much of a surprise to you. and yes, monetary policy today is still regulatory policy in action, in my opinion. you see, the chief task of monetary policy in the euro area is to preserve price stability. this makes it part of the overall regulatory structure, in which it plays a crucial role. echoing walter eucken ’ s words, otmar issing remarked that the primacy of monetary policy had been reconfirmed by the establishment of european monetary union. that said, walter eucken was not thinking of a central bank to safeguard price stability. in his opinion, a good monetary constitution should, like the competitive order, function as automatically as possible. this is because eucken warned of weaknesses in central bankers and their influence. i quote : “ … experience shows that a monetary constitution which gives those in charge of monetary policy a free hand places greater confidence in them than it is advisably possible to do. ignorance, weakness with regard to interest groups and public opinion, incorrect theories, all these things influence those responsible for monetary policy, to the great detriment of the task they have been assigned. ” as otmar issing admitted, walter eucken is not a name that springs immediately to mind when searching for the intellectual antecedents of the euro. [ 7 ] what is noticeable instead is eucken ’ s general scepticism towards central and uncontrolled monetary policy institutions. today ’ s advocates of regulatory policy see central bank independence in a more positive light. it is precisely this, together with a narrow mandate, which shields monetary policymakers against being co - opted for political purposes and is the sine qua non for striving for price stability without compromise. last year saw the ecb ( european central bank ) governing council complete the review of its monetary policy strategy, a key component of which was to recalibrate the manner in which the governing council intends to preserve price stability in the euro area. [ 8 ] the eurosystem is now aiming for an inflation target of 2 % in the medium term. the target is symmetrical, meaning that positive and negative deviations of inflation from the 2 % target are equally undesirable. by setting this target above zero, monetary policy has a greater safety margin against deflationary risks. the medium - term orientation accounts for the fact that short - term fluctuations in inflation can balance out over time and that monetary policy measures will only fully feed through into prices with something of a lag.

the weakest hardest. this puts it at odds with promises to deliver “ prosperity for all ”. monetary policy and its toolkit evolve over time. that ’ s because new academic and scientific insights come to light, but it ’ s also primarily due to changes in the economic environment. over time, monetary policy needs to be updated, as it were, to enable it to perform its statutory – and crucial regulatory policy – mandate of preserving price stability. time and again, crises, or transmission disruptions triggered by market failures, might necessitate new interventions. however, these updates need to remain within the guidelines. in particular, account needs to be taken of the specific challenges inherent in the euro area, whose regulatory framework is enshrined in the european treaties. i am aware that some of the updates carried out in the eurosystem bring with them regulatory policy risks. that is why, when i look at the tpi ( transmission protection instrument ), there is an important point to bear in mind : if temporary activation were to be considered, we have to be able to provide compelling evidence that we would be correcting a fault in the markets that is severely restricting monetary policy. if we confine ourselves to necessary regulatory interventions, i am convinced that good monetary policy remains, to this day, regulatory policy in action. thank you very much for your attention. i am now eager to hear what my swiss counterpart has to say on this topic. and i look forward to our discussions afterwards. footnotes : 1. young, b. ( 2017 ), ordoliberalism as an ‘ irritating german idea ’, in ordoliberalism : a german oddity?, pp. ( pages ) 31 ff. 2. eucken, w. ( 1923 ), kritische betrachtungen zum deutschen geldproblem, jena ; eucken, w. ( 1951 ), unser zeitalter der misserfolge. funf vortrage zur wirtschaftspolitik, tubingen. 3. eucken, w. ( 1952 / 1990 ), grundsatze der wirtschaftspolitik, 6th edition, tubingen, pp. ( pages ) 255 - 256. 4. erhard, l. ( 1957 / 1964 ), wohlstand fur alle, 8th edition, dusseldorf, p. 15. 5. issing, o., walter eucken : vom primat