The review of the Eurosystem's monetary policy strategy

Vai alla versione italiana Site Search

At the beginning of 2020, the European Central Bank (ECB) and the national central banks of the euro area launched a review of the Eurosystem's monetary policy strategy to make sure that it continues to be fit for purpose to pursue the objectives set out in Article 127 of the Treaty on the Functioning of the European Union.

As part of this review, the Bank of Italy launched a dialogue with representatives of business, labour markets, socially engaged organisations, youth, sustainable development players, academy and media, in order to better understand their expectations and concerns and gather useful insights into how best to fulfil our mandate.

This page gathers materials related to listening and dialogue events organised by the Bank of Italy, the ECB and the other central banks of the euro area. For further details, see the Monetary Policy Strategy Review on the ECB's website.

Sections

The review of the strategy

The Treaty on the Functioning of the European Union (EU) assigns to the Eurosystem the objective of maintaining price stability. Without prejudice to this objective, the Eurosystem is also called upon to support EU policies, in particular "sustainable, non-inflationary and environmentally-friendly growth, a high degree of convergence of economic performance, a high level of employment and social protection, raising the standard of living and quality of life, economic and social cohesion and solidarity between Member States".

What aspects of monetary policy are involved in the review?

The review of the strategy covers all aspects of monetary policy:

  • the definition of "price stability" and the measurement of inflation;
  • an analysis of the economic phenomena and channels through which monetary policy measures influence the decisions of consumers, firms and financial intermediaries, aiming at the pursuit of price stability and the early identification of factors that may endanger it;
  • the means by which monetary policy can be most effectively conducted;
  • within the mandate, the role of employment, social inclusion, climate change and financial stability;
  • communication with the public;
  • the role of the euro as a public good.

Why is the Eurosystem reviewing its strategy now?

Since the 2003 review of the strategy, we have witnessed fundamental changes in the economy.

The global financial crisis, the sovereign debt crisis in the euro area and most recently the pandemic called for the adoption of innovative monetary policy tools to preserve its transmission to the economy, stimulate demand and ensure price stability.

Developments such as globalisation, digitalisation, populations ageing, climate change can have persistent effects on business and households' choices and behaviours, the functioning of financial markets, the economy as a whole.This has complex implications for monetary policy. The pandemic crisis has added further elements of difficulty, due both to the depth of the economic crisis it has generated in the short term, and to the possible lasting effects in the medium and long term.

Through the review, we want to make our monetary policy strategy as effective as possible in this complex and changing environment.

Background

Events in Italy and the rest of EuropeEvents in Italy and the rest of Europe

The review of the monetary policy strategy is an exercise involving the Eurosystem as a whole:like the Bank of Italy, the European Central Bank (ECB) and other national central banks also organise meetings to engage with citizens, civil society organisations, academics and information.

The Bank of Italy will host three meetings, all in virtual format, dedicated to Academy (9 February 2021), press (22 February 2021) and civil society (3 March 2021).

The insights taken from these meetings will feed into the deliberations of the Governing Council of the ECB, together with the work of central bank experts and the views of citizens, academics, members of the European Parliament and civil society organisations across Europe.

Bank of Italy's Agenda

  1. 9 February Appointments The Bank of Italy in conversation with academics Rome (online meeting)
  2. 22 February Appointments The Bank of Italy listens to the world of communications Rome (online meeting)
  3. 3 March Appointments The Bank of Italy in conversation with civil society Rome (online meeting)

The monetary policy response to the COVID-19 pandemic

The Governing Council of the European Central Bank has immediately put in place extraordinary measures to counter the risks to the economy stemming from the COVID-19 outbreak and to ensure the smooth transmission of monetary policy in all euro area countries.

The scope of the measures taken is unprecedented and the Council has repeatedly announced that it is ready to use all available instruments to ensure that every sector of the economy can benefit from accommodative financing conditions and broad availability of funds, and to ensure the steady return of inflation towards the aim of an increase in consumer prices in line with the stability objective of the Treaty on the Functioning of the European Union.

Contribute to the discussion

The Eurosystem conducts monetary policy with the objective of ensuring price stability and, under this constraint, supporting the policies of the European Union, in particular "sustainable, non-inflationary and environmentally-friendly growth, a high degree of convergence of economic performance, a high level of employment and social protection, raising the standard of living and quality of life, economic and social cohesion and solidarity between Member States".

In recent years, this has required large and mostly non-standard interventions, in the face of far-reaching economic shocks. Understanding the functioning of monetary policy helps people decide how to spend, save, invest or apply for a loan.We therefore want to see if we can explain what we do, why we do it and how much we influence the decisions of people and organisations.

Listening to the views of civil society is an essential part of this exercise. Provide your input on these issues sending an email to strategyreview@bancaditalia.it.

Some possible insights are available on the ECB's website.