Stabilization-oriented central bank policy

Monetary policy is geared to macroeconomic equilibrium. – Since not all imbalances are cyclical, but many are structural, such as those caused by technological progress or integration into new economic areas, monetary policy would prevent necessary adjustments. Moreover, the central bank would have to frequently reverse its deployment of funds. Such volatility would have adverse spillovers to financial markets and the exchange rate. – The most important task of monetary policy is to maintain the benchmark character of the monetary unit, not to use money as a suction and pressure pump for often contradictory economic policy objectives. Stable money, however, is a prerequisite in every other area of society without exception. – See adjustment policy, central banking, instructions, monetary policy, orientation, single-objective, data uncertainty, monetary functions, monetary policy, forward-looking, business cycle policy, long-lag theory, medium-term, model uncertainty, forecasting model. Structural uncertainty. – Cf. ECB Annual Report 2003, pp. 16 ff.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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