Only structural reforms, preferably of a comprehensive nature, can therefore tackle the underlying impediments to employment growth. When deciding on monetary policy, the Eurosystem must acknowledge the capabilities and limitations of monetary policy implied both by general economic principles and by the structure of the euro area economy.
This is also reflected in the formulation of the Eurosystem’s monetary policy strategy, which is designed to maintain price stability in the euro area. The strategy was announced by the Governing Council on 13 October 1998. It is designed to fulfil two important functions.