...The European Monetary Union (EMU) was established as a formal objective in 1992 from the Treaty of Maastricht. In 1995 initial details of a union currency “the Euro” was announced and in 1998 the European Central Bank (ECB) was created and in 1999 the Euro underwent a 3 year transition introducing the Euro notes and coins. The purpose of this text is to analyse in detail EMU’s macroeconomic framework and performance and how this has evolved in the past 10 years. Firstly, I will look into the fiscal policy set out by the EMU however the bulk of the text will look into the monetary policy framework. Finally I will conclude by briefly trying to pin point the links between the macroeconomic framework to the current Eurozone crisis. In general on average the Eurozone’s first decade is viewed as a success and the ECB met its targets by delivering low and stable inflation with an output gap consistently close to 0. However, if we inspect country by country, we witness a large variation. The macroeconomic framework of the EMU, takes 2 main forms Fiscal policy and Monetary Policy. National governments are responsible for their individual fiscal policy while the ECB undertook the responsibility of Monetary Policy. Under the umbrella of Fiscal policy, the Stability and Growth pact provides a clear economic boundary to all Eurozone members. The Stability and Growth Pact specifies 2 boundaries. Firstly, national budget deficits must be kept below 3% and secondly the ratio of the government...
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...Easing Liquidity as Rates on Hold”-By Jana Randow & Andre Tartar – October 10, 2013 Prepared By: Varanth Boyadjian • Sahag-Grag Pailian • Shant Kupjian • Outline: * Introduction * The European Central Bank (ECB) * Body * Summary of the Article * Analysis * Monetary Policy of the ECB * Interest Rate * The Impact of Interest Rate on: * Inflation * Liquidity * Gross Domestic Product (GDP) * Unemployment * How to Ease the Liquidity * Print more Euros (€) * ECB Buying of Government Bonds * New Governmental Institutions * Decrease of Reserve Requirements * ECB Buying Corporate Bonds * Recommendations * Bibliography Introduction: The European Central Bank (ECB): The European central bank was formed in Frankfurt, Germany in 1988. The ECB is responsible for the monetary system of the euro currency and it consists of 17 European countries. The European central bank works with the other national banks of each of the European Union members to formulate monetary policy that helps maintain the euro’s purchasing power. The responsibilities of the ECB are to formulate monetary policy, conduct foreign exchange, hold currency reserves and authorize the issuance of bank notes, among many other things. The European central bank and the national central banks constitute the Euro system...
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... Monetary policy is a central bank’s use of either the money supply and/or interest rates to influence economic activity (Froyen, Richard (2009). Macroeconomics Theories and Policies. Pearson Prentice Hall). Monetary policy is run by the Federal Reserve in the United States and by the European Central Bank (ECB) in Europe. The mean objective of the first institution is to insure price stability and full employment; meanwhile, for the second one is price stability. They are the responsible institutions for issuing Money. The ECB focus on price stability because, accordingly with this institution, it cannot control anything more. However, I do not believe that. Everything is linked and, by economics decisions (interest, taxes…), is possible to change different variables which influence, for example, the employment. Even so, it is true that the ECB have in consideration the employment and a sustainable and non-inflationary growth. The European Central Bank by fixing interest rates in the short-term, monetary policy influences the economy and, ultimately, the price level. ECB has adopted the so-called "two-pillar approach": the economic analysis and monetary analysis. This is to prevent loss of information relevant to assessing risks to price stability, in order to obtain an overall assessment of the risks to price stability price. The European monetary policy is not flexible; it...
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...Purificato 1. The debate on the role of the central bank in the European debt crisis reveals the increasing difficulty of the authorities to apply sensible solutions. De Grauwe and Ji express this opinion by noticing that unfounded fears ‘have been widely advertised in Germany and have contributed to creating a view in that country that the German taxpayer is likely to become the victim of a money machine that rewards the profligacy of Southern European countries’ (De Grauwe and Ji, 2012, p. 1). These fears ‘have become powerful political forces that make it difficult for the governments to find rational solutions to the euro crisis’ (De Grauwe and Ji, 2012, p. 13). In order to appraise this opinion we discuss how the European Central Bank (ECB) and the Eurosystem have been intervening in favour of the Government sector. We start by noticing that central banks can play the role of lenders of last resort in favour of the banking and of the Government sector and that “moral hazard” problems emerge in both cases. Yet, they have only been mentioned to curtail the interventions in favour of the Government sector, in spite of the fact that, during the last two decades, moral hazard regarding the behaviour of the Government sector has proved easier to solve than that regarding the behaviour of the managers of financial firms. The rules on multilateral surveillance, introduced to coordinate the monetary and fiscal policies in Europe,...
