It is now more than 30 years since the Werner Report first proposed a framework for replacing Europe’s national currencies with a single European currency, more than 20 years since the establishment of the European Monetary System (EMS) and nearly 10 years since the signing of the Maastricht Treaty, which committed EU Member States to achieving Monetary Union.
These conflicting challenges, and the uncertainties that surround them, call for particular vigilance on behalf of monetary policy-makers, and for a readiness to adapt one’s monetary stance to a changing macroeconomic environment. At present, the Monetary Policy Committee remains of the view that interest rates will have to normalise over time.