UNEMPLOYMENT AND THE INDEPENDENT EUROPEAN SYSTEM OF CENTRAL BANKS - PROSPECTS AND SOME ALTERNATIVE ARRANGEMENTS

This paper scrutinizes the case for an Independent European System of Central Banks (IESCB). Proposals for IESCB are based on some specific interrelated theoretical propositions upon which we cast some doubt. T he case for an IESCB is rejected on the grounds that it would worsen t he performance of the real economy. We propose different arrangements, which are focused on high levels of employment throughout the Europea n Union as the prime objective. Such a scenario, which emphasizes full employment and requires coordination among member countries in terms of economic policy, will avoid most, if not all, of the problems of th e the IESCB proposals. The alternative would thus be better able to ta ckle the unemployment problems of the European Union.