now include providing monetary advice to European Union (EU) countries that have not yet joined and overseeing the functioning of the exchange rate mechanism (Issing, 2008, p. 75). How do these three bodies work together in making decision to satisfy its primary objective of price stability? What exactly is the ESCB? And what role they play in the ECBs monetary policy? Otmar Issing states further that the functionality of the ECBs monetary policy rest on three pillars: prohibition of monetary financing, central bank independence and primacy of price stability (Issing, 2008, p. 54). These three pillars summarize how the ECB regulate the Eurosystem which essentially is its single monetary policy. The prohibition of monetary refers to the historical account where member states national central banks were pressured into buying up unlimited amount of government paper or granting direct credit to the public sector. These actions by the central banks increased the money supply or the amount of money in circulation which caused inflationary pressure in the community. Now ECB and the national central banks are prohibited from engaging into such actions (Article 101 of the Treaty) and a ban has also being placed on their ability to provide provision of credit to the public sector coupled with the direct purchase of public debt instruments (Issing, 2008, p. 5 5). Another pillar of the monetary policy of the ECB and the national central banks concerns their independence found in Article 108 of the Treaty which is quoted: When exercising the powers and carrying out the tasks and duties conferred upon them by this Treaty and the Statue of the ESCB, neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Community institutions or bodies, from any government of a Member State or from any other body. The community institutions and bodies and the governments of the Member states undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the ECB or of the national central banks in the performance of their tasks (Issing, 2008, p. 56) This quotation sums up the importance of the ECBs independence from the respective government bodies or legislative powers from the different member countries. Therefore, persons working within the ECB would be subject to this independence as well. Such independence attributed to staff of the ECB is to ensure that contracts cannot be terminated prematurely, for example, members of the Executive Board have a term of office of eight years with no renewal. The ECBs independence is fundamental to the implementation and formulation of monetary policy (Issing, 2008, p.56). The final pillar that contributes to the regulation of the Eurosystem is referred to as the primacy of price stability or in other words, the ECB primary responsibility is to maintain price a stable price throughout the Eurosystem. Why is this objective of price stability so important to monetary policy? If price stability is not maintained it will cause inflation and the contrary to this is deflation. Price stability here is defined as a year-on-year increase in the Harmonized Index of Consumer Prices (HICP) for the euro area of below two per centÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦aim to maintain inflation rates close to two per cent over the medium term (Issing, 2008, p. 115). Issing gives three important reasons for the importance of price stability as adopted by the ECB, namely, that central planning is based on the correct signals coming from prices in deciding on production and consumption, investing and saving issues. These correct signals from prices refer to changes in relative prices. Changes in relative prices consequently signal changes in relative scarcity which acts as a guide for participant in market activities pointing them in the right direction. Simultaneous shifts in prices cause difficulty in differentiating between shifts in relative prices and overall price increases. Such anomaly means that the economy is operating below performance or below potential which affects investment and household spending (Issing, 2008, p. 62). As mentioned in the above, inflation or deflation causes changes in price and such changes can distort the distribution of income and wealth. This re-distribution of income and wealth is also affected by the tax system, specifically through transfer payments based on nominal values and adjusted values. Research done by Edmund Phelps, the 2006 Nobel laureate has shown that such effects can be substantial even at harmless levels of inflation (Issing, 2008, p. 62). The final point based on the importance for price stability rest on the assumption surrounding the uncertainty of predicting the stability of future prices. Marketing intermediaries will hedge against this uncertainty as a precautionary measure which will lead to corresponding increases in nominal prices and not long-term interest rates. As a consequent of this action by marketing intermediaries financing for investment becomes more expensive and so does government borrowing (Issing, 2008, p. 63). Conclusion The ECB single most responsibility justifiably has been since its inception is to maintain price stability across the Eurosystem. It has been a challenge or a mammoth task by the ECB given the intricacies involved in the implementation and formulation of mechanism to complement and support this objective. The three pillar approach conceptualized by Otmar Issing has proven to be the one of the success factors capitalized by the ECB used to regulate the Eurosystem. There are many other areas worth mentioning that would underscore the importance of utilizing such an approach, but would extend beyond the bounds of this paper, for example, other monetary policy options considered (Taylor Rule, discretionary policy, inflationary targeting and others) and what are some of the instruments of monetary policy. References European Union. (2010, December). Europa. Retrieved from https://europa.eu/institutions/financial/ecb/index_en.htm Issing, O. (2008). The Birth of the Euro. New York, NY: Cambridge University Press.

