Role of the European Central Bank in Resolving the Current Economic Crisis Sweeping through Europe
QUESTION 3: Discuss the role of the European Central Bank in resolving the current economic crisis that is sweeping through Europe. In your opinion, does the European Central Bank have an obligation to those countries that have not adopted the euro?
The European Central Bank (ECB) based in Germany, was established in 1998; it is the central bank for Europe’s single currency that is the euro (Ecb.europa.eu 2015). It consists of 19 European member states out of 28 European union countries, where they all adopt the euro currency, which is also known as the Eurozone (Howarth & Loedel 2003).Only two European Union states are not in the Eurozone, Denmark and United Kingdom. The role of the European central bank is to implement and framing the EU’s monetary policy and economic policy (Allsopp & Vines 1999). The European Central Bank (ECB) is one of the most important factors in the financial crisis and the sovereign debt crisis in the Euro- Zone. The ECB has an important role to play to resolve these issues during this crisis.
During the financial crisis, some members of the European Union viewed this crisis as an American phenomenon (Jackson 2009). But this view that people had, has changed as the EU has declined at a very fast pace. Matters went worse when the global trade started to decline sharply when it started eroding prospects for European exports giving safety valve for local industries that are reducing output (Gojinetchi 2012). Moreover the rise in unemployment and having a lot of concerns over the growing financial turmoil, are making the political stakes to increase for the EU government and for the leaders (Nanto 2009). The more the economic crisis persist the more will pressure mount on the governments
The ECB clearly did not see this crisis coming in 2007 and they did not know the dimension and depth of this crisis until it was summer 2008. In fact, what they did, is that they increased the target rate to 4.1 to 4.25% in July 2008 by following the
The European Central Bank (ECB) based in Germany, was established in 1998; it is the central bank for Europe’s single currency that is the euro (Ecb.europa.eu 2015). It consists of 19 European member states out of 28 European union countries, where they all adopt the euro currency, which is also known as the Eurozone (Howarth & Loedel 2003).Only two European Union states are not in the Eurozone, Denmark and United Kingdom. The role of the European central bank is to implement and framing the EU’s monetary policy and economic policy (Allsopp & Vines 1999). The European Central Bank (ECB) is one of the most important factors in the financial crisis and the sovereign debt crisis in the Euro- Zone. The ECB has an important role to play to resolve these issues during this crisis.
During the financial crisis, some members of the European Union viewed this crisis as an American phenomenon (Jackson 2009). But this view that people had, has changed as the EU has declined at a very fast pace. Matters went worse when the global trade started to decline sharply when it started eroding prospects for European exports giving safety valve for local industries that are reducing output (Gojinetchi 2012). Moreover the rise in unemployment and having a lot of concerns over the growing financial turmoil, are making the political stakes to increase for the EU government and for the leaders (Nanto 2009). The more the economic crisis persist the more will pressure mount on the governments
The ECB clearly did not see this crisis coming in 2007 and they did not know the dimension and depth of this crisis until it was summer 2008. In fact, what they did, is that they increased the target rate to 4.1 to 4.25% in July 2008 by following the