The pivotal role of the ECB in the New Europe

Article Abstract:

The European Central Bank (ECB) was launched in Jan 1999 and has to ensure that prices are stable in the countries taking part in European monetary union. There are rewards for appropriate fiscal and supply side policies, and penalties in the form of tight monetary policy if inflation becomes a problem. There are risks if a too-cautious approach is adopted, and fiscal consolidation is hindered. Such an approach could discourage reform and mean that structural unemployment becomes locked into European economies.

Economic policy, Western Europe, Monetary unions, European Central Bank

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World assessment

Article Abstract:

The crisis that hit emerging markets in 1997 and 1998 was not due to developments in those economies alone, but was also linked to events in Japan and Europe. Japanese and European investment is at low levels, while US investment has risen. European banks have lent abroad due to lack of domestic opportunities. Emerging markets should seek to tackle problems related to banking and liquidity. Growth rates should recover, though not to levels previously seen during the early 1990s.

Economic aspects, Developing countries, Capital market, Capital markets, Financial markets

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