The Governor discusses some of the considerations that will be central to the debate on the later stages of European monetary union, highlighting four broad principles that any future arrangements, whatever their form, will have to respect if they are to provide the flexibility that will be needed. These principles are:
- that monetary policy must be dedicated to the achievement and maintenance of price stability: and that, therefore, those responsible for its implementation must be given a mandate to pursue stability and the instruments to make that mandate effective, and must have the operational autonomy to employ those instruments for the desired end;
- that the techniques by which price stability is pursued should work with the grain of market forces, not against it;
- that the monetary authorities must be accountable for the fulfillment of their mandate; and
- that the relative roles of the centre and the national central banks in any new monetary arrangements should be determined by reference to the principle of subsidiarity-ie powers should be exercised centrally only where it is essential for the effective pursuit of common objectives.