The Performance of the European Central Bank

The European Monetary Union has been in operation since 1 January 1999. The paper offers an interim assessment of the operations of the European Central Bank (ECB) during this period. It describes how the ECB defined its monetary strategy and carried out its policy. The evaluation offered in the paper is largely positive, the principal objects of criticism being found to stem from the constitution which defines the position and principal objective of the ECB. This constitution embodies an extreme version of Central Bank independence and creates a 'democratic deficit' in consequence. Albeit the operating record is not without some blemishes, for example in regard to the ECB's communication policy. So far, the ECB has benefitted from a favourable macroeconomic conjuncture. This has changed and a more testing time may now be in store.