ECB vs FED

This paper provides a systematic comparison of the institutional structure, policy framework and operational procedures of the Eurosystem and the US Federal Reserve. The institutional features of these monetary authorities reflect differences in their main goals and their monetary policy implementation and can provide a partial explanation for their divergent behavior during the recent financial crisis. However as the crisis intensifies, the ECB seems to increasingly adapt the Fed’s practices (quantitative easing) in the interest of financial stability. Finally we examine the challenges of the ECB stemming from the imbalances within the Eurozone and its internal disputes, some of which are beyond the scope of its jurisdiction and require drastic changes in the architecture of the European Monetary Union.