European Central bank

Role and presentation

The ECB is the decision-making body of the Eurosystème and the European Système of central banks :

the Eurosystème gathers the European Central bank (BCE) and the national central banks (BCN) of the Member States of the European Union which adopted the Euro;
the European Système of central banks (SEBC) includes/understands the ECB and the BCN of the twenty-seven Member States of the EU, i.e., compared to Eurosystème, it includes/understands in more the BCN of the countries which did not adopt the euro. The BCN of the Member States not taking part in the Euro area enjoy within the SEBC a particular status: they are entitled to lead a autonomous Monetary policy national, but they do not take part in the decision making of the monetary policy of the Euro area nor to its implementation.

In 2009, the ECB could be equipped with the legal personality, in the event of ratification of the modifying Traité.

Missions

In accordance with the treaties and statutes, the main aim of the ECB is to maintain the stability of the Prix. Without damage of this objective, it gives its support for the economic objectives of the Union, i.e. the maintenance of a high employment level and the encouragement of a growth not-inflationist. It acts in accordance with the principle of a open market economy .

The fundamental missions concerned with Eurosystème consist with:

to define and implement the Monetary policy of the Euro area;
to lead the Political of exchange of the euro area;
to hold and manage the Monetary reserves Member States;
to ensure the good performance of the systems of payment.

Moreover, Eurosystème contributes to the good behavior of the policies followed by the competent authorities concerning the prudential control of the finance companies and the stability of the Financial system.

The ECB fulfills an advisory function near the Union and of the national authorities in the fields of its competence, in particular the questions concerning the Community legislation or national. Lastly, in order to ensure the missions of the SEBC, the ECB, assisted by the BCN, collects the statistical data necessary to its operation.

Organization

The process of decision making within Eurosystème is centralized on the level of the bodies of decision of the ECB, namely the Conseil of the governors and the Directoire . As long as certain Member States will not have adopted the euro, there will exist a third decision-making body: the General advice .

Since the creation of the ECB, the presidents (also called governors) of the ECB were:

of June 1st 1998 at November 1st 2003: Wim Duisenberg (Dutch)
since November 1st 2003: Jean-Claude Trichet (French)

The Directory

The Directoire includes/understands the president, the vice-president and four other members, all selected among people having an authority and track records recognized out of monetary or banking matter. They are named by mutual agreement by the Heads of State or government of the States of the euro area, on recommendation of the Conseil of the European Union and after consultation of the the European Parliament and the Council of the governors of the ECB (or of the Council of the European monetary Institute (IME) for the first nominations). The principal responsibilities for the directory consist with:

to implement the monetary policy in accordance with the orientations and with the decisions taken by the Council of the governors of the ECB and, within this framework, to give the instructions necessary to the BCN;
to exert the powers which are delegated to him by Council Decision of the governors of the ECB.

The Council of the Governors

the Conseil of the Governors is composed of the directory and the only governors of the BCN of the euro area. The principal responsibilities for this Council consist with:
to formulate the guidelines and to make the necessary decisions with the achievement of the missions entrusted to Eurosystème;
to lay down the monetary policy of the euro area, including, if necessary, intermediate monetary objectives, the directing Rate S and provisioning of reserves within Eurosystème;
to formulate the guidelines necessary to their execution.

The General advice

The General advice is composed of the president and the vice-president of the ECB, of the governors of the BCN of the euro area and the governors of the BCN of the remainder of the EU, i.e. Member States (still) not having adopted the euro, being the subject of an exemption. It carries out the missions which the ECB took again of the IME and which, have regard to the exemption whose the object one or more Member States are, must still be accomplished during phase III of the economic Union and monetarist (UEM). The General advice also contributes:

with the advisory functions of the ECB;
to collect the statistical data;
to draw up the annual reports of the ECB;
to adopt the rules necessary to the standardization of the countable procedures and declaration relating to the operations of the BCN;
to take measurements, others that those already envisaged in the Treaty, relating to the definition of the scale for the subscription for the capital of the ECB;
to define the condition of uses of the personnel of the ECB;
with the preparations necessary to the irrevocable fixing of the foreign exchange rate of the currencies of the Member States being the subject of an exemption compared to the euro.