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...Why have you chosen to apply to this particular role and why at Barclays? (300 words maximum) Any company to check the progress depends on the financial analysis. So, I chose Finance for internship in Barclays. Barclays is a Universal company with annual revenues of more than GDP of India, which only few banks could achieve. It has its operations in more than 50 countries and has its presence in almost every division in finance sector. These are few of the reasons that attracted me towards Barclays Describe a recent development in the banking industry. What implications might this development have for the division to which you have applied? (300 word maximum) * http://economictimes.indiatimes.com/news/economy/finance/rbi-eases-procedure-of-ecb-refinancing/articleshow/41019401.cms http://www.caclubindia.com/forum/ecb-loan-110580.asp#.VFJ--PmUfXo RBI eases procedure of ECB(external commercial banking) refinancing. It means that borrowers can repay existing debt by raising fresh ECB at lower all-in-cost but subject to the condition that the outstanding maturity of the original loan is maintained. Now more loans will be available for investors but banks has to be careful that they must be very careful while processing loans as in pursuit of repaying their debts, companies may get into more debts What do you understand about our Company Values? Give an example of how you have demonstrated one or more of our Values. (300 words maximum)* Respect, Integrity, Service, Excellence...
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...the European Unions and hence to the above crisis, thus causing a great impact beyond the borders to the world as a whole. We will look into various roles undertaken by the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) in helping to solve the euro zone Debt Crisis. European Central Bank (ECB) The ECB is one of the seven institutions of the European Union which was listed in the Treaty on European Union where it administers the monetary policy of the 17 EU members’ states where euro zone is consider one of the largest currency areas in the world. Founded in 1998, the central bank is one of the most important in the world with more than 500 billion euros in its reserves. Currently, the bank is based in Frankfurt, Germany and led by Jean-Claude Trichet. The primary function of ECB is basically to implement monetary policy for Euro zone, responsible for the care of foreign reserves of the European System of Central Banks, and to promote and conduct smooth operating of the financial markets and foreign exchange functions. In addition, ECB also handles exclusive right to authorize issuance of banknotes and member states can issue euro coins only prior to ECB approval. The European Central bank, or ECB for short, is the European Union’s institution in charge of monetary policy European Commission (EC) European Commission (EC) is the executive body of the European Union (EU) responsible for proposing legislation,...
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...Lab Assignment #1: Introduction to Encryption Algorithms CSEC 630 University of Maryland University College Professor Jingyu Zhang 1. Which tool or technique would be most effective for a cryptanalyst to use to decipher a text encrypted with the Caesar cipher, and why? The best analysis tool to break the Caesar cipher is histogram because it performs a statistical analysis on cipher text which shows the frequency of each letter used in the file. This can later be compared and matched to the frequency of letters in the English language. 2. What do you notice about the histogram results when text is encrypted with the Vigenère cipher in comparison to the results of the Caesar cipher? Why is this the case? Histogram simply gives the frequency of each individual letter in cipher text without taking the plaintext into consideration. Since in Caesar cipher the relationship between plaintext and cipher text is one to one, histogram is more efficient to break the cipher. Since the key in vigenere is somewhat random the histogram shown below seems random as well. 3. There is an error in the following cipher text representation of this quote, what is it? The original unencrypted message is: TH ED IF FE RE NC EB ET WE EN ST UP ID IT YA ND GE NI US IS TH AT GE NI US HA SI TS LI MI TS The original encrypted message is: THE CORRECT CIPHERTEXT SD AH FO HL AR ST RE AS YL BS CI MQ TF NI VE TG HB SN QC NC SD TD HB SN QC DE CN IC IF OT IC This is the error example: SD...
