The adoption of this policy means firstly, price increases should be kept at a level lower than the rate of economic growth. Secondly, the growth of money supply should be slightly above the sum of the rate of economic growth and the target rate of the price increase.
This is particularly true in a currency union that – in contrast to the United States – does not have a large federal budget to balance severe asymmetric developments. For EMU, the economic governance framework devised in the 1990s has not been correctly implemented and, in any case, has proved too weak during the crisis.