The monetary policy of the Eurosystem

Marius Herbei and Florin Dumiter
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Marius Herbei: West University of Timisoara
Florin Dumiter: West University Vasile Goldis of Arad

Finante - provocarile viitorului (Finance - Challenges of the Future), 2009, vol. 1, issue 9, 168-173

Abstract: The European Central Bank (ECB) and the National Central Banks (NCB) together constitute the Eurosystem, the central banking system of the euro area. The main objective of the Eurosystem is to maintain price stability: safeguarding the value of the euro. The scope of the European Central Bank monetary policy is in the first place the long neutrality of money: this underlines all standard macroeconomic thinking; real income or the level of employment are in the long term essentially determined by real factors such as: technology, population growth or the preferences of economic agents. Another very important scope of monetary policy is the view that inflation is a monetary phenomenon: prolonged periods of high inflation are typically associated with high monetary growth. While other factors such as variation in aggregate demand, technological changes or commodity price shocks can influence price developments over shorter horizons, over time their effects can be offset by a change in monetary policy.

Keywords: monetary policy; euro area; banking system; price stability (search for similar items in EconPapers)
JEL-codes: E24 E42 E52 E58 O23 (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:aio:fpvfcf:v:1:y:2009:i:9:p:168-173

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