Frameworks and Conduct of Monetary Policy in Europe

This chapter provides a brief account of the evolution of frameworks of domestic monetary and foreign exchange rate policies followed in Europe since the 1990s and reviews discussions at OECD meetings on the management of the European Exchange Rate Mechanism (ERM) and the introduction of a single European currency. In this context, it also provides a detailed account of the views the author expressed as OECD Chief Economist, including his specific suggestion about adding some flexibility to the operation of ERM by temporarily widening exchange rate fluctuation bands.