Independence

The ECB is a body independent of the other European institutions and Member States. In the exercise of the missions relating to Eurosystème, neither the ECB, neither a BCN, neither an unspecified member their decision-making bodies can solicit nor to take instructions of an external body. To guarantee this independence and a certain stability, the statutes of the SEBC envisage:

one duration a renewable mandate at least equal to five years for the governors of the BCN;
one eight years duration a nonrenewable mandate for the members of the directory (it should be noted that the mandates were spread out for the members of the first directory other than the president in order to ensure the continuity of this body);
that a governor can be revoked only in the event of incapacity or of serious error (the Court of justice of the European Communities is qualified to know litigations in this field).

History of the institution and its doctrines

See also: History of the economic and monetary Union European, Ordolibéralisme

The European Central bank (BCE) succeeded in June 1998 the European monetary Institute (IME). This last had been created by the Traité of Maastricht to prepare the installation of a transnational central bank and a common monetary policy. The ECB located at Frankfurt was created on the model of the German central bank, the Bundesbank. The latter being mainly the work of ordolibéraux German, it is interesting to include/understand how this economic current sees the role of the central banks.

For the ordo-liberals the main issue in economy comes from the destruction of the mechanisms of the market either by private monopolies or by the State. Also they recommend the installation of an economic constitution aiming at founding a “powerful system of price based on competition”. In these problems, the currency poses a particular problem to them as we will see it.

From the beginning of the 19° century, after the Industrial revolution, one witnesses a change in the mechanism of monetary creation. The Monnaie becomes gradually less and less the counterpart of a money or gold stock and more and more that of the emission of the credit by the banks. If, for the ordo-liberals, of the institutions in competition are effective in the distribution of appropriations to the private individuals, they are it less as regards monetary creation. Indeed, if they create too much currency in creating too much credit, they at the same time will make run a risk to the depositors and cause inflation. It is thus necessary to introduce an agent in charge of the general interest since in this case the market alone cannot provide for it. But for the ordo-liberals, witnesses in the Thirties of the utilisatiion by the German governments of the central bank to finance their expenditure, the State cannot be guaranteeing general interest in the field of the currency. From where to avoid that the political power is at the same time judge and part the idea to create an independent central bank which would be to some extent in the monetary order the equivalent of what is in the legal order a Supreme court.

Operation of the monetary policy of the ECB

The objective of the European System of central banks (SEBC) is to maintain the stability of the Prix and, without damage of this objective, to give its support for the general economic policies in the Community in order to contribute to the realization of the objectives of the Community. In the continuation of these objectives, the SEBC acts in accordance with the principle of a open market economy where competition is free, by supporting an effective allowance of the resources.

For his Monetary policy, the ECB uses three directing rates different (of the rate low at the highest rate):

the Rate of remuneration of the deposits;
the Rate of refinancing (it is the most important rate);
the Rate of the marginal loan.

Two pillars

The ECB defined two pillars which enable him to judge the risks of inflation in the euro area.

The ECB assigns a leading role with the currency within the framework of the first pillar . A broad range of aggregates, energy of m3 to its components and its counterparts, in particular incur it appropriations, is analyzed in order to evaluate the risks for the price stability. By granting a paramount role to the currency, the ECB takes care that the analysis underlying the decisions of monetary policy does not neglect the basically monetary origins of inflation.

The crucial role assigned with the currency is announced by the advertisement of a value of reference, fixed at 4.5%, for the annual growth of the monetary aggregate broad m3. This value of reference corresponds to the growth rate of m3 compatible with the price stability medium-term. The ECB explained from the start which it would not mechanically react to the variations noted between the growth of m3 and the value of reference. On the contrary, prudence must always be of setting in the analysis of the monetary evolutions and the evaluation of information which they contain with regard to future inflation. Indeed, the relation between the currency and the prices are, essentially, a medium-term relation; consequently, the short-term evolutions of the monetary aggregates must always be interpreted with caution. Nevertheless, the ECB was not held with its choice of origin of 4.5%, since the monetary aggregate m3 in the euro area, which was of 4.709 Md€ at January 1st, 2000 passed to 7.782 Md€ to January 1st, 2007 is an annual increase of 9.4%

In parallel, of many other economic indicators and financial are analyzed within the framework of the second pillar so, on the one hand, to obtain additional details which are not contained in the monetary data and, on the other hand, to recut the elements arising of the examination of the monetary evolutions. The analysis carried out through the second pillar has the aim of highlighting the incidence of a series of factors on the trend of the prices from the point of view of short in the medium term. They are for example the wage evolutions, the fluctuations in prices of the raw materials and foreign exchange rates, the confidence of the consumers and the companies, etc

Within the framework of the second pillar, macroeconomic projections, which rest on models commonly used, also constitute a tool of regrouping and synthesis of information available.

