To attenuate time inconsistency, central banks need to be independent but at the same time accountable and transparent. These two requisites are mutually self-reinforcing: a well-defined strategy implies greater transparency and accountability, and viceversa. The Outright Monetary Transactions announced by the ECB Governing Council last September are an excellent case in point.
Communication was essential: we had to explain that the OMTs were legitimate and compatible with the Treaty, since their aim was to preserve the functionality of markets and thus restore the monetary policy transmission mechanism. The conditionality and enforcement mechanisms were such as to prevent moral hazard for both borrowers and investors.