The Euro in Crisis: Decision Time at European Central Bank Harvard Case Solution & Analysis

The Euro in Crisis: Decision Time at European Central Bank  Case Solution 

Introduction:

The case study highlights the challenges and questions that the management of the European Central Bank were facing with regards to the debt crises of Greece as the bank and its management were caught snapping between both the options that whether to assist the government of Greece or not.

The financial crises issue of Greece was a defining moment for the European Union as it was the first significant challenge that posed a serious threat to the currency of the European Union (euro) and the way this will be tackled will lay out the trend and culture for any such issue with any other member country in the future.

 The management of ECB should identify the importance of the decision that the bank would make and therefore, they are worried that if the bank decides to buy the Greek debt then the other dwindling economies among the member states will also likely look towards the bank for bailing them out.However,the legislation will handle the crises and this is not the way forward for the bank as the other economies of the EU are significantly larger and buying their debt will likely lead the bank to crises itself. (Belkin, 2011)

The management of the bank isconsidering adopting a feasible strategy as per the situation and crises in the region.Therefore, in this case the meeting has been planned to decide the way forward for the organization.

European central bank:

A central bank can be best described as an entity that is structured and fermented to provide monetary as well as banking services to the region’s government and the private or commercial banks in order to sustain the stability of the economy of the region while also safeguarding the currency from devaluation or fluctuation. The other secondary roles and responsibilities of the Central Bank of the region are to promote the monetary policy of the government or the united entity in case of European Union and to issue the currency for the region.(ECB, n.d)

The European Central Bank is the regulatory authority of the common currency of the European Union and the primary purpose of the creation of the bank is to control the prices in the region and to safeguard the currency of the region. Initially it only regulated the currency for accounts’ purpose only however, it has also been regulating the issuance of the currency afterwards.

The introduction of free capital flows among the members of the European Union laid the foundations for the introduction and adoption of a single currency for the whole region, known as Euro, and the introduction of Euro led to the foundation of the ECB as an entity was required to regulate and maintain the newly adopted currency of the region.

Structure and authority of the ECB:

The main working structure and the decision making body of the ECB comprised of a governing council that oversaw the workings and operations of the bank. The governing council of the bank comprised of an executive board of six individuals who were appointed by the government of the member countries.(ECB, n.d)

 The other members of the management structure of the bank were the heads of the national central banks of each and every member country of the EU. Moreover, the decision criterion of the organization is based on decisions made through unanimity such that every member of the governing council agrees with the decision being made.....................

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