Operational framework of Eurosystème

The statutes of the SEBC (articles 17 to 24) specify the monetary functions and the operations ensured by Eurosystème. The European monetary Institute (IME) had worked out, on the basis of these provision, an operational framework for the single monetary policy. The Council of the governors of the ECB made the final decisions relating to the operational framework in the current of the second half-year of 1998. The Council of the governors can modify certain characteristics of the instruments and procedures presented below. One will find detailed informations on these questions in the headed document “the single monetary policy within the euro area - general Documentation about the instruments and procedures of monetary policy of Eurosystème” (April 2002)

Capital and reserves

The BCN are only authorized to subscribe and hold the capital of the ECB. Its subscription is carried out according to a scale based on the share of each Member State of the European Union in GDP and the population of the Union.

It is a little higher than 4 billion euros. The BCN of the euro area completely poured their share in the capital subscribes of the ECB. The BCN of the nonparticipating countries brought 5% of their capital subscribes as participation in the operating costs of the ECB. Consequently, the ECB was equipped with a start-up capital of a little less than 4 billion euros. Thus, when Greece reached the third phase of the UEM, on January 1st, 2001, the Banque of Greece poured the 95 % remaining of its share in the capital of the ECB.

Moreover, the BCN of the Member States taking part in the euro area equipped the ECB with asset of Monetary reserves, to the amount of an amount are equivalent to approximately 40 billion euros. The contribution of each BCN was fixed proportionally at its share in the capital subscribes of the ECB, while each BCN received ECB a credit in euros equivalent to its contribution. 15 % of the contributions were versed in the form of Or and the 85 % remaining were it in US Dollars and Yen.

Instruments and procedures of the monetary policy

The operational framework includes/understands a range of instruments. Eurosystème carries out Opérations open market, offers permanent facilities and fixes the finance companies with the constitution of obligatory Reserves on accounts open on the books of the national central banks (BCN) of the euro area.

Operations of open Market

The Opérations open market play a big role in the monetary policy of the ECB for the piloting of interest rates, the management of the banking liquidity and to indicate the orientation of the monetary policy. Eurosystème has five types of instruments to carry out the operations of open market. The most important instrument is consisted the operations of temporary transfer (in the form of pensions or guaranteed loans). Eurosystème can also resort to the operations closes, with the emission of certificates of debt, the operations of exchange of currencies and the resumptions of liquidities in white. The operations open market are carried out on the initiative of the ECB, which chooses the instrument to be implemented and lays down the methods of these operations. These operations can be carried out by way of normal invitations to tender, fast invitations to tender or bilateral procedures. According to their objective, their frequency and the procedures used, the operations of open market of Eurosystème can be divided into four categories:

the principal operations of refinancing consist of operations of temporary transfer intended to provide liquidities in a regular way, with a weekly frequency and a one week expiry. These operations are carried out by the BCN by way of normal invitations to tender and according to a preset calendar. The principal operations of refinancing play a pivot part in the continuation of the aims of the operations of open market of Eurosystème and constitute the principal channel of the refinancing of the financial sector;
the operations of refinancing later on take the form of operations of temporary transfer intended to provide liquidities, with a monthly frequency and a three months expiry. These operations are carried out by the BCN by way of normal invitations to tender and according to a preset calendar. They are intended to provide to the counterparts an additional refinancing later on. In theory, Eurosystème does not intend to emit, through these operations, of the signals for the market; it thus puts them normally works about it by retaining the rates of tender which are proposed to him;
the operations of final tuning are carried out in an ad hoc way in order to manage the liquidity on the market and to ensure the piloting of interest rates, in particular to attenuate the incidence on interest rates of unforeseen fluctuations of the banking liquidity. The operations of final tuning take primarily the form of operations of temporary transfer, but can also comprise operations closes, of the operations of exchange of currencies and the resumptions of liquidities in white. The instruments and procedures used in the control of the operations of final tuning are adapted to the types of transactions and the had specific aims. The operations of final tuning are normally carried out by the BCN by way of fast invitations to tender or bilateral procedures. The Council of the governors of the ECB will decide if, in exceptional circumstances, bilateral operations of final tuning can be implemented by the ECB itself;
moreover, Eurosystème can carry out operations structural by emitting certificates of debt and by having recourse to operations of temporary transfer or operations firm. These operations are carried out when the ECB wishes to adjust the position structural of Eurosystème with respect to the financial sector (on a or not regular regular basis). The operations of nature structural carried out in the form of operations of temporary transfer and emissions of certificates of debt are carried out by the BCN, way of normal invitations to tender. The operations structural in the form of operations closes are carried out by the means of bilateral procedures.

