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N° 182 |
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| September 1999 |
| The ECB and the Euro |
| Agnès Bénassy-Quéré |
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| The effectiveness with which central banks
can correct exchange rate levels or reduce instability is much debated. The main
condition for such intervention being successful is that it is coherent with macroeconomic
policy. From this point of view, the joint involvement of the European Council
and the ECB in setting the exchange rate policy of the euro would appear to be
sensible. But, its application will be difficult, given the constraints and the
different objectives of both institutions. The principles for coordinating monetary
and fiscal policy should be set out clearly if the capacity for the ECB to intervene
is not to be inhibited. |
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