International Business : European Central Banks

Running head: INTERNATIONAL BUSINESS
INTERNATIONAL BUSINESS
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INTERNATIONAL BUSINESS1
Executive summary
The paper discusses about the role of central banks in the economy with respect to several
economic indicators. The central bank acts the prime financial authority to manage the price
stability and enable economic growth. The paper also discusses about the role of European
Central Banks and its role as a balancing the economic crisis in the future.

INTERNATIONAL BUSINESS2
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Importance of central banks in the global economy....................................................................5
Functioning of the European Central Banks (ECB)....................................................................6
Influence of political power by the European Central Bank (ECB)............................................9
Conclusion.....................................................................................................................................11

INTERNATIONAL BUSINESS3
Introduction
The central bank is a monetary institution that handles the supply of money, currency and
interest rates of an economy or formal monetary authority. It looks after the commercial banking
system and keeps an eye towards the operations of the commercial banks with respect to interest
rate, money supply, rate of inflation, demand for loan and inflation rate respectively. Central
bank has a monopoly power such that it has the power to increase the monetary base of the
economy. Monopoly power is gained when an individual or governing body is the sole supplier
of the particular commodity in the market. It also has the flexibility to control the printing of
national currency and serve the stae as the legal tender where legal tender is denoted as a form of
money that is used as a satisfactory payment for ant type of monetary debt. A commercial banks
are governed by central banks who acts as the lender of their last resort at times of financial
crisis.
Most of the central banks has effective regulatory powers to govern the issue of the
commercial banks and denote any special changes in the market based policies and outcomes
(Thijs and Corvoisier 2017). Central banks are generally institutionally independent of the
political inference of government institutions, although legislative and executive bodies has a
limited control over central bank. Some central banks are nationalized, yet they are not
government agencies in the developed and developing nations. European Central Bank serves as
one of the biggest monetary areas in the world that comprise over 19 member states of the
European Union. It has a huge role in the Eurozone for maintaining the financial structure. The
aim of the paper is to study the importance of central Bank in in the global economy and study
its significance in the European Central Bank.