Permanent facilities

The permanent facilities make it possible from day to day to provide or withdraw liquidities from day to day, to indicate the general orientation of the monetary policy and to frame market rates. Two permanent facilities, managed in a way decentralized by the BCN, are at the disposal of the eligible counterparts, which can resort to it to their own initiative.

The first is the facility of marginal loan, that the counterparts can use from day to day to obtain BCN of the liquidities against eligible credits. The interest rate of the facility of marginal loan normally constitutes a ceiling for the interest rate of the market from day to day.

The counterparts can also use the facility of deposit from day to day to carry out deposits at the BCN. The interest rate of the facility of deposit normally constitutes a floor for market rate from day to day.

Obligatory reserves

The Council of the governors of the ECB decided to apply a system of obligatory Reserves , as integral part of the operational framework of the monetary policy in phase III. The system of the obligatory reserves has the aim of stabilizing interest rates of the money market, to create (or to accentuate) a need structural of refinancing and to contribute, if necessary, with the control of the monetary growth. The amount of the obligatory reserves to constitute by each establishment is given according to elements of its assessment. To answer the objective of stabilization of interest rates, the mode of the obligatory reserves of Eurosystème makes it possible the establishments concerned to constitute their reserves on average. That means that the achievement of the obligations to treat in confidence is checked on the basis of average of the daily assets of the establishments during one one month period. The obligatory reserves are remunerated bya rate corresponding to average interest rate, over the period of constitution, of the principal operations of refinancing of Eurosystème.

Counterparts

The framework of the monetary policy is designed so as to make there take part a large range of counterparts . Only the establishments fixed with the constitution of obligatory reserves can have access to the permanent facilities and take part in the Opérations open market by way of normal invitations to tender. Eurosystème can select a limited number of counterparts likely to take part in the operations of final tuning. With regard to the firm operations, there does not exist any restriction a priori as for the authorized counterparts. It is called upon active participants of the foreign exchange market concerning the operations of exchange of currencies carried out within the framework of the monetary policy.

Eligible credits

Under the terms of article 18.1 of the statutes of the SEBC, all the operations of credit of Eurosystème must give place to the constitution of suitable guarantees. Eurosystème accepts a large range of credits in guarantee of its operations. A distinction is established, primarily for internal considerations suitable for Eurosystème, between two categories of eligible credits: credits of “level 1” and “level 2”. Level 1 consists of negotiable evidences of indebtedness satisfying the uniform criteria of eligibility defined by the ECB for the unit of the euro area. Level 2 consists of additional, negotiable credits or not negotiable, which have an particular importance for the markets of capital and the banking systems national and for which criteria of eligibility are fixed by the BCN, subject to the agreement of the ECB. No distinction is made between the two levels with regard to the quality of the credits and their eligibility with the various types of operations of monetary policy of Eurosystème (if it is not that the credits of level 2 are normally not used within the framework of the operations firm). The criteria of eligibility of the mobilizable credits within the framework of the operations of monetary policy of Eurosystème are the same ones as those used by this one for the guarantees of appropriations intrajournaliers. Moreover, the counterparts of Eurosystème can carry out a transborder use of the eligible credits, i.e. to borrow funds near the central bank of the Member State in which they are established by using credits located in another Member State.

Controversies on the European Central bank

Question of independence

If the central banks of the principal countries of planet are independent by the law of the government of their State (for example the Federal fund of the United States, the Banque of Japan or the Banque of England), it is noted that their respective governments try to exert a certain pressure on their decisions. A contrario, and to take into account the characteristic of the monetary unions, the ECB was conceived as of its origin to be completely independent of the governments of the Member States.

