Designing a Central Bank for Europe: A Cautionary Tale from the Early Years of the Federal Reserve System

Barry Eichengreen

No 585, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Important questions concerning the structure and operation of a European Central Bank remain unanswered. Although there exists no precedent for the process of institution-building in which the European Community is currently engaged, the founding and early operations of the Federal Reserve System in the United States provide a suggestive parallel. The US experience suggests that Stage 2 of the Delors Plan contains potential sources of instability and provides an argument for direct transition from Stage 1 (national monetary autonomy) to Stage 3 (centralization of authority). It also suggests the need for more thought about voting and mediation procedures to be used to reconcile and aggregate national interests.

Keywords: ECB; Federal Reserve System; Monetary Policy; Open Market Operations (search for similar items in EconPapers)
JEL-codes: E42 E58 F15 F33 F36 N22 (search for similar items in EconPapers)
Date: 1991-11
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