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This chapter analyses the operational framework for monetary policy implementation in some central European countries that have recently joined the European Union (EU).¹ For the sake of simplicity, they will be referred to as “non-euro area countries” in the rest of the chapter (although such a classification also includes Denmark, Sweden and the United Kingdom) which are not analysed here. The analysis is based on public information collected for 2001; since then, the operational framework of these central banks has not changed substantially. Most of the recent changes in the operational framework have taken place in the Eurosystem (or euro area, as it is also commonly known). For this reason, more recent euro area data is reported for 2003 and 2004, and a detailed analysis is made wherever appropriate. The study therefore presents an uptodate comparison of operational frameworks across the countries. The remainder of the chapter is organised as follows. Section 2 examines the characteristics of the minimum reserve system in the euro area. Section 3 examines open market operations, Section 4 examines the standing facilities and Section 5 looks at counterparties. Finally, chapter 6 describes at eligible collateral.

Puts the decline of the euro’s value following its introduction down to rapid US economic growth and the expansionary policies of the European Central Bank. Contrasts popular UK opposition to joining the euro with business pressure to do so, and suggests that the five stated conditions for entry have almost been met. Looks at economic conditions in other European countries and compares growth rates, unemployment, inflation and capital movements in the UK, USA and the eurozone. Outlines some views on the likely future of the euro and its effects on other currencies; and concludes that the macroeconomy of the eurozone “will bear continued watching”.

Considers the macroeconomic effects of European monetary union and the launch of the euro, suggesting that it offers major advantages to European traders, investors and consumers by reducing transaction costs, currency risks and information costs. Recognizes some problems, e.g. transition costs, increased competition in financial services; and the uncertainty surrounding the powers of the European Central Bank (ECB) and effects on national economic policies. Discusses the pros and cons of remaining outside the euro zone; and the likelihood that governments will push the ECB into accelerating monetary growth in order to reduce unemployment.

The membership in the European Union (EU) affected price perceptions of citizens in many European countries at the beginning of 2002. How did the transition from the national currency to the Euro, the new single currency of EU, actually take place? Examines the confusion among Finnish consumers concerning internal reference prices in different product and service categories immediately after the transition to the Euro. Proposes tentatively and empirically tests a framework model. Provides the relationships between the paper's key constructs of consumer price perception and some attitudinal and behavioral variables shortly after transition to Euro currency. Basically price perception took place in similar way, when Markka and Euro scales were utilized. This result was shown, first, by analyzing price perception strategies of consumers, and, second, by showing with correlation analysis that as internal reference price increases, the width of price latitude increases, and, third, by modelling reference price perception on the basis of Volkmann's range theory. Money illusion effect was found to exist to some extent.

This paper investigates the European Central Bank’s (ECB) monetary policies. It identifies an anti-growth bias in the ECB’s monetary policy approach: the ECB is quick to hike, but slow to ease. Similarly, while other players and institutional deficiencies share responsibility for the euro’s failure, the bank has generally done “too little, too late” with regard to managing the euro crisis, preventing protracted stagnation, and containing deflation threats. The bank remains attached to the euro area’s official competitive wage repression strategy which is in conflict with the ECB’s price stability mandate and undermines the bank’s more recent unconventional monetary policy initiatives designed to restore price stability. The ECB needs a “Euro Treasury” partner to overcome the euro regime’s most serious flaw: the divorce between central bank and treasury institutions.