BUSI 604 Discussion Board 4: European Central Bank
Michael Hipsman
Liberty University

EUROPEAN CENTRAL BANK AND WHY I’M INTERESTED IN IT
I picked this Key Term due to relevance of the Euro and the European Central Bank in my previous work and current work experiences. I was previously employed with the Federal Reserve Bank, which is the main decision maker for all U.S. currency, and monetary policies. In my current position, the company I work for is headquarter overseas, and has offices located in countries that are members of the European Central Bank. I think researching the European Central Bank, will be very useful to have a more thorough understanding of currency and business practices in within the European Union. In addition, gaining the knowledge of what requirements are needed to join the European Central Bank, and the monetary policies these countries must abide by in order to maintain membership will be insightful towards my GBCA paper, since my country is member of the European Central Bank and European Union.

EXPLANATION OF EUROPEAN CENTRAL BANK
The European Central Bank is the central bank for nineteen European Union members. The central bank is responsible for all monetary policies within the European Union, and sets interest rates across the nineteen participating members. Any nation that chooses to join the European Union much adopt the Euro as their currency except for the member states which have been exempted under the Maastricht Treaty (Great Britain & Denmark). Prior to membership into the Euro Zone, European Union member countries must adhere to and satisfy very strict economic convergence criteria. Most member countries much have specific limits on national inflation and budgetary deficits in order to be approve to join the Euro Zone. Through setting key interest rates and maintaining price stability the European Central Bank strives to maintain the safeguarding the value of the Euro currency.(Satterlee,2014)
MAJOR ARTICLE SUMMARY The article Evolution of the European Central Bank, the (Lastra,2012) gives a general history of how the European Central Bank (ECB) was formed and the role of the bank from its inception until modern day. The article goes further into discussion of the objective and functions, independence and supervision, and accountability of the European Central Bank. In regards to the objectives and functions of the European Central Bank. According to (Lastra,2012) “The list of central bank functions is open-ended and dynamic, including note issuing, government finance, monetary policy, banking supervision and regulation, banker's bank and lender of last resort, smooth operations of the payment systems, management of gold and foreign reserves, conduct of foreign exchange operations, debt management, exchange controls, and development and promotional tasks.” The article continues discussion about the independence and accountability of the ECB. In addition the article also give background information on how the ECB dealt with the financial crisis of 2008, and the bank’s function after the crisis. In May of 2010, the ECB established the Securities Markets Programme. According to (Lastra,2012), “Under this programme, the euro area NCBs, according to their percentage shares in the key for subscription of the ECB's capital, and the ECB, in direct contact with counterparties, may conduct outright interventions in the euro area public and private debt securities markets.” The article describes the independence and accountability of the ECB as having a close working relationship with governments since its inception, yet as with other Central Banks in the world, The ECB also continues to try to gain further independence from government regulation at the same time. However, with the financial crisis of 2008 the ECB now coexists with greater political interference within the European Union, and reduced independence for all central banks/supervisory agencies, because of the fiscal costs of the bailout or rescue packages. In regards to the accountability of the ECB, the article states that “Although a consensus has been reached on the definition and adequate quantum of independence, a debate is still going on regarding the definition and the adequate quantum of accountability. The ECB has often been criticized for its alleged lack of accountability and transparency” (Lastra, 2012). The article states that since the ECB’s inception the bank has had issues with accountability and transparency within the leadership and organization, which has lead legal cases, as well as other world central banks to question the policies that are being implemented.

DISCUSSION
The article reviewed above does an excellent job giving an in depth overview of the European Central Bank and the banks history. Overall, I feel the article does not give specific examples of policies that have shaped the bank, nor does the article compare vs contrast the ECB to other central banks around the world. This info would be helpful for further insight of how central banks operate.
European Central Bank Policy-Making And The Financial Crisis - This particular article focuses on the ECB and their policies after the financial crisis of 2008. The author focuses on if the ECB has been selective to certain regions with their monetary policies since the financial crisis. The article also uses the Taylor model to rule if regional divergence is being used in ECB’s decision making. In addition the article states that the main focus of the ECB has had to shift from inflation control to less conventional methods to ensure Euro Zone countries’ economies remain stable.
How does the European Central Bank react to oil prices? – This article looks into the ECB and how they react to various shocks in the oil markets. The article talks about the differences between the Federal Reserve and ECB and how they react with monetary policy when oil prices rise and fall. This article also uses the Taylor model to see the trends of the ECB over time in reaction to oil prices. This article relates to material discussed this week in the text book and does a good job on focusing on one policy, and to compare and contrast different central banks.
Against quantitative easing by the European central bank. - This article discusses the ECB and their role in buying up debt and securities after the financial crisis after 2008. The article discusses the difference between the Federal Reserve Bank and the ECB in their tactics in regards to quantitative easing. The article states that the ECB has continued to be less centralized in their efforts to buy debts, and securities in the Euro Zone. Instead, the ECB has produced more currency at low interest rates and allowed the regional banks to buy the debts.

The European Central Bank: Independence, Accountability and Strategy: A Review- This particular article is similar to the major discussion article. The article give an overview of the independence, accountability, and strategy used in the ECB during the 1990’s and before in particular. This article gives a good amount of detail into all three topics and touches briefly on the EURO and how it will be introduced within the Euro Zone. This article also does a good job of giving a solid overview of the ECB and how it the bank worked before the Euro was introduced.

REFERENCES
Gorter, J., Stolwijk, F., Jacobs, J., & Haan, J. (2012). European Central Bank Policy-Making And The Financial Crisis. Int. J. Fin. Econ. International Journal of Finance & Economics, 19(1), 132-139. doi: 10.100 http://onlinelibrary.wiley.com.ezproxy.liberty.edu:2048/doi/10.1002/ijfe.1452/full Haan, J. (1997). The European Central Bank: Independence, Accountability and Strategy: A Review. Public Choice, 93(3), 395-426. Retrieved June 5, 2015, from JSTOR. http://www.jstor.org/stable/30024309 Lastra, R. (2012). Evolution of the European Central Bank, The. Fordham International Law Journal, 35(1260), 1260-1281. Retrieved June 4, 2015. http://heinonline.org.ezproxy.liberty.edu:2048/HOL/Page?handle=hein.journals/frdint35&id=1293
L’Œillet, G., & Licheron, J. (2012). How does the European Central Bank react to oil prices? Economics Letters, 116(3), 445-447. http://dx.doi.org/10.1016/j.econlet.2012.04.035
Satterlee, B. (2014). Regional Economic Integration and Trade Agreements. In Cross Boarder Commerce (2nd ed., p. 191). Raleigh, North Carolina: SI-Corp.
Tempelman, J. H., C.F.A. (2012). Against quantitative easing by the European central bank. Financial Analysts Journal, 68(4), 4-6. Retrieved from
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