Stronger fiscal institutions combined with reforms boosting the long-term growth and competitiveness of euro area economies and a more resilient banking system are the right way to address the “d” factor. The overarching principles guiding monetary policy Knowing that monetary policy does not cure structural economic malaise is one of the overarching principles guiding central banks.
Equally important are price stability – as a clear overriding objective – as well as central bank independence and credibility. Let me elaborate on these principles and on how they have supported the ECB’s monetary policy in recent times. Independence is essential for central banks, particularly in periods of sovereign funding stress.