Making Monetary Policy

As you know, a monetary policy is used to regulate the supply and availability of money within an economy to provide predictable and stable inflation and interest rate fluctuations. In the United States, the economic sector of the government will evaluate the current state of the economy’s money supply and adjust it accordingly for the best results. Finland; however, does not single handedly create monetary and economic policy for its economy because it is part of the Euro zone which shares currency with other European nations. The Euro system is composed of the national central banks (NCBs) in the euro area and the European Central Bank (ECB) in Frankfurt Germany. Because Finland participates in the Euro system the Bank of Finland will monitor its economy regarding money supply and have a representative sit among a council with other representatives of the Euro nations. During the council the Bank of Finland will participate with other Euro nations in the preparation of a single monetary policy and the related decision making and implementation for the entire euro area. I feel that this group effort towards policy making is necessary for nations sharing a single currency and a good way to provide consistency to Europeans in the Euro zone. If one country made all the decision making for the Euro zone accommodations for other countries would obviously be unconsidered. If every country within the Euro zone made their own monetary policy it would render the Euro system useless and assign different money values to different countries for the same universal currency. For these reasons, the European Central Bank (ECB) and National Central Bank (NCB) are vital for the existence and prosperity of the Euro in Finland and elsewhere.

http://www.bof.fi/en/rahapolitiikka/index.htm
http://www.bof.fi/en/rahapolitiikka/rp_julkaisuja/index.htm

[Picture of European Central Bank]