Steve Bogue
Professor Carman
Eco 315 H
The ECB and the FED
The European Central Bank and the Federal Reserve both hold crucial roles within the
states/countries that they conduct business in. Not only do these systems affect the
state/countries in which they operate in, but they directly affect the macro economy with
their decisions. The role of a central bank has two main responsibilities, those
responsibilities include; being the government’s bank and controlling the money supply as
well as being the banks bank. As the bank’s bank, these systems act as the lender of last
resort and allow for the payment system.
The European Central Bank is responsible for all of the actions listed above. Notably, the
European Central Bank oversees multiple countries, therefore they must implement their
policies in each of those countries central bank. The budget for the European Central Bank
is administered by the National Central Banks. The National Central Banks are very
similar to the Federal Reserve, and the Governing Council is similar to the FOMC. The
ECB allows for great transparency by releasing large amounts of information on paper and
online for the publics use. The ECB also releases reports quarterly which include public
speeches, research reports, forecasts for inflation/growth. Unlike the Federal Reserve, the
ECB supplies the reserves differently. The ECB collateralizes lending to banks, whereas
the Federal Reserve sells and purchases securities.
The Federal Reserve is also responsible for being the government’s bank, and being the
banks bank. The Federal Reserve issues new currency, manages the United States Treasury