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...for the purpose of this assignment is the England and Wales Cricket Board (hereafter ECB). The ECB is the governing body of cricket in both England and Wales and was created on the 1st January 1997, replacing the National Cricket Association and the Test and County Cricket Board. It has increasingly turned to commercial revenue generation to support its activities and raises revenue from the proceeds of broadcasting, sponsorship, the sale of merchandise and through the sale of tickets for International cricket fixtures hosted at venues throughout England and Wales. Hoult (2014) comments that as a result of new broadcasting deals and increasing profits, the ECB has faced increased pressure from County Clubs and the associated Test Match venues to alter its previous ticketing and test match venue selection policy. From 2017 ticketing costs and revenue will no longer be the sole responsibility of the Test venue and instead the venue and the ECB will share ticket revenue. The remainder of this essay will therefore focus on commercial revenue, notably the sale of England Team Test match tickets. It will introduce economic theories relevant to the sports market and will attempt to assess the usefulness of economic theory in analysing demand for these products. It will discuss the response made by the sport market to an increase in the price of these products and will examine strategies the ECB can use to increase its market share. Critically assess the usefulness of economic...
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...European Central Bank LaRisha Baker Professor: Tom DiCorcia November 30th, 2014 Introduction The European Central Bank (ECB) is the central bank for Europe's single currency, the euro. Its main task is to maintain the euro's purchasing power and maintain price stability in the euro area. The euro area comprises of 18 European Union (EU) countries, of which Greece is included (European Central Bank, n.d.). As the EBC holds extraordinary decision-making power, this will in effect have an impact on the financial economy of Greece. From this case analysis, the ECB must decide whether to purchase or to not purchase Greek sovereign debt (Trumbull, Roscini & Choi, 2011). The Problem After the sub-prime mortgage burst in the United States, this sent reverberating shock waves throughout world economies. As the US economy tightened, economies around the world were also affected; adversely affected highly leveraged banks in the Eurozone. Though providing financial bailouts were against the Eurozone philosophy, with fear looming that Greece would default on its debt, this put pressure on Eurozone members to intervene (Trumbull, Roscini & Choi, 2011). For the euro to maintain stability, a bailout for Greece was imminent. If no Greek bailout were made available, this could potentially upset the stability of the entire EU and the euro. The ECB had been slow to act, in part due to reluctance from EU members France and Germany. As members of the EU, France and Germany are...
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...AUGUST 26, 2011 ------------------------------------------------- Questions and Answers on the Eurobond - Full analysis |More Services | Eurobonds are essential to save the euro, yet a flawed structure will produce adverse effects. We must see what needs to be done, what to be avoided. | In explaining the new order of things in the systemic crisis of the euro I concluded saying that a series of structural reforms in the architecture of the euro need to take place. Among them was/is the introduction of the eurobond. The eurobond is quite a vague and broad concept since it has never taken material form before. It therefore creates a number of questions as to its form, the body responsible for its issuance, the relations between it and the states, the sovereign debt of euro countries and whether it will be mutualized, what are the dangers etc. All these arguments are legitimate and bear a certain truth in them, yet without putting everything into context we can never reach a verdict and decide whether to adopt or reject the option of the Eurobond. In my discussions with my readers and with other Europeans, as well as in my research across the Internet and the European blogosphere, I have gathered a number of common questions that are raised. I shall attempt to provide answers to these questions in order decide whether eurobonds are the only way out of this dead-end that Europe has reached. (To view a concrete proposal for saving the euro, within the current institutional...
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...Quality Review Credit Loss Projections Loss Absorption Capacity Capital shortfall ~€50mld Capital shortfall ~€60mld Cyprus – ’12 • • Portugal – ’11 • • • • • Economy: ~2% GDP EU Asset Quality Review Credit Loss Projections Loss Absorption Capacity Capital shortfall ~€7mld • Economy: ~0.2% GDP EU Asset Quality Review Credit Loss Projections Loss Absorption Capacity Capital shortfall ~€6mld Slovenia – ’13 • Economy: ~0.4 % GDP EU Capital shortfall ~€4.8mld © Oliver Wyman LON-FSP22401-197 3 A new, Eurozone-wide Asset Quality Review and stress test has recently been undertaken by ECB European Baking Union outlook Three Pillars of the European Banking Union and the Comprehensive Assessment • Pillar 1: ECB will keep direct responsibility for the largest banks, but...
