First, 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. Second, the Eurosystem must act in accordance with the mandate, tasks and powers assigned to it by the EC Treaty.
Finally, the monetary policy strategy of the Eurosystem has to reflect practical constraints, many of which arise because of the uncertainties created by the regime shift associated with the transition to Monetary Union. I should like to address each form of constraint in turn, starting with general economic issues.