Designing a Central Bank for Europe: A Cautionary Tale From the Early Years of the Federal Reserve System
Important questions concerning the structure and operation of a European central bank remain to be answered. Although there exists no precedent for the process of institution-building in which the European Community is currently engaged, the founding and early operation of the Federal Reserve System in the United States provides a suggestive parallel. It suggests that Stage 2 of the Delors Plan contains potential sources of instability. It suggests attempting a direct transition from Stage 1 (national monetary autonomy) to Stage 3 (centralization of authority). It suggests the need for more thought about voting and mediation procedures to be used to reconcile and aggregate national interests.