a good reputation and a high degree of credibility for the ecb. i will focus my attention on four aspects of institutional design which are of the utmost importance for the ecb's reputation and credibility : ( 1 ) its mandate ; ( 2 ) its independence from political interference ; ( 3 ) its transparency ; and ( 4 ) provisions that contribute to fiscal discipline. first, the treaty establishes a clear hierarchy of objectives for the single monetary policy, giving overriding priority to the maintenance of price stability in the euro area. this reflects the fact that the best contribution that the ecb can make to long run sustained economic growth, employment creation and raising standards of living, is maintaining price stability. the clear priority given to the price stability objective also highlights the fact that the ecb itself does not have either the means or the responsibility for ensuring a high level of employment and real growth, beyond the positive impact of price stability just mentioned. such a clear allocation of task and objective to different policy - makers ensures efficiency, transparency and accountability. second, the treaty has made the ecb one of the most independent central banks in the world. in this way, political pressures can be avoided and european citizens can be assured that a long - term euroarea wide perspective will be taken by the central bank in pursuing its mandate of maintaining price stability. third, the treaty recognises that the assignment of an important policy responsibility to an independent institution has to be accompanied by transparent and accountable policy design and implementation. transparency and the accountability of the central bank add to its credibility by imposing discipline on policy - makers. for these reasons, the ecb went significantly beyond the statutory requirements regarding transparency. finally, let me emphasise that the treaty, reinforced by the stability and growth pact, contains important provisions to facilitate the co - ordination of economic policies and ensure sound public finances. the eu countries must regard their economic policies as a matter of common concern. the ecofin council is required to formulate broad guidelines for the economic policies of the member states and to monitor economic developments within a multilateral surveillance framework. eu governments are also subject to a common code of conduct in fiscal matters, in particular imposing limits on government deficits, as laid down in the treaty. the stability and growth pact, together with the " no - bail - out clause " and other treaty provisions, contributes to maintaining fiscal policy discipline. in fact, fiscal discipline makes it easier for the central bank to maintain price stability and thus indirectly contributes to keeping inflation expectations

otmar issing : the euro - a stable currency for europe speech by professor otmar issing, member of the executive board of the european central bank, at euromoney institutional investor plc, london, 21 february 2001. * * * introduction slightly more than two years ago the european central bank ( ecb ) assumed responsibility for the second largest economic area in the world after the united states. the euro is now the currency for 300 million people. the transfer of monetary policy competence from 11 national central banks, many of them characterised by a long history and impressive monetary policy results, was met with a great deal of scepticism. all the more so, because the asymmetry between a self - contained central bank and - in the meantime 12 - national governments brought with it an historically unique situation. the single monetary policy has not experienced any significant accident so far in its short life : the transition to the single currency has been quite smooth and the governing council of the ecb was successful in fulfilling its mandate, namely in maintaining price stability in the euro area over the medium term. clearly, we are not satisfied with hicp inflation above 2 %, as we have seen since the middle of last year. however, we have announced before we started to conduct our monetary policy that the ecb could not precisely control inflation in the short - term and would not try to as, for example, in the case of an oil price shock. but we have good reasons to expect that, if nothing comparable happens again, hicp inflation in the euro area will fall back to below 2 % in the course of this year. you may ask why i am so confident about this. there are three main reasons. first, the institutional set - up on which the ecb and the euro have been built is very sound. second, the governing council of the ecb managed to set up an efficient framework both as regards the monetary policy strategy as well as monetary policy instruments. finally, monetary policy in the last two years has rightly been perceived by most observers as having been appropriate to maintain price stability in the medium term. all this is reflected in a high degree of credibility of the ecb, as evidenced by low inflation expectations. the institutional design let me start with the institutional design. the treaty establishing the european community - which i will refer to as the " treaty " - and the mandate of the ecb provide a sound basis both for an effective monetary policy and for the establishment and development of