Difficulties of a Single Monetary Policy for a Large Number of Countries

INTRODUCTION The common currency of the European Economic and Monetary Union (EMU) and the euro has been promoted initially as a source of economic growth and as a mechanism to reduce the diversification of the European market. However, recent eurozone crisis has shown that the problem of single monetary policy is complicated in many countries. Therefore, recent economic development in the euro area highlights the question of whether or not "monopolistic" monetary policy is feasible. In this article we analyze the feasibility of a single monetary policy implemented by the European Central Bank (ECB).

The main difficulty for developing countries to develop effective monetary policy is that few developing countries have serious government debt markets. The difficulty is further complicated by the difficulty in predicting funds demand and the financial pressure imposing inflation tax by rapidly expanding the foundation. In general, the central banks of many developing countries have insufficient records in the management of monetary policy. This is usually because the financial authorities of developing countries are rarely independent of the government, so excellent monetary policy is being used to keep up with the government's political will and to pursue other nonfinancial goals That is why. For these reasons and for other reasons, developing countries trying to establish reliable monetary policy can establish a financial committee or adopt a dollarization. This can avoid government intervention and lead to monetary policy implemented in the anchor country.

Developing countries may face difficulties in developing effective and effective monetary policies. The main difficulty is that the government debt market in some developing countries is deep. The problem is further complicated by the prediction that it is difficult for the financial pressure and money demand to collect inflation tax through the rapid expansion of the monetary base. In many developing countries, monetary policy management records by central banks are poor. This often happens when financial authorities are not dependent on governments in developing countries. Therefore, good monetary policy can be forgotten by the political will of the government or used to explore other non-financial goals. For these reasons and for other reasons, developing countries trying to develop reliable monetary policy can implement the financial committee and dollarization.