john hurley : the eurosystem approach to monetary policy speech by mr john hurley, governor of the central bank and financial services authority of ireland, at the conference “ the global interdependence center abroad in ireland ”, co - organised by the central bank and financial services authority of ireland and the irish american business chamber and network, dublin, 11 - 12 june 2007. * 1. * * introduction ladies and gentlemen, let me begin by saying how pleased i am to have the opportunity to participate in this conference. we in the bank have co - organised this event and we feel that the high quality of the speakers and participants will ensure its success. it is both a networking exercise and an opportunity for participants to exchange views and hopefully gain further insights into financial and economic issues. i have been asked to speak on the topic of monetary policy in the euro area. the single european currency project commenced towards the end of the 1980s and resulted in the adoption of the single currency eight years ago. although the euro area is comparable to the united states in terms of population and gdp, it differs significantly in a number of respects. in particular, it is not accompanied by political union, nor is there a common language. these factors have not presented major difficulties and, by any standards, it can be said that emu has been a success. i will start by briefly recalling the background to the creation of the european single currency. i will then talk on the monetary policy strategy of the european central bank as well as its communication strategy. after briefly describing actual monetary policy since the launch of the euro, i will examine the benefits of monetary union for the euro area economy. finally, i will refer briefly to the effects of the single currency on the irish economy. 2. background the adoption of a single currency by eleven members of the european union at the start of 1999 was an ambitious and unprecedented event. it was a very challenging task for all concerned. despite considerable scepticism about the project in some quarters, it has been an undoubted success. reflecting this, it has attracted two new members, greece in 2001 and slovenia in 2007. it has also resulted in the physical replacement of national currencies by euro notes and coin in 2002. at this stage, the general public in the euro area has effectively altered its mindset to think in terms of the euro rather than their previous national currencies. how was this success achieved? one important impetus was the strong belief that the full benefits

joint action from all relevant stakeholders – including member states, the commission and eu fora – is therefore critical. in this context, we welcome initiatives – such as this – to connect the market, policy, and supervisory discussions on this topic and promote a dialogue between respective professional communities to define a shared agenda for npl workout and resolution. 5. conclusion to conclude, we were given a clear mandate to deliver a consistent supervisory approach to the treatment of non - performing loans across the euro area. the guidance delivers on this objective, by setting the standard for npl management going forward. it ensures supervisors have the necessary tools available to them, and banks have the necessary capacity to tackle npl problems. however, publishing the guidance is only the first step. implementation is our next challenge and this will not happen overnight. we also need strong and clear support from member states to tackle legal and related issues. boards will play a crucial role in developing, owning, and implementing bank specific strategies, and we expect pro - active engagement going forward. as madame nouy has repeatedly emphasised, this will be reinforced by tough but fair supervision. thank you for your attention, i look forward to the discussion. 4 / 5 bis central bankers'speeches 1 for ireland see ‘ the irish banking crisis : regulatory and financial stability policy 2003 – 2008. a report to the minister for finance by the governor of the central bank. for spain, see for example cuerpo, carlos and pontuch, peter, ( 2013 ), ‘ spanish housing market : adjustments and implications ’, european commission – ecfin, 10 ( 8 ). 2 see garrido, jose, anke weber, and emanuel a. kopp, ( 2016 ), ‘ cleaning - up bank balance sheets : economic, legal, and supervisory measures for italy ’, imf working paper wp / 16 / 135. 3 the draft guidance to banks on non - performing loans can be found here. 4 see'the hard road : npl workout and resolution in the euro area ', address by sharon donnery at the peterson institute for international economics, 6 october 2016. 5 the ecb stocktake of national supervisory practices and legal frameworks related to npls can be found here. 5 / 5 bis central bankers'speeches