Monetary policy faced major challenges in the two mechanisms I mentioned earlier; namely, the relationship between interest rates and economic activity and that between economic activity and prices (Chart 3). First, in terms of interest rates and economic activity, monetary policy faced the lower bound on interest rates.
We are playing an active part in the global efforts to address these weaknesses and redesign the regulatory and institutional framework. A lot of work remains to be done. Second, Economic Union. The solidity of the single currency rests on two pillars: a monetary policy firmly geared towards price stability and a set of sound economic policies.