Discussion of Chapter 10

Before I get to the substance of my remarks on the chapter by Pringle and Turner I want to make a couple of comments on the historical position in which we find ourselves. It is my view an enormous accomplishment that a large piece of Europe has established a single central bank, when countries in Europe continue to retain much of what goes with sovereignty. By my political yardstick, the fact that this has occurred is little short of a political miracle. There is no equivalent institution for fiscal or structural policy in Europe. The new institution has as one of its foundation stones that of independence, a responsibility which weighs heavy on the shoulders of the ECB policymakers. This independence was granted, I believe, because of the considerable success European central banks acting in a coordinated manner achieved, seen in the convergence to low inflation and interest rates in Europe. The establishment of a European System of Central Banks is an enormous institutional, as well as economic policy, accomplishment. And it succeeded because of the success of co-operation among central bankers who shared similar views regarding the contribution low inflation could make to the attainment of economic growth and stability in Europe. The need for further co-operation and the search for shared views on how best to promote financial and economic stability will continue. But note what has already been established: national central banks are now making monetary policy within the framework of a single institution with a single currency.