Henrik Ibsen s A Doll s House - 1291 Words

002322- 3 Henrik Ibsen’s A Doll’s House is based in the Victorian society of the 19th century. It assesses the many struggles and hardships that women faced because of marriage â€Å"laws† that were crucial during that time period. The society was male- dominated with no equality. Nora is the protagonist in A Doll’s House and the wife of a man named Torvald. This play is about Nora’s voyage to recognizing her self- determination and independence. She transforms from a traditional, reserved woman to a new, independent woman. Nora’s relationship with Mrs. Linde, Nils Krogstad, and her husband, Torvald, help her personality grow throughout the play, A Doll’s House. In Henrik Ibsen’s play, A Doll’s House, many literary elements such as juxtaposition, irony, and symbolism are intentionally used to reveal Nora’s true character. There is juxtaposition that Ibsen creates between Mrs. Linde and Nora. This is shown mainly through their marriages. Nora and Torvald play unequal roles in their marriage and according to Torvald, Nora is a child- like object whom he must provide for. In their relationship, Nora plays the passive role. Her only duty is to please her husband, who feels he is superior to her. Mrs. Linde’s situation was totally different. She was looking desperately for a job at the beginning of the play, as her husband, Mr. Linde, had just died. She and Krogstad had a relationship in the past, but because of her family’s financial needs she ends up marrying a businessman, Mr.Show MoreRelatedHenrik Ibsen s A Doll House1563 Words   |  7 Pages In the play, A Doll House by Henrik Ibsen, the title itself symbolizes the dependent and degraded role of the wife within traditional marriages. Ibsen portrayed the generous nature root into women by society, as well as the significant action of this nature, and lastly the need for them to find their own voice in a world ruled by men. Ibsen wrote this play in 1879, this is the era where women were obedient to men, tend the children until their husband came home, and stood by the Cult of DomesticityRead MoreA Doll s House By Henrik Ibsen1717 Words   |  7 Pagesâ€Å"A Doll, a Partner, and a Change† Social movement of women liberation toward equal rights and independence has been a big subject in human history. It happens not only in Europe but also all over the world. Though making progress, this movement has been advancing slowly and encountered backslashes from time to time. Maybe there is something deeply hidden which the society has not figured out yet, even women themselves. What do women want, freedom or good life? Most of the time, they are notRead MoreA Doll s House By Henrik Ibsen1291 Words   |  6 Pages A Doll s House by Henrik Ibsen, is a play that has been written to withstand all time. In this play Ibsen highlights the importance of women’s rights. 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Pros and Cons of Social Studies Teaching Free Essays

Characteristics of Short Stories [pic][pic] References Alphonse, M. , (2011). Naturalism in Literature. We will write a custom essay sample on Pros and Cons of Social Studies Teaching or any similar topic only for you Order Now Retrieved November 20, 2012 from http://www. buzzle. com/articles/naturalism-in-literature. htmlom. Vaux, R. (2012). What Are the Basic Characteristics of Realism. Retrieved November 20, 2012 from http://www. ehow. com/facts_5714410_basic-characteristics-realism_. html. [pic] ———————– Dramatic Structure Exposition: Introduction to setting, situation, and main characters. Complication An event that introduces the conflict. Rising Action Crisis: Crucial moment for the protagonist to commit to a course of action. Climax The highest interest of conflict, the most action. Resolution The point when the conflict is resolved. Naturalism Realism Pessimism: When a character tends to repeat a phrase by having a pessimistic outlook, this sometimes emphasizes the inevitability or quality of death, or the end (Alphonse, 2011). Detachment: The author tries to maintain an objective tone by achieving a detachment or change through nameless characters. This focuses mainly on the plot and character rather than focusing on the character only (Alphonse, 2011). Determinism: The notion that individual characters have a direct choice on their lives is replaced by a focus on fate or nature; this is the opposite of the belief of free will. The author makes the reader believe that the fate of the character has already been predetermined by certain factors, especially environmental factors and he can do nothing to change it (Alphonse, 2011). Twist at the end: There is an overwhelming sense in the naturalist stories and novels that nature is not affected by human struggle. The key themes, survival, determinism, violence, and taboo, have been ideally portrayed in all the works of this literature genre (Alphonse, 2011). Accuracy: Realism strives for total accuracy in the depiction of its subjects. Devoid of any unnecessary dramatics or artistic affectation. Realistic works refrain from undue embellishment, and strive for a natural tone (Vaux, 2012). Read more: What Are the Basic Characteristics of Realism? eHow. com http://www. ehow. com/facts_5714410_basic-characteristics-realism_. html#ixzz2CmwKmoVv Honesty: Realism seeks the depiction of honesty. Avoid hiding things behind distortions or opinions. Unpleasant facts or images are presented as they are, as are plain or unassuming details about the content (Vaux, 2012). Independence: Philosophical realism stresses the independence of objects from the reader. The author gives a life and an existence separate from anything else, which will continue regardless of anyone’s opinions the matter (Vaux, 2012). Ordinariness: The subjects of realistic works are defined not by their exceptional nature, but by how ordinary they seem. This allows ordinary to have a voice (Vaux, 2012). Difficulties: Realistic protagonists are often beset by great forces beyond their control or the natural world. Through indifference of a larger society, and in many cases they do not find triumph in their struggle. Unhappy endings are not always the norm in realistic stories, but they are fairly common. Happy endings often involve compromise and larger than life victories (Vaux, 2012). How to cite Pros and Cons of Social Studies Teaching, Papers