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Explain the similarities and differences between the European System of Central Banks andthe Federal Reserve System.Answer: The similarities between the two are in their structure. The National Central Banks ofthe member countries of the Eurosystem have the same role as the Federal ReserveBanks in the Federal Reserve system. The Executive Board and the Governing Councilof the Eurosystem resemble the Board of Governors and the Federal Open MarketCommittee of the Federal Reserve System, respectively. There are three majordifferences between the two. The first difference is concerning the control of thebudgets. In the Fed, the Board of Governors controls the budgets of the Reserve Bankswhile in the Eurosystem, the National Banks control the budget of the European CentralBank.!!The second difference is the monetary operations of the Eurosystem areconducted by the National Banks, so they are not as centralized as the monetaryoperations in the Federal Reserve System. Finally, the European Central Bank is notinvolved in the supervision and regulation of the financial institutions in the euro zonewhile the Federal Reserve is involved with the