This article founder of the independence of the ECB was called in question by certain French policies during the electoral campaign of 2007. The European institutions (others that the ECB) and the governments of the Member States prohibit the right to influence the decisions of the ECB, and this, according to some, unlike the central banks of other large countries having a currency used in the international exchanges (the United States, the United Kingdom and Japan).

Although its council and his governor are named by the governments of the democratic countries of the euro area, and that it must return account to the European Parliament, of criticisms of the ECB reproach him that its decisions are made in the only respect of its independence and that the elected officials do not have a direct control on its activity. This situation is criticized by the movements Altermondialiste S: for example, association ATTAC, is not in favor of the independence of the central banks, estimating that deprives economic operations potentially being able to reduce unemployment. Movements altermondialists propose the tender of the ECB to the the European Parliament (elected by the citizens) and to the the Council of Europe.

However, the independence of the Central bank has also its defenders. The independence of the Central bank prevents the governments from practicing monetary measurements electoralists. According to the Theory of the political cycle, controlling them tends to privilege austerity measures monetary at the beginning of mandate and the expansion policies illusory of short term at the end of the mandate in order to ensure a pretense of economic revival before the elections. Indeed, a expansionist Monetary policy will start again the economic activity (and unemployment will drop) on the short term (approximately 2 years), but of many economists the negative effects with the long run underline some (debt of the States, loss of credibility of the Central bank, reduction in the growth, raises inflation). Accordingly, it is advisable to prevent the governments from practicing policies aiming at contributing to their re-election via an improvement in trompe-l'oeil of the economic situation.

In parallel, economists Monétariste S, such Milton Friedman, are not in favor of the independence of the central banks, but because they estimate that this one will not prevent them from resorting to inflationary policies

Lastly, the Euro area is a economic Union and monetarist who gathers 13 Member States which, not being in identical economic situations (the business cycles for the moment not being strongly synchronized and of the same amplitude between the States of the euro area), do not have the same individual wishes of Monetary policy. The principal European economists think that a " right of influer" allotted to each of the Thirteen would have a chaotic and against-productive effect.

Question of the objectives of the ECB and the monetary policy to carry out

To harden its credibility, dubious because of its extreme youth, the ECB received for main mission the fight against inflation. Other traditional objectives of a Central bank (Economic growth, low Unemployment rates,…) are conditioned with the realization of the main aim. It also took again the structures of the German central bank (Bundesbank), to profit from its “credibility”, considerably higher than those of the other European central banks between the years 1970 to 1990.

The main aim of the ECB, according to its statutes, is to maintain the price stability, and, “ without damage of this objective ”, it must “ promote an harmonious development, balanced and durable of the economic activities, a high employment level and of social protection , a durable and noninflationary growth, a high degree of competitiveness and convergence of the economic performances ''”.

In practice, since his creation, one notes that the ECB knew to show flexibility in the completion of its main aim, inflation having exceeded 2% several times since 2001, in spite of the official objective to place itself “at the lower part but near 2%”.

Polemic: focusing on the objective of inflation, not enough on the growth and employment?

Economists close to the movements altermondialists reproach the ECB for not being concerned with economic growth and unemployment rate of the Member States, but to have like only and single concern the fight against inflation. They propose to include more directly among the objectives of the ECB a policy favorable to employment in the Union, and in particular a policy to fight against the competitive Dévaluation S of the business partners.

In France, these remarks were taken again during the French presidential campaign of 2007, initially by members of the Socialist party, who denounced what they think of being “ the blindness of the ECB obnubilated by the only fight against inflation ” and proposed “ a revision of the Staff Regulations of the ECB, by obliging it to take into account also the growth target and employment” and to make his decisions “ of coordination with the the European Parliament, the Eurogroupe and the European commission ”. During the countryside, two of the candidates, Ségolène Royal on the left, Nicolas Sarkozy on the right, made equivalent statements, as that of this last on February 21st, 2007 stating to want “ Europe where the monetary policy aims at the growth and employment and not only inflation ” and wondering “to Pourquoi the Americans have do the right to make use of the dollar as of a weapon to the service of their power and why Europe it would not have the right to make use of the euro? ”.

These opinions are however not those of all the members of the UMP or the PS. With the UDF, Francois Bayrou estimated on February 12th, 2007 that “ Any change would mean rise of the prices and rise of the rates. We would die about it ”.

