The ECB and the Euro: The First Five Years

53 Pages Posted: 24 Dec 2004

See all articles by Otmar Issing

Otmar Issing

Center for Financial Studies (CFS)


Whilst the debate on the merits of adopting the euro rage on in the UK, comparatively little attention is paid to the way in which the ECB is managing monetary policy in the euro zone. This analysis describes the success of the first five years of the euro's life. Not only has price stability been maintained, despite some turbulent economic times, but the financial markets appear to be convinced that the ECB will be effective in the long term in maintaining a stable price level. The paper describes the mechanisms that have been used by the ECB to achieve its objectives.

The paper, published by the Institute of Economic Affairs, also examines the issues that EU governments must address, particularly the problems of structural rigidities in their economies. The paper concludes that the ECB must not be sidetracked into trying to achieve higher growth and employment - that is only in the power of governments that must adopt liberalising reforms.

Keywords: Euro, ECB, monetary union, inflation

JEL Classification: E40, E42, E50, E58

Suggested Citation

Issing, Otmar, The ECB and the Euro: The First Five Years. IEA Occasional Paper No. 134, Available at SSRN:

Otmar Issing (Contact Author)

Center for Financial Studies (CFS) ( email )

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Frankfurt am Main, 60323

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