European Monetary System and the Fiscal Crisis

Abstract

The episode of fiscal crisis in the Euro zone has now become a recurrent theme of debate and has attracted a range of experiences regarding the nature of fiscal turmoil, its causes and effects, which vary widely across individual countries. The confidence in the European monetary system has been confounded with the European fiscal turmoil. The phases of its revival and by what method it will recoil, and at what velocity, are unanswered questions. At the centre of the European monetary system is the European Central Bank (ECB) which shapes and conducts a vigorous and complex set of policies and institutional arrangements that represent the image of neoliberal economic ideology. The debate over the European monetary system’s architecture has significant ideological, economic and political implications. This article approaches the debate by assessing the monetary policy strategy and in particular the organisational structure of the ECB, and what role they play in the conduct of economic and monetary course of action in the Euro zone.