This instrument is in the hands of the ECB, which can assess when and how to use it in the light of the prevailing market conditions and its monetary policy stance. To sum up, the euro area has all the necessary instruments to implement an effective exchange rate policy for the euro. Is there scope for improvement?
I see three areas where further progress should be made. First, there is a need for verbal discipline when making statements on exchange rates. Especially in the early years of EMU, public statements on exchange rate developments were too frequently made by individual policy-makers who were not mandated to speak on behalf of the euro area.