Federal Central Banks: A Comparison of the US Federal Reserve and the European Central Bank

Federal Central Banks is a unique study that critically examines the role and impact of central banks in federal and confederal political systems.

It conducts a detailed examination of the history, design and operation of central banking in the United States and in the European Union. The contradiction between the centralizing features of banking and monetary policy and the political and economic expectations of pluralist federal democracy is explored. Regional economic disparities are seen to be amplified by modern ‘independent’ central banking. The response of the US Treasury and Federal Reserve to the GFC is rated as superior to immature Eurozone institutions. But both underperformed in not providing adequate fiscal-monetary solutions. Quantitative easing rescued the financial sector from collapse, but exacerbated wealth inequalities and failed to provide a sufficiently rapid economic recovery. Federal level banking reforms need to go hand in hand with democratic accountability. The Eurozone governance structures are dysfunctional and undemocratic and should be reformed.