Given successful monetary and economic policies, many people will perhaps ask whether unilaterally pegging the exchange rate to the euro in advance might not be a sensible strategy for advanced emerging economies - which would be more ambitious and demanding than the crawling peg strategy which is being pursued here at present.1 However, a strategy of this kind initially presupposes that the euro will indeed be a stable, and internationally attractive, investment and reserve currency, and hence a serious competitor for the US dollar.
The ECB Governing Council defines price stability as an increase in consumer prices (measured in terms of the Harmonized Index of Consumer Prices) of less than two percent a year. The ECB Governing Council has opted for a two-pillar strategy to analyze prospective price movements over the medium term. In pillar one, the growth of a broad monetary aggregate is analyzed.