By contrast, the US Federal Reserve has a dual mandate price stability and full employment.

Unlike the Fed, the BoE s sole objective for years has been price stability, with no additional employment mandate.

With all this trouble, the ECB is showing itself to be an anchor of stability by steadfastly sticking to its mandate of insuring price stability.

German Chancellor Angela Merkel doesn t make speeches attacking the strong euro and the European Central Bank s price stability mandate.

This stance reflects the Fed s dual mandate, according to which monetary policy targets maximum employment consistent with price stability.

The European Central Bank, established in 1998, has a mandate to manage the new currency to maintain price stability.

For example, in addition to its price stability mandate, the Bank of England has been given the new task of maintaining the stability of the financial system.

But the ECB, whose only mandate is to maintain price stability, cannot pursue this policy without fundamental changes in legislation.

The European Central Bank s mandate is to ensure price stability, but inflation is far from Europe s most important macroeconomic problem today.

The Fed Versus Price Stability

The European Central Bank would then have to intervene to maintain the credibility of its commitment to price stability, which is its primary mandate.

This starts with ensuring price stability.

He consistently blamed France s poor export performance on the strong euro, favoring a politically subservient ECB whose mandate should include economic growth as well as price stability.

But the Fed may hesitate to act, or may act with insufficient force, owing to its dual mandate to focus on employment as well as price stability.

All include price stability. Many add a reference to general economic conditions, including growth and employment or financial stability.

At the same time, regulatory regimes have been toughened everywhere to prevent banks from jeopardizing the financial system again. For example, in addition to its price stability mandate, the Bank of England has been given the new task of maintaining the stability of the financial system.

For now, Germany is satisfied with the status quo, enjoying stable growth and retaining control over domestic economic policy, while the ECB s limited powers and strict mandate to maintain price stability ease fears of inflation.

Of course, many central banks around the world pursue both price stability and growth.

Lower government spending, together with tight monetary policy, are contributing to greater price stability.

When forced to choose between full employment and price stability, the international finance economists say that the Fed will choose price stability, because its institutional memory of the 1970 s, when inflation ran rampant, remains very strong.

Indeed, price stability, and the broader macroeconomic stability emanating from it, would provide a good foundation for pushing forward with other financial sector reforms.

If Europe s central bank had not been too late and too slow in the past, it would have been truer to its own price stability mandate, and not now out of step with central banks in other industrial countries.

That may sound obvious, but abandoning price stability is exactly what some European politicians are advocating.

But this argument becomes irrelevant when ensuring price stability is no longer monetary policymakers sole task.

Its prime objective remains price stability, with real economy factors relegated to the second order of importance.

Prospective French presidential candidate Nicolas Sarkozy wants the ECB to promote economic growth, not just price stability.

For decades, Egyptians and Tunisians paid a high a price in freedom for the stability of others.

In short, they fear that all of the sacrifices made for price stability will have been in vain.

There may be a legal rationale for this neo imperial elitism. The so called C 6 might argue that, given their price stability mandate, only central banks of countries whose economic fate might destabilize domestic prices should receive privileged access to domestic currency.

Northern Europe should temporarily accept somewhat higher inflation, provided price stability is maintained in the eurozone as a whole.

Both market discipline and sound fiscal management are needed to create a reasonable chance of long run price stability.

These successes, combined with the 1990 s boom and the seeming durability of price stability, reinforced Greenspan s exalted status.

Increased currency flexibility would allow China s central bank to use monetary policy to enhance China s financial and price stability.

Over the past few decades, most central banks have focused on price stability as their single and overriding objective.

Europe needs a monetary policy that views aiding employment growth in northern Europe as more important than continental price stability.

Germany was reluctant to give up the Deutsche Mark, a symbol of its economic power and commitment to price stability.

The single most important institutional reform underlying price stability throughout the world has been the stronger independence of central banks.

How can measures to increase commodity price stability and returns from commodity exports contribute to achieving the Millennium Development Goals?

But, because Germany and the other northern surplus countries remain hawkish on price stability, real exchange rate adjustment within the eurozone requires actual wage and price deflation in the distressed southern economies.

Will the country continue along its well trodden path of price stability, or must it take a more free market route?

At some point, the Fed s tolerance of a weak dollar would be taken as a lack of commitment to price stability.

Moreover, both have a reputation for believing that the Fed should not place excessive weight on price stability relative to unemployment.

Moreover, the highest priority for central banks can no longer be to maintain their credibility as guardians of price stability, but rather their credibility as guardians of the financial system s stability and soundness.

Over the past 20 years, central banks around the world, including the United States Federal Reserve, pursued price stability with remarkable success.

Once the episode of zero interest rates ends, the US Federal Reserve will be anxious to reassert its commitment to price stability.