On Difficulties Of ECB’s Monetary Policy And Solutions

The ECB(European Central Bank) formulates the monetary policy for euro-zonecountries uniformly, it has a great impact on European,even the world’s politics andeconomy. The ECB has made a lot of considerable achievements during its14years’operation, but some countries said they may exit from the euro-zone with the outbreak ofthe European debt crisis, which provoked a deep reflection on the single monetary policy.This paper mainly uses the description method and causal analysis. First of all, wecan conclude what are the difficulties of the ECB’s monetary policy, basing on thedescription of what the monetary policy is and the euro-zone’s economic situation by theobjective economic indicators. Secondly, analyzes the reason which caused suchdifficulties by causal analysis. Finally, proposes solutions.This paper argues that there are three main difficulties in ECB’s monetary policycurrently: first, the economic gap between countries is big and the convergence criteriaisn’t standard; second, the euro-zone’s fiscal position is not standard; third, there has aconfliction between the ECB’s functions and the public’s expectations. Three causes ofdifficulties above are: the asymmetric shocks from the expansion of euro-zone; theinherent constraints of the monetary policy; the inherent deficiencies of the functions ofthe ECB compared with traditional central banks. However, the real way to solve theseproblems is still limited to set up an euro exit procedure or to deepen the combination ofeuro-zone.