ABSTRACT

This chapter provides a brief comparison of some key features of the Eurosystem, that is, the central banking system of the euro area, the Federal Reserve System in the US, and the Bank of Japan. The institutional arrangements of the Eurosystem resemble in some ways those of the US Federal Reserve System. The Treaty contains the institutional arrangements for the conduct of monetary policy in the European Economic and Monetary Union. The law states that 'the Bank of Japan's autonomy regarding currency and monetary control shall be respected.' Central bank independence is a multilayered concept with several constituent elements, including personal independence, financial independence and functional independence. To retain legitimacy, an independent central bank must be accountable to democratic institutions, as well as the general public, for its actions in the pursuit of its mandate. The Bank of Japan undertakes foreign exchange interventions as an agent of the government using government funds.