Price stability: why is it important for you?

More than 330m people in 17 European countries share the euro as their currency. The Governing Council of the European Central Bank (ECB) is responsible for the single monetary policy in these countries, which are known collectively as the euro area. The Eurosystem, comprising the ECB and the national central banks (NCBs) of the euro area countries, has a clear mandate assigned by the Treaty establishing the European Community: its primary objective is to maintain price stability in the euro area.

In other words, the Governing Council of the ECB is mandated to preserve the purchasing power of the euro. This mandate reflects a broad consensus in society that, by maintaining price stability, monetary policy contributes significantly to sustainable growth, economic welfare and job creation.

The Eurosystem has been granted independence in order to carry out its mandate. Furthermore, the Governing Council has selected and made public its monetary policy strategy to deliver price stability, and uses an efficient and well-functioning operational framework in order to conduct its single monetary policy.

In short, the Eurosystem has all the tools and skills needed to conduct a successful monetary policy. Like any important and independent institution in modern society, the Eurosystem needs to be close to the general public and understood by the citizens of Europe. It is therefore important that its mandate and policy are explained to a wide audience. This book aims to provide a comprehensive but easily accessible overview of the reasons why price stability is so important in ensuring that prosperity is sustained and of how the ECB’s monetary policy is geared towards achieving this mandate.