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How Central Bankers See It

How Central Bankers See It

The First Decade of European Central Bank Policy and Beyond

(p.327) 9 How Central Bankers See It
Europe and the Euro
Stephen G. CecchettiKermit L. Schoenholtz
University of Chicago Press

This chapter opens up with a brief history of the challenges that people faced who forged the policies of the European Central Bank (ECB) in its first decade. The ECB faced challenges in retaining public support for its own policies and in promoting the structural reforms needed to increase the flexibility of member economies. The ECB itself has been an excellent source, reflecting its admirable penchant for self-assessment. This chapter discusses the initial conditions in 1998 and the challenges that participants expected as the monetary union was getting under way. The construction of the ECB's operational framework, including the creation of the euro area money market as well as the initial implementation of the policy and communication strategies, is analyzed. It then proceeds to an evaluation of ECB policy performance in the first decade of monetary union. Furthermore, this chapter shows that, as the euro area expands, the addition of new constituencies that speak different languages and have different customs and histories will complicate communication further.

Keywords:   European Central Bank, challenges, monetary union, euro area money, policy

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