BIS Review 53/2006  3  paper, Michael Woodford shows that it is a reasonable approximation to the indirect consumer utility function if the following conditions are met: a)  There are no «welfare consequences of transaction frictions that account for the demand for the monetary base», which means the results apply to a «cashless limit» economy.
This notwithstanding, the uncertainties surrounding estimates of the medium-term development of potential output growth in the euro area have become skewed to the upside. Against this background, the Governing Council will carefully monitor further evidence with regard to an acceleration of productivity growth in the euro area.