Review article
A BRIEF OVERVIEW OF MONETARY POLICY IN THE EUROPEAN UNION
Maria Pompò
Abstract
In the first place this paper considers the monetary politics of Eurosystem. Secondly, the monetary politics strategy of the European Central Bank (ECB) is analysed, emphasizing the target of price stability and that this has been achieved in the European Union. As a result it is concluded that the European Monetary Union is not an Optimum Currency Area. The Union’s labour market is not an integrated and co-operative one. There exist, in fact, deep rooted differences between the labour markets of the countries in the Union, which do not permit work mobility or wage flexibility. There is another factor supporting this thesis, which is the impossibility of turning to tax transfers to contrast unemployment due to the drop in demand. Therefore, it is necessary to reduce the discretion left to the member States in terms of fiscal policy, but it is important, above all, that the countries in the Union respect the rules set up by the Stability and Growth Pact.
Keywords
monetary system; Optimum Currency Area; price stability
Hrčak ID:
38202
URI
Publication date:
15.3.2009.
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