price stability. to illustrate this point, the treaty requires – if i may quote from article 105 – 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 ”. the qualification “ without prejudice ” leaves no room for ambiguity about the status of price stability as the overriding objective of the eurosystem and the single monetary policy. the treaty also clarifies that the primary objective of exchange rate policy shall be price stability ( article 3 ). this is an important feature that will help the ecb achieve its mandate. in many respects, monetary and exchange rate policy can be regarded as two sides of the same medal. a different objective for exchange rate policy would not have been compatible with the overriding commitment to maintain price stability, which the treaty has placed upon monetary policy. finally, let me address a number of more practical issues associated with the transition to monetary union itself. in designing the eurosystem ’ s strategy, the governing council of the ecb recognised the new circumstances faced by monetary policy in the euro area. where there were previously eleven open, generally small economies, there is now one large, relatively closed single currency area. the challenges implied by this transformation in the landscape of monetary policy are profound. given that the euro area did not exist as a single currency area before january 1999, one obvious problem was the need to establish a statistical data set. much has been achieved, particularly in the areas of money and banking and balance - of - payments statistics. nevertheless, compared with national central banks in the past, we still do not always have at our disposal the long historical time series of economic indicators, based on harmonised statistical concepts, which are required for detailed analytical studies. however, the quality and availability of current statistics on the euro area has increased significantly over the last few quarters. this process of improving the quality and the availability of statistical data covering the euro area will continue. these economic, institutional and practical constraints were important elements that led to the specific design of the stability - oriented monetary policy strategy. the strategy is intended to fulfil two important roles. first, it structures the monetary policy making process so that the ecb governing council, the decision - making body on monetary policy, is presented with all the information and

prohibition on monetary financing are essential for euro area integration this condition of de facto political union raises questions about the proper role of the central bank in emu. the ecb is very much in the focus at the moment. some observers call for it to play the role of a “ national ” central bank like the federal reserve or the bank of england, and emulate their policies. but these viewpoints are partial. they overlook what is my third bis central bankers ’ speeches proposition : that the treaty prohibition on monetary financing by the ecb, over the medium term, is a force in favour of euro area integration and greater stability. the positive effects of the ecb ’ s policies are fairly obvious in the case of the banking sector. our standard and non - standard measures ensure price stability in the euro area. while our standard measures signal the monetary policy stance, our non - standard measures ensure the transmission of the desired policy stance to the real economy in those market segments in which the transmission is impaired. our non - standard measures ensure that despite increased liquidity demand, financial institutions are able to continue lending to clients. however, misconceptions persist related to the securities markets programme, our programme for intervening in government bond markets. the smp deliberately addresses the appropriate transmission of our monetary policy to the real economy in market segments which are impaired. government bonds are crucial for the transmission of monetary policy, via their status as a benchmark for borrowing by banks. put simply, left unaddressed, the malfunctioning of sovereign bond markets ’ could block the bank lending channel. an important difference with quantitative easing programmes is that the liquidity injected into the banking system via the smp is sterilised by the ecb through regular liquidity absorbing operations. the ecb has been widely recognised as an institution capable of timely, decisive and convincing action during tumultuous times. we see this as a mark of distinction. however, it would be erroneous to derive from this that it should be a political institution in charge of running the euro area economy. it cannot be and should not be. the ecb is a central bank, committed to its mandate to preserve price stability over the medium term. it is not the fiscal lender of last resort to sovereigns. markets participants that call for the ecb to play this role may care only about the nominal value of their assets and the need to avoid losses. whether or not the underlying asset – our currency as store of value