DISCUSSION APPROACHES TO THE PROVIDING OF MONETARY POLICY IN THE EURO AREA (ON THE EXAMPLE OF BUNDESNANK)

Authors

  • Y. I. Vdovychyn Postgraduate student at the chair of international economic and financial analysis at the National Ivan Franko University of Lviv

DOI:

https://doi.org/10.17721/apmv.2014.120.1.

Abstract

Abstract. This article analyzes the monetary policy of the euro zone, its strengths and weaknesses
and alternative approaches of the economists to its strategy. The strategy of monetary pillars,
which was selected by European Central Bank is considered and compared with the strategy
of inflation targeting. The monetary policy of the euro zone is compared with other major
economies such as the United Kingdom, for example. Also the question of the copying of the
German Bundesbank strategy by European Central Bank is considered.
This article analyzes the main purpose of the euro zone, which is defined in the Statute of the
ECB – maintaining price stability and appropriateness of targeting only on this specified index.
Also there is the question in the article: why the European Union signed so quickly transition
to the common currency. And there are the opinions of economists who consider that this
was rather a political than economic decision. Arguments of economists about the appropriateness
of following the target, which was sustained in all years, are given in the article. Due to
the fact, this threatens a reputation of the ECB.

The article gives many critics to monetary policy of the euro zone and its effectiveness. However,
the eurozone further extends its integration and now one more superstructure in the form
of a bank union is formed. Will it be effective or serve as breakup of the euro zone will be clear
in the near future.
Key words: monetary policy, monetary base, inflation targeting, monetary pillars.

Published

2014-11-10