Above all, the Government must create a balanced budget that allows sufficient room for manoeuvre as a member of the Eurozone to be able to reduce the fluctuations of growth in case of shocks to the economy. b. The central bank has to prepare players in the economy to exploit the benefits arising from price stability as well as possible.
If this avenue is not taken, an independent supervisory institution will become necessary, in my view. When it comes to monetary and fiscal policy, however, the separation should go a little further, even. Mervyn King once quipped that “central banks are often accused of being obsessed with inflation. This is untrue.