Current and Future European Central Bank Monetary Policy
Abstract
This contribution examines the operations of the European Central Bank (ECB) with respect to monetary policy, along with its effects on inflation, exchange rate and financial stability. It also discusses how the regulatory role of the ECB should be improved in the future. The contribution discusses the involvement of the ECB in regulatory policy towards the financial sector, and the responses of the ECB to the financial crisis. It begins with the current set up of the European Monetary Union (EMU) along with the theoretical principles of the EMU model, and the extent to which it conforms with the theoretical framework of the New Consensus Macroeconomics (NCM) and its policy implications, namely inflation targeting. Problems with the current EMU arrangements are then discussed, followed by required ECB changes, before we finally summarize and conclude.
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