Indeed, evidence indicates that monetary policy effectiveness is the driving force behind improved macroeconomic performance, as measured by the reduction of inflation and output volatility15 (Figure 9). Underlying this increased effectiveness lies central bank independence and greater transparency which gives monetary authorities the chance to communicate their monetary policy objectives more effectively.
The ECB’s two-pillar monetary policy framework, which takes account of real, monetary and financial factors, provides conditions under which credibility is attained, allowing the euro area to reap the benefits just discussed. The explicit goal of maintaining price stability, along with an actual quantitative  13  See Yellen, 2006. 14  Woodford (2003).