A COMPARATIVE ANALYSIS OF THE EUROPEAN CENTRAL BANK (ECB) AND THE EUROSYSTEM, THE BANK OF ENGLAND, AND THE FEDERAL RESERVE SYSTEM

Abstract

When discussing the importance of central banks in the economy of each country, it is essential to consider their geographical positioning and the type of legal framework in which they operate. This paper aims to conduct a comparative analysis of the three leading central banking systems in the world. Firstly, the European Central Bank (ECB) together with the Eurosystem, which operates across the European Union; secondly, the Bank of England (BoE), functioning within the territory of the United Kingdom; and thirdly, the Federal Reserve System of the United States of America (FED). The focus of this research lies in their institutional structure, legal frameworks, primary goals of monetary policy, degree of independence, applied instruments, and their responses in times of economic crises—particularly during the global pandemic and the inflationary shock in the period from 2020 to 2024. Through analysis of their similarities and differences—in both legal foundations and monetary strategies, as well as mechanisms of transparency and accountability—this paper offers a deep comparative insight. It thus provides a perspective on the evolution of central banking within each of these three systems and highlights their role and significance in ensuring global economic stability. Furthermore, the research analyzes the concept of institutional independence in the context of political pressures, legislative limitations, and the extent of interventionism. Special attention is given to inflation targeting as a core tool for stabilizing price levels. The paper also examines the long-term effectiveness of quantitative easing (QE) measures. From the aspect of public trust, the role of transparent communication by central banks and the influence of market expectations are explored. The Bank of England and the FED are analyzed through the lens of their so-called dual mandate, unlike the ECB which maintains a single primary goal—price stability. The study also investigates the role of central banks in addressing climate-related financial risks and the challenges of digital transformation. The analysis is based on a review of relevant legal acts, official reports, academic literature, and empirical data. The aim is to provide a holistic and interdisciplinary approach that connects economic outcomes with the institutional and legal design of each banking system. Through such an approach, best practices and opportunities for improving the monetary framework under modern challenges are identified. Consequently, this analysis provides a broader picture of how different institutional models respond to global economic shocks. It also raises the question of whether legal design and institutional structure have a direct impact on the effectiveness of monetary policy. Ultimately, this paper seeks to emphasize the importance of understanding each of these monetary systems in detail.