In the context of the review of the reference value, the Governing Council wishes to recall the following features of the reference value and its role in the ECB's monetary policy strategy. Under its first pillar, the monetary policy strategy of the ECB assigns a prominent role to money. To signal the prominent role of money to the public, in October 1998 the Governing Council decided to announce a quantitative reference value for the growth rate of a broad monetary aggregate. The reference value was derived using the well-known relationship between monetary growth, on the one hand, and developments in prices, real GDP and the income velocity of circulation, on the other. The derivation of the reference value was therefore based on the Eurosystem's definition of price stability.
Price stability is to be maintained over the medium term.
At its meeting on 14 December 2000, the Governing Council reviewed these assumptions and concluded that both of them remain valid in principle. The Governing Council also wishes to recall that the ECB's monetary policy strategy uses two pillars in order to assess the risks to future price stability. The monetary analysis always has to be seen in conjunction with the second pillar of the ECB's monetary policy strategy, which uses other economic and financial indicators in the context of a broadly based assessment of the outlook for price developments and the risks to price stability. The reference value does not entail a commitment on the part of the Eurosystem to correct mechanistically deviations of monetary growth from the reference value. Rather, monetary developments are thoroughly analysed, in conjunction with other indicators in order to ascertain their implications for the risks to price stability over the medium term.