Article Analysis Assignment Example | Topics and Well Written Essays - 750 words

Article Analysis - Assignment ExampleConstructing Conceptions of Central Banking Historically Central Banks acted as both bankers and governments bank. As a government banker, the Central Banks helped in debt management, development programs, currency evaluation and reality finances. As a cliquish bank, it facilitated in maintaining banking stability and payment robustness etc. The habit of the central banks as a government banker shows its historical links with fiscal policies. Over time, the basal role of the central bank has been confined in framing monetary policies. Previously, Keynes considered Central Banks as organs of state and instrument of government policy. Central banks role was to maintain economic and financial stability, check states control over currency and manage public finances. Prices of goods and services were fixed under the Keynesian regime. Friedman and Hayek claimed that the central banks should save try to check the proponents of governments by control ling the money supply of the economy and framing monetary policies (Marsh, 1992). ... All the nations in the EMU under this regime resolute to use Euro as their common currency. The ECB was supposed to formulate the monetary policies for all these nations. The central bank of Germany, Bundesbank has seemed to highly influence the policies set by the ECB. Germanys grueling authorities in the EMU have do other nations suspect the virtues of ECBs policies towards the economic progress of the EMU. Under this regime the governments of all these nationals had no power to control the monetary supremacies of ECB (Kolb, 2005). Both Super Strong and Extraordinarily Weak The ECB did non make direct public debts purchases and imposed high constraints in public debt financing. The member states in the EMU were instructed to maintain their budgets in balance or in surplus. If the budget deficit of a nation increased by 3% of its GDP then that nation was penalized under the regime of Excessive Deficit Procedure. Rather no implicit bail outs were offered on the failed government projects. ECB started to act as inflation tighter, while the supreme powers of the Bundesbank made other nations of the EMU hostile. Rather lack of funds started to imbibe economic crisis in the EMU. The same dress does not fit everyone, the German policies and norms introduced by ECB were highly unsuitable for many nations in EMU. The price stability and structural changes made in the labour market made income distributions inequitable between the European nations and also reduced the domestic demands (Szapary, 2000). ECB Anti-growth Bias and Pre-crisis Performance The ECBs antigrowth biased monetary policies following the Stability and Growth form _or_ system of government is actually responsible