The International Dimension of Monetary Policy
Introductory speech by Mario Draghi, President of the ECB, at the ECB Forum on Central Banking,
Sintra, 28 June 2016
In recent years central banks across advanced economies have been engaged in the same task, namely raising inflation and inflation expectations back to levels consistent with price stability. Each has faced conditions particular to its own jurisdiction. Each has deployed measures appropriate to its own context. And each has acted to fulfil the mandate laid down in its own constitution.
And yet, the fact that all central banks have faced a common challenge of low inflation is not coincidental. There are global factors at play. And this begs the question, what is the best way for us to deal with them?
At one extreme, central banks can take global conditions as entirely exogenous and set their policies accordingly. At the other extreme is explicit coordination of monetary policies. In between is a range of informal solutions.
Whatever one’s views on these options, what is clear is that the question of the international dimension of monetary policy is becoming more pertinent, since the common factors affecting central banks are increasing.
The full speech is available at https://www.ecb.europa.eu/press/key/date/2016/html/sp160628.en.html