A European System of Central Banks: Observations from Abroad

In an effort to enhance the economic advantages of a single market, the European Economic Community is considering monetary union. A European System of Central Banks would be structured after the German Bundesbank model and vested with the power to conduct a single monetary policy and perhaps issue a common currency. In a recent speech to a group of German bankers and business representatives, Cleveland Federal Reserve Bank President W. Lee Hoskins argued that price stability must be the sole objective of a central bank, and pointed out