This series of posts describes a study abroad course in which
students visited several central banks and talked with central bankers
about how they responded to—and sometimes failed to respond to—the
global financial crisis, and how they are adjusting to their new roles.
by Sarah Sykstus
It seemed as though the trips to both the Federal Reserve and the Bundesbank were just pit stops on the way to the ultimate destination that we were all looking forward to visit: the European Central Bank (ECB). Just the day before, we had visited Germany’s National Bank, the Bundesbank. It was the first time we had been able to receive a perspective completely different to what we were used to. It provided us with information regarding solely Germany’s economy, however, it gave us a necessary foundation for the trip to the ECB.
At 9 am we set foot in route to the ECB. We took the subway just like we taken the previous day. On the way to the subway, we passed by the old ECB, marked by the large euro mark with gold stars surrounded by it. I would like to think it was a sign that the day would be successful. The new ECB building was visible the moment we started to climb the stairs up from the subway. It was very sleek and modern on the outside, as it was all glass that shined bright in the morning sun. The moment we walked into the building we were all in awe. It was even more beautiful on the inside. Thus, it was necessary to stop and take pictures of the ground level floor. We even had to stop and take a group picture in front of the main display: all of the flags of the European Union (EU) surrounding a wall that has the words “European Central Bank” written in all of the languages specific to the nations representing the EU.
After all of the pictures were taken we were lead further into the beautiful building, past water features and into the glass elevators. One of the students in the group, Tulsi Joshi, told us that when we were in the elevator it felt like we were in the elevators of the ministry of magic, a ficticous place in the Harry Potter Series. Once we got off we were lead to a conference room where we had the pleasure of listening to two very respected economists that work for the ECB, Dr. Demosthenes Ioannou and Dr. Florian Helder. Dr. Ioannou and Dr. Helder first gave us background information regarding the basics of the Euro Area (the group of countries that use the euro currency). Then they proceeded to provide us with how the Euro Area looked before the crisis which transitioned to the crisis and the reasons they believed it happened. Dr. Helder stated that the crisis can be summed up in the following ratio: debt/GDP (the debt is individual debt by each person).
After they provided us with background information and have caught us up through the crisis, they talked to us about the measures that the ECB is taking in helping the European Economy. It was very interesting to listen to this because it proved to be different from the duties of the Federal Reserve. The ECB is still very young and does not have as much power because they are dealing with fully developed countries that each have their own policies in place while the Federal Reserve is on the federal level and thus can overrule state law.
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