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...origins of the Euro (€) had been studied. From the background of Euro, initial idea for the creation of Euro can be trace back to 1979 when European Union (EU) set up European monetary system (EMS). Due to the successful of EMS, the European Union decided to form the Economy and Monetary Union (EMU) to create Euro in December 1991.The main advantages and disadvantages of a single currency for the countries and the zone had been analysis with the macroeconomics knowledge that has learnt from this course. The advantages mainly help to eliminate the floating exchange rate, transaction cost and price transparency, whereas the disadvantages include loss of sovereignty, cost of Euro and budget position. Thus, the significant influences of Euro dollar from birth to now, it can be known that Euro currency is defined under flexible exchange rate system. With flexible exchange rate, the currency can be effort between the capital movements, tax and subsidize international trade and therefore the currency from overseas will influenced the demand. 2. Analysis 1. History of Euro In January of 1999, single currency, Euro has been introduced by members of European Union. It has been approved by Maastricht Treaty and used by its members currently who called as Eurozone. Those members consists of 16 members which are Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, Spain. Hence, United States...
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...Discuss and analysis the movements in value of the Euro against the pound since January 2008 Introduction The value of Euro varies with time by a floating exchange rate against British Pound (GBP). Hence, the exchange rate influenced the value of Euro against GBP and law of one price is assumed. Theories such as the relative Purchasing Power Parity and the fisher effect illustrate the impact of the inflation and the interest rate between two countries on the value of the currency. The asset market model is also another instrument to analyse the movement of a currency. The constraints of using these models are those theories all assumed perfect efficiency of market and the increasing role of global capital flows is ignored. Therefore they are relatively useful to predict the rates in the future which are demonstrated in part two. The following analysis is based on economic factors such as the economic status of the Euro area and the United Kingdom (UK) and the decision made by the Bank of England (BoE) and the European Central Bank (ECB). The investor confidence (Market Psychology) is also below. They affect the value of euro significant, as they vary the supply of and demand for Euro. The value of Euro against British Pound (GBP) increased throughout the three years. The Euro rose from 0.7416 to 0.8507 over the three decades. Euro was 0.7416 at the beginning of 2008, which was its weakest point in these three years. Moreover, the strongest point of Euro relative to GBP is...
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...of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB. In 2011 all ECB publications feature a motif taken from the €100 banknote. This paper can be downloaded without charge from http://www.ecb.europa.eu or from the Social Science Research Network electronic library at http://ssrn.com/abstract_id=1646277 1 European Central Bank, Ettore.Dorrucci@ecb.europa.eu, Julie.McKay@ecb.europa.eu. The views expressed in this paper do not necessarily reflect those of the European Central Bank. The authors would like to thank, outside their institution, A. Afota, C. Borio, M. Committeri, B. Eichengreen, A. Erce, A. Gastaud, P. L'Hotelleire-Fallois Armas, P. Moreno, P. Sedlacek, Z. Szalai, I. Visco and J-P. Yanitch, and, within their institution, R. Beck, T. Bracke, A. Chudik, A. Mehl, E. Mileva, F. Moss, G. Pineau, F. Ramon-Ballester, L. Stracca, R. Straub, and C. Thimann for their very helpful comments and/or inputs. © European Central Bank, 2011 Address Kaiserstrasse 29 60311 Frankfurt am Main, Germany Postal address Postfach 16 03 19 60066 Frankfurt am Main, Germany Telephone +49 69 1344 0 Internet http://www.ecb.europa.eu Fax +49 69 1344 6000 All rights reserved. Any reproduction, publication and reprint in the form of a different publication, whether printed or produced electronically, in whole or in part, is permitted only with the explicit written authorisation of the ECB or the authors....
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...emerging when the newly-elected government realised that the country was heavily in debt. In the meantime, both Greek banks and the government were graded by rating agencies as dramatically low, as the country's debt had peaked (Tseronis 2014). Furthermore, in 2010, reports concerning accounting irregularities for the statistics which the Greek government delivered to Brussels caused the media to put Greece on the spot and raised concerns about the sustainability of the Greek debt and the country's credibility (Tseronis 2014). Thus, Greece became the first EU member to activate a bailout package from the newly set up European Financial Stability Facility (EFSF) and representatives of the European Commission (EC), the European Central Bank (ECB), and the International Monetary Fund (IMF), commonly referred to as the ‘troika’, in May 2010 (Gemenis & Nezi 2015; Tseronis 2014). Afterwards, Greece required a second bailout programme in February 2012 and an agreement that led to a third bailout after marathon negotiations, on 13th July 2015. The aim of this essay is not only to describe and analyse how Greece reached a third bailout but also to investigate if this programme could be the end of the Greek and euro crisis. It is divided into three main sectors: the first one is about the previous bailout programmes as well as the reasons for their failure. The second one analyses the present crisis, the new bailout framework and its current effects in Greece. The last one illustrates...
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