7  In terms of communication, however, there may be some differences that are significant in practice. BIS central bankers’ speeches  3  on the risks one wishes to counteract. A monetary policy that leans against the wind therefore gives little “benefit”, while the “cost” in the form of poorer price stability and macroeconomic stability is high. On the other side of the debate it has been pointed out that it is not necessarily a disadvantage that monetary policy is blunt, in the sense that it has a broad impact on the economy, as it then “gets in all of the cracks” and is difficult to circumvent. 8 What the benefits and costs of using monetary policy to counteract financial imbalances will be is also an empirical question. Here, as well, the problem is that the practical experiences of a monetary policy that leans against the wind are still limited. Should the level of the inflation target be changed? Another question being discussed is whether the level of the central banks’ inflation targets should be changed. The debate since the financial crisis has primarily concerned whether the target should be raised, but most recently there have also been arguments for lowering the target. Should central banks lower their inflation targets? It appears to be mainly in the debate in Sweden that arguments in favour of lowering the target have been put forward recently. 9 But they have also arisen in other countries to some extent.
The introduction of the euro has been a strong catalyst for mergers and acquisitions in the euro area. The European M & A market seems to be amongst the most dynamic in the world: with operations totalling over 1,000 billion euros in 1999, it is now catching up on the American market. The euro has brought about significant changes for participants in financial markets and has fostered structural developments in the financial industry. This is true both on euro-area money markets and on capital markets. From the beginning of Stage Three of EMU, cross-border transactions in the money market increased so as to represent more than 50% of the total activity in all segments of the money market. The unsecured deposit interbank market—which is mostly concentrated on shorter maturities—exhibits a  4  BIS Review 11/2001  very high degree of integration. The integration of interest-rate markets within the euro area is a key achievement which deserves to be underscored. EONIA and EURIBOR have provided the market with uniform benchmarks fully accepted by all market participants. The diagnosis is the same in the shortterm derivatives market, whose integration, standardisation and depth have increased. This is reflected, for instance, in the scale of daily transactions and the huge expansion of the euro interestrate swap market. These structural changes in the euro area money market have generated significant moves by market participants, who have concentrated their euro cash management activity and have benefited from better liquidity on the secondary market.