The Eurosystem is actively participating in these ongoing discussions. Our focus in these discussions is clearly on crisis prevention. If, however, another financial crisis was to occur in the future, it should be handled in a way that will not create incentives for both creditor countries and investors which are incompatible with the future stability of the international financial system. Again, the best contribution the Eurosystem can provide to international stability is to maintain price stability in the euro area. International policy cooperation which goes beyond the exchange of information and views on issues of mutual interest could easily become counterproductive, compromising both the Eurosystem’s mandate and international financial stability itself. With the creation of the euro, there has been a renewed interest in the concept of target zones for exchange rates among the main currency areas, namely the Unites States, the euro area and Japan. But, in a world characterised by highly integrated and sophisticated international financial markets, there is serious doubt as to whether target zones for exchange rates are feasible or even desirable. Such exchange rate targets would imply that domestic policy objectives would have to be subordinated to external requirements. This would – in certain circumstances – conflict with the primary objective of price stability and result in a greater volatility of business cycles, as the burden of adjustment would be transferred to domestic policies and developments.

Against this background, the predominant view has emerged that the best and most lasting contribution that monetary policy can make to long-term economic welfare is that of safeguarding price stability. Therefore, central banks throughout the world have been moving towards adopting long-term price stability as their primary goal. In order to achieve this goal most successfully, independence from political interference and a clear legal mandate for price stability are of the utmost importance. A lack of independence and an ambiguous mandate can easily force central banks to focus on the short term, and thus to fail to adopt the forward-looking, medium-term orientation that is crucial for a successful monetary strategy. These aspects were taken into consideration by policymakers when drafting the Maastricht Treaty. The mandate to maintain price stability cannot be seen in isolation. The Treaty assigns other tasks to the Eurosystem. Article 105 requires that the Eurosystem “without prejudice to the objective of price stability … shall support the general economic policies in the Community, with a view to contributing to the achievement of the objectives of the Community.” These Community objectives include “sustainable and non-inflationary growth” and “a high level of employment”. But, given the qualification “without prejudice”, the Treaty also clearly states how the Eurosystem shall set its priorities. A contribution to the achievement of the other objectives of the European Community can only be made if the Eurosystem’s primary objective is not compromised. However, there is ultimately no incompatibility between maintaining price stability and pursuing these other objectives at Community level.