Many countries to day, especially in Asia, are confronted with the same challenges we faced, in Europe, fifteen years ago: first, is it possible to reconcile greater economic integration with exchange rate volatility? And, if not, can fixed or pegged exchange rates regimes be sustained in an environment of full capital mobility? Taken together, these two questions led European countries to forgo monetary autonomy. Is this always advisable? This is a very difficult question. My own answer would be to progress towards closer monetary cooperation with determination and caution. A strong degree of political determination is necessary because, clearly, full monetary autonomy becomes more and more problematic when economic integration has reached a certain stage. With greater economic openness, it is no longer an option, for small and medium size economies, to be indifferent to their exchange rates. On the other hand, independent management of their exchange rates by countries with close trade and investment links can lead to undesirable outcomes. Thus, cooperation is warranted. Monetary union, however, is a demanding endeavor. I have alluded earlier to the theory of optimum currency areas. While it is debatable in some of its details and developments, the main message is clear: the exchange rate remains an essential adjustment tool whenever economies are faced with asymmetric shocks and markets are insufficiently flexible to absorb them internally. This is still the case in many regions of the world where regional economic integration moves at a rapid pace, but between countries whose economic structures and specialization are very different.

The Statute is found in a Protocol to the EU Treaties. Such protocols form an integral part of the Treaties. This means that, in principle, the Statute can only be amended as part of a revision of the Treaties. However, some provisions of the Statute – like Article 22 – can be amended by means of a “simplified amendment procedure”. The ECB can recommend a change; the Commission can give its opinion; and the Council and European Parliament can then adopt a decision to amend the Statute by simple majority. Given that the simplified amendment procedure is an exception, we have to be very careful what we change in Article 22 and how we go about changing it. Any change must comply with the other provisions and principles of the Treaties, which enjoy a higher constitutional rank. For example, any change to Article 22 must respect the principle of central bank independence and the exclusive competence of the ECB to conduct monetary policy. Amending Article 22 of the Statute – substance But what does this mean for the substance of Article 22, which is part of Chapter IV of the Statute, entitled “Monetary functions and operations of the ESCB”? The Statute grants the ECB flexibility and autonomy over the instruments available for conducting monetary policy. The Treaty drafters provided for various instruments4, including the possibility to conduct open market and credit operations, and to make regulations to ensure efficient and sound payment and clearing systems. This means that the ECB can react effectively to unforeseen circumstances.