vitor constancio : past and future of the european central bank monetary policy speech by mr vitor constancio, vice - president of the european central bank, at the conference on “ central banks in historical perspective : what changed after the financial crisis? ”, organised by the central bank of malta, valletta, 4 may 2018. * * * ladies and gentlemen, it is a pleasure to be here today and participate in this celebratory event for the 50th anniversary of the central bank of malta. in accordance with the conference theme, i would like to take this opportunity to adopt a historical perspective and offer some reflections on monetary policy in the euro area over the past two decades. i will start with a review of the ecb journey from 1999 to date, to highlight the evolution of the practice of monetary policy in the euro area over this period. i will then draw some lessons from this experience, both for economic thinking and monetary policy making. the ecb journey as you all know, the treaty on the european union defines the contours of monetary policy in the euro area. according to article 127 of the treaty, price stability is the primary objective of monetary policy in the euro area. it is only without prejudice to the objective of price stability that monetary policy can support the general economic policies in the union. this high - level mandate enshrined in the treaty is the cornerstone of all ecb decisions and has remained unchanged over its two decades of existence. within the boundaries of the treaty, however, the practice of monetary policy in the euro area has undergone a process of transformation over time. while the transformation has often been gradual, four key phases can be clearly identified. first phase : monetary policy beginning and adjustment ( 1999 - 2003 ) the first phase starts with the launch of the single currency and lasts until the revision of the monetary policy strategy in may 2003, when the weight of the monetary pillar and the “ dominant role of money ” were demoted and the framework got closer to the flexible inflation targeting regime adopted by many other central banks around the world. in the preparation for monetary union, a document published in 1997 by the ecb predecessor, the european monetary institute, explained why both a monetary aggregates targeting strategy and an inflation targeting regime were not considered fully appropriate for the euro area. the first regime, which was followed by the bundesbank, in a tradition that understandably exerted a crucial influence on the initial ecb decisions, was refused for the practical

charbon et de l ’ acier plus d ’ un demi - siecle. qui aurait pu penser en 1950 que nous aurions au tout debut du siecle suivant une union europeenne de vingt cinq et bientot vingt sept pays, un parlement elu au suffrage universel, une cour de justice etablissant sa jurisprudence sur toute l ’ union, un marche unique de 450 millions d ’ habitants et la meme monnaie pour 12 pays et bientot 13, regroupant 315 millions de concitoyens europeens? nous vivons aujourd ’ hui, sur le plan politique, apres le double non neerlandais et francais, un moment de doute, de trouble, un temps d ’ hesitation devant l ’ avenir. de tels episodes nous en avons vecus plusieurs au cours des soixante dernieres annees. nous les avons toujours depasses et la construction europeenne a repris son cours. les raisons que nous avions hier de nous engager dans l ’ immense entreprise de l ’ union europeenne et d ’ approfondir cette union sont toujours valables ; sans doute meme sont - elles encore plus fondees aujourd ’ hui qu ’ hier. c ’ est pourquoi je suis confiant dans notre capacite de surmonter a terme nos difficultes presentes : les rendez - vous historiques de l ’ europe doivent s ’ apprecier dans la longue duree. par ailleurs l ’ imprevisibilite du cours actuel de l ’ union politique est la marque meme de l ’ histoire qui se fait. jean monnet, cet optimiste, dont les idees sont la source meme de la construction europeenne, ecrit a la fin de ses memoires : « ceux qui ne veulent rien entreprendre parce qu ’ ils ne sont pas assures que les choses iront comme ils l ’ ont arrete par avance se condamnent a l ’ immobilite. personne ne peut dire au