In turn, the Governing Council adopted a more precise, quantitative definition of its objective. It aims for an annual rate of inflation of “below, but close to, 2% over the medium term” as measured for the euro area as a whole. The medium-term orientation of monetary policy is important, because in the short term 1  actual inflation can fluctuate due to temporary factors, such as spikes in oil prices or changes in indirect taxes. At the same time, it is also worth noting that the focus is on the euro area as a whole, and not on particular member states within it. But why should monetary policy focus on price stability? In the view of classical economists, money is neutral. On this view, the quantity of money in an economy affects nominal variables, such as the price level, the exchange rate and the nominal interest rate. However, changes in the money supply have no effect on real variables, such as output, incomes or relative prices. Monetary policy has, within this theoretical framework, no effect on the real economy at all. Today, most economists would consider that the neutrality of money holds only in the long run. In the long run, the economy reaches its steady-state equilibrium, with output at its potential. Any monetary expansion at this point, with the economy operating at full capacity, would merely push up prices. This is evident during episodes of hyperinflation, where rapid increases in the money supply lead to ever-increasing consumer prices.
Tukiya Kankasa-Mabula: Modernising Zambia’s payment system Remarks by Dr Tukiya Kankasa-Mabula, Deputy Governor Administration of the Bank of Zambia, at the Ecobank Launch of Financial Products, Lusaka, 16 December 2009. *  *  *  • Members of the Ecobank Zambia Limited Board of Directors present; • The Managing Director of Ecobank Zambia Limited, Mrs Charity Lumpa; • Members of the Diplomatic Corps; • Ecobank Zambia Limited Customers; • Management and Staff of Ecobank Zambia Limited; • Members of the Press; • Distinguished Invited Guests; • Ladies and Gentlemen. It is with great joy and gratitude that I stand to address you at this important launch of the “Ecobank Rapid Transfer” and the “Non-Resident African Account”. I am informed that the two products are designed to transfer money faster and in real time while meeting the needs of customers resident in countries other than those where their accounts are domiciled. I am also pleased that these two products are aimed at promoting the efficient transmission of remittances at an affordable cost. Distinguished Ladies and Gentlemen, allow me to briefly highlight the importance of remittances to our economy. Remittances are increasingly growing to be one of the most important sources of finance in Zambia. Such funds are not simply an expression of fondness by people in the diaspora to assist their families in adverse situations. They also represent an important source of finance that augments capital inflows and investments in the economy.