In this policy paper by the Fondation Robert Schuman, Jean-Francois Jamet outlines the European Central Bank'a (ECB) monetary policy and argues that it can not be solely held responsible for sluggish growth rates in the eurozone.
The ECB's monetary policy has recently seen some criticism from French politicians. This paper outlines the main policies pursued since its creation in 1999 and takes a closer look at the ECB's policy choices, as well as its impact on the economic situation in the eurozone.
Jamet underlines the following points in particular:
- The ECB has maintained its primary objective of price stability, as agreed by the member states. It continues to be guided by this key objective in the current economic context.
- Concerning growth and jobs, the ECB has exercised a contracyclical policy, which has stabilised the activity in the eurozone, but member states are not living up to their budgetary policy commitments.
- On exchange rates, the euro has experienced a large instability between 1999 and 2004. Meanwhile, this does not stem from the ECB’s policies, but rather is due to international economic imbalances and the lack of defined targets for exchange rates.
Therefore, the author argues that the ECB can not be held responsible for weak growth rates in the eurozone and the stagnation of purchasing power since 2001. Rather, he concludes, these are also dependent on the member states’ ability to accelerate productivity growth, which requires an adjustment of their structural policies.
- Fondation Robert Schuman: La politique monétaire de la zone euro et la Banque centrale européenne (5 February 2007)