Both the Federal Reserve System in the United States and the European

Both the Federal Reserve System in the United States and the European Central Bank are comprised of geographically dispersed Banks. How might such decentralization contribute to successful monetary policy?

What will be an ideal response?

ANSWER

The economies of both the U.S. and Europe encompass many regions with distinct economic specializations, income levels, demographics, etc. Policymakers need to be aware of this heterogeneity and of how the policies under consideration might impact some regions differently than others. Having had a role in the design and selection of policies, officials and citizens at the regional level will be more willing and able to support and to implement the policies.