Jacques Delors, on March 2nd, 2007, declared that “ the behaviors of the European Central bank and those of Federal Bank Reserve in the United States, about which one speaks so much, are exactly the same ones. It is not a question of statute ”.

On the other hand, certain economists reproach the Central bank for applying too low rates, considered as being at the origin in certain countries of inflation diverted in the form of Real estate bubble or stock exchange, and also of swelling of the public or deprived debt due to the facilities of loan atlow rate. The example of the Ireland, in situation of overheating, strong real estate bubble and strong increase in the debt of the households - but where on another side the standard of living strongly progressed - would show, according to interpretations, the possibility or the difficulty in simultaneously following an effective single monetary policy for all the countries of union monetary.

Jean-Claude Trichet with many recoveries specified that the control of inflation and the credibility of the ECB go “ in the interest even of the European growth and job creation”.

In his report/ratio of January 2007, OECD estimates that the monetary policy of the ECB is slightly too accommodating (i.e. the directing rates are slightly too weak). For the the IMF, “ orientation of the monetary policy of the overall suitable (BCE) European Central bank ”.

Question of “competitiveness” related to the euro

The Monetary policy of a Central bank can have an influence on the Foreign exchange rate of the currency. It can intervene on the Foreign exchange market by using its monetary reserves. In addition, the directing rate that it fixes (above all according to the risks of inflation) has an influence on interest rates of its currency and thus on its attractivity for the financial investors.

The policy of exchange (except fixing of the directing rate) of the Euro area is not only spring of the ECB; it is about advantage a political decision, which is under the joint responsibility for the ECB and the Eurogroupe. President Sarkozy emitted wills of action on foreign exchange rate.

The euro was appreciated of almost 50% compared to the dollar between 2000 to 2005, and of the voice (of which that of the president, but also of Didier Migaud (PS)) rose in France to criticize the force of the euro which would have caused a loss of Compétitivité european companies. France is isolated within the euro area in its critic from foreign exchange rate from the euro. Countries as Germany are satisfied some, and thus, according to economists, the problems of competivity of France would not come from foreign exchange rate, but from the absence of structural reforms.

Indeed, like the essence of the French foreign trade is done with other countries of the euro area, in particular Germany, the effect of foreign exchange rate is restricted on the French quantum of exports. Moreover France records a trade surplus with respect to the the United States (a billion euros in 2006) and a broad deficit with respect to Germany (13 billion euros). In addition, the appreciation of the euro did not prevent Germany from becoming the first world exporter since 2005.

In August 2007, the president of ECB J.C. Trichet stresses that the unemployment rate of the euro area, maintaining to 6,9%, is lowest that we have had for twenty-six years , and that certain countries (as the Germany) knew an improvement of their trade balance; the movement of recent exchange would more hold with an undervaluation of the dollar that to an overvaluation of the euro.

The French president critical Nicolas Sarkozy the policy of the ECB and in particular its passivity vis-a-vis a foreign exchange rate of the euro which he considers overestimated. With respect to the european partners, this attitude makes conspicuous and insulates France.

In addition, the majority of the economists estimates that the practice of the competitive Dévaluation has only effects of short term, is likely to be used like an electoral tool, and causes with final loss of competitiveness, the reverse of the desired effect; a devaluation involves with short-term an increase in exports, discourages the importation, and thus starts again the growth of GDP. However this practice has opposite effects on the long run: the loss in value of the currency and the inflation which is followed from there cause a rise in the costs inside the country and to final loss of competitiveness. Accordingly the defenders of the ECB suggest a strategy of competitive reduction of inflation which aims at slowing down inflation in order to obtain on the long run a downward trend of the costs and thus better a economic Compétitivité of the euro area. This policy known as “of rigor” has taken again the strategy adopted for several decades by Germany, one of the principal world exporting countries, and by France since 1983. The cost of this competitive reduction of inflation, in term of points of growth, employment and purchasing power, during the two decades spent, however was important (including with the eyes of OFCE). This harmful aspect on the short-term one leads certain economists, of which those of the OFCE, to think that this policy is partly responsible today for the weak economic performances of the euro area compared to the rest of the world. However, it is necessary to keep in mind that the positive aspects are less visible because more diffuse, and that they appear on the means and long terms.