At the beginning of May 1998 the EU Council – meeting in the composition of the Heads of State or Government – unanimously decided that 11 Member States, namely Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland, fulfilled the necessary conditions for the adoption of the single currency on 1 January 1999. One month later the European Central Bank (ECB) was established, which took over the tasks of the European Monetary Institute (EMI). Thereafter, preparations for the start of Stage Three of Economic and Monetary Union (EMU) intensified and were finalised.
During this process, the Governing Council of the ECB endorsed the stability-oriented monetary policy strategy of the Eurosystem, i.e. the ECB and the national central banks (NCBs) of the 11 Member States which adopted the euro at the start of Stage Three. This strategy provides a definition for price stability as the primary objective of the single monetary policy of the Eurosystem and is based on two pillars, namely a prominent role for money and a broadly based assessment of the outlook for price developments and the risks to price stability, using financial and other economic indicators.
This Annual Report, which is the first one to be published by the ECB, provides a record of the developments in the economic environment for monetary policy in 1998, both for the euro area and for the non-euro area Member States, and the steps taken to finalise the operational framework for Monetary Union.
The Report also covers the first few weeks of 1999 after the start of Stage Three of EMU. […]
