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The monetary policy of the Eurosystem

Author

Listed:
  • Marius HERBEI

    (West University of Timisoara)

  • Florin DUMITER

    (West University Vasile Goldis of Arad)

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.

Suggested Citation

  • Marius HERBEI & Florin DUMITER, 2009. "The monetary policy of the Eurosystem," Finante - provocarile viitorului (Finance - Challenges of the Future), University of Craiova, Faculty of Economics and Business Administration, vol. 1(9), pages 168-173, May.
    • Handle: RePEc:aio:fpvfcf:v:1:y:2009:i:9:p:168-173
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    More about this item

    Keywords

    monetary policy; euro area; banking system; price stability;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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