The European Union has created the European Central Bank (ECB).

Question

Unlike the Federal Reserve, the ECB is not a lender of last resort. This means that if commercial banks fail to honor their deposits, the ECB is not supposed to step in and help them with emergency credit. In your opinion is this a reliable institutional setting for a banking system? Why? Justify your opinion.

Answer 1

The ECB's only mission is to keep inflation in check. If banks fail, thats not their problem. In times of great economic stress between nations in Europe, the EU will not last. A Confederation is never as strong as a Union.