The publication analyses the performance and achievement of the Euro during its first ten years, and includes a special report on the European Central Bank (ECB) from Otmar Issing, one of the key architects and former chief economist of the ECB.

Monetary Union: The Latest and Deepest Move in a Gradual Process of European Integration

The ECB was founded ten years ago in preparation for the launch of the Euro at the beginning of 1999 as a common currency for 11 EU members. We join the celebrations with an assessment of the first ten years, as well as a discussion of the key challenges for the next ten years, as seen from the perspective of a market participant. To put our views into the proper perspective, we are particularly pleased to present first a special contribution by Professor Dr. Otmar Issing, one of the key architects of the ECB, and an Executive Board member and “chief economist” of the ECB during its first eight years.

From our perspective, the European Monetary Union (EMU) has been a remarkable success so far, weathering widespread original scepticism, as well as a series of shocks—including 9/11 and the present market dislocations—while contributing to good and relatively stable growth throughout the Euro-zone.

The ECB is at the core of EMU, with a mandate to secure price stability, identified (by the ECB itself) as headline inflation “below but close to 2.0%”. Any commitment to an inflation target is based on the most fundamental of observations, namely that low and stable inflation is good for long-term growth.

In line with its mandate, the ECB has delivered the most stable inflation environment of any major Western central bank during the past ten years, even though it did overshoot its target by a small margin throughout the period. This achievement is a key factor in the widespread credibility earned by the ECB among investors, citizens and politicians alike. ...

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Goldman Sachs European Economics Group
June 2008

Contents
Introduction
Monetary Union: The Latest and Deepest Move in a Gradual Process of European Integration
—Erik F. Nielsen
Special Contribution from Otmar Issing
Ten Years of the ECB—Achievements and Challenges
Chapter 1 
Trade and the Dispersion of Growth: The Optimal Currency Area Discussion Revisited
—Ben Broadbent and Saleem Bahaj
Chapter 2
The Euro-zone’s Understated Success
—Kevin Daly
Chapter 3
Is the ECB’s Inflation Target Also Good for the Next Decade?
—Dirk Schumacher
Chapter 4
The Future Geography of EMU
—István Zsoldos, Kevin Daly and Erik F. Nielsen
Chapter 5
Financial Stability: A Dual Mandate for the ESCB
—Natacha Valla and Javier Pérez de Azpillaga
Chapter 6
The Euro: Sound Money for the World
—Javier Pérez de Azpillaga and Fiona Lake
Chapter 7
The Need to Merge the External Political Voice
—Jim O’Neill

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