question archive What are the exact differences between the Fed and ECB, in regards to their open-market operations procedures for achieving their targeted benchmark rates?
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What are the exact differences between the Fed and ECB, in regards to their open-market operations procedures for achieving their targeted benchmark rates?
In the federal reserve, the bonds are purchased or sold in the open market such that the money supply increases or decreases in an economy. Whereas in the European central bank, the bonds are purchased only such that the money supply increases in an economy. The federal reserve conducts the open market operation on the daily basis at the market interest rate and the European central bank conducts the open market operations on weekly basis at the market interest rate. The European central bank have both lending and deposit facility through discount rate that means in the case of lower discount rate, the money supply increases and in the case of higher discount rate, the money supply decreases. And, the federal reserve have lending facility only that means in the case of lower discount rate, the money supply increases in an economy.