However, others criticise the Eurosystem for not basing monetary policy decisions almost exclusively on deviations of M3 growth from the reference value, as they are convinced that money is the best indicator for monetary policy. I reject the criticisms of both camps. Let me explain why.
First, I disagree with the view that money should play no or only a small role in the ECB’s strategy. Empirical studies show that M3 for the euro area has a stable relationship with the price level over the medium term. Such a stable relationship with price developments has not been found for any other indicator variable at this place in time.