In practice it is not always so easy to distinguish between what is important for credibility and various factors can interact in a complicated manner. Two cases can, however, be discerned:  BIS Review 56/1997  -6-  - In the first case, the problem of credibility is primarily based on a lack of confidence in the central bank as such and in monetary policy. In the long-term perspective, the task is then the establishment of a trackrecord. Laws that guarantee independence can be an important support in this process. In the short term, there is probably most often not much that can be done other than to show by action--increases in interest rates--that one is sticking to one’s objectives. - More difficult to assess and manage are situations in which the currency’s depreciation is a consequence of weakening credibility in the general direction of economic policy. Investors in the financial market may, for example, think that the risk has increased for a change of regimes in the future, when the target for price stability may be abandoned at least temporarily as a result, for example, of government financial problems. In Sweden this was probably the most common explanation for the recurrent periods of exchange rate turbulence during the 1990s. In situations of this type, monetary policy itself cannot do the job, and what is worse, in the short term the costs of monetary policy measures may be considerable.
It has been agreed that all EU Member States may connect their national RTGS systems to TARGET, whether or not they join EMU. The main policy issue outstanding concerns the terms on which the European Central Bank will grant intraday credit to the “outs”. We see no monetary -- or other -- grounds for any discrimination against the “outs”. If intraday liquidity to the “outs” were to be restricted the effect would be to increase the cost of using TARGET, and to damage the efficiency of the system for both “ins” and “outs”. That would simply divert euro payments to alternative mechanisms, including correspondent banking and the EBA’s net end-of-day settlement system. It would be unlikely significantly to deter the international use of the euro -- if that were the objective -- any more than lack of direct access to national RTGS systems deters the international use of the dollar or yen or Deutsche Mark now. Its main impact would be to make intra-European payments less secure. We would regret that. Besides payments systems, the preparation of securities settlement systems for the introduction of the euro is a complex task in its own right. One of the reasons for this is that there are different approaches to securities settlement between different Member States and financial institutions. Another is that different approaches may be required to meet issuers’ requirements for re-denomination.