European monetary system and european currency

Страница: 5/34

The Treaty imposes several duties and tasks on the ECB. However, there is no doubt that the objective of price stability is over-riding. For example, the Treaty stipulates - if I may quote - that the Eurosystem "without prejudice to the objective of price stability, … shall support the general economic policies in the Community, with a view to contributing to the achievement of the objectives of the Community", which include "sustainable and non-inflationary growth" and "a high level of employment".

Given the clear priority attached to the primary objective of price stability, how does the ECB address these other Treaty obligations? Let me make three points in this regard.

First, among economists and central bankers, there is overwhelming agreement that there is no long-run trade-off between real activity and inflation. Attempting to use monetary policy to raise real economic activity above its sustainable level will, in the end, simply lead to ever higher inflation, but not to faster economic growth. I am convinced that the best contribution monetary policy can make to sustainable growth and employment in the euro area is to maintain price stability in a credible and lasting manner, allowing the considerable benefits of price stability to be reaped over the medium term. This is the economic rationale underlying the EC Treaty and the Eurosystem's monetary policy strategy.

Second, it is generally acknowledged that monetary policy does affect real activity in the short run. Although the focus must always be on price stability, in many cases the policy action required to maintain price stability will also help sustain short-run economic and employment prospects. The reduction of the Eurosystem's main refinancing rate on 8 April was a case in point. Following the Asian and Russian financial crises last year, global demand weakened. Weaker external demand led to a shift in the balance of risks to price stability in the euro area towards the downside, as demand pressures abated. As monetary indicators did not signal inflationary risks at that time, the Governing Council of the ECB concluded that a cut of 50 basis points in the main refinancing rate best served the maintenance of price stability. This lower level of interest rates may also be supportive of real activity and employment in the short-run. Our eyes must always be firmly focused on the goal, on our goal, to maintain price stability in the medium term. Our monetary policy does not explicitly aim at influencing the business cycle. However, as said in many cases, the necessary monetary policy measures to achieve our goal also tend, almost automatically, to work in the right direction from a cyclical point of view.

This leads me to my third point. In situations where monetary policy might face a short-term trade-off between adverse developments in real activity and deviations from price stability, the over-riding priority accorded to countering the latter must be made absolutely clear. Any ambiguity on this point will simply endanger the credibility, and therefore the effectiveness, of the monetary policy response. This does not mean that the policy action must be draconian. The medium-term orientation of the Eurosystem's monetary policy strategy permits a gradualist and measured response to previously unforeseen threats to price stability, should this be regarded as appropriate, depending on the nature of the threat. Such gradualism may help to avoid the introduction of unnecessary uncertainty into the real economy.

Recognition and an understanding of these three central points are essential for the implementation of a successful monetary policy. Communicating both the objective and the limitations of monetary policy to the public is a vital issue to which I will return later in my remarks. But it would be remiss at this point if I did not address what is surely the greatest economic challenge facing the euro area at present, namely the unacceptably high level of unemployment. There is a broad consensus that unemployment in the euro area is overwhelmingly structural in nature. Monetary policy cannot solve this problem. National governments bear the main responsibility for structural economic reforms. In particular, further reforms of the tax and welfare systems are required in many EU countries in order to increase the incentives to create new jobs and to accept them. Wage moderation can also have a significant beneficial impact. Monetary policy makes its best supportive contribution by providing the environment of price stability in which structural reforms can work most effectively.

It should be recognised that the implementation of EMU has made it even more urgent to improve the flexibility of labour and goods markets. In this context, it would very likely be the wrong answer if governments were to try to create a "social union", harmonising social security systems and standards at a very high level. The ECB will continue to cajole governments into implementing necessary and long overdue reforms, but the final hard decisions - and I acknowledge that they are hard decisions, since the considerable benefits of structural reform often only become apparent with time - lie with the national authorities. In those countries where appropriate structural reforms have been implemented and wage growth has been moderate, unemployment is either low by euro area standards or is falling more rapidly. These experiences offer important lessons for other countries in the euro area. Fortunately, a broader awareness of the necessity of structural reforms recently seems to be emerging in Europe. Of course, ultimately only sustained action will count. The cyclical recovery that is underway is no substitute for such action.

Реферат опубликован: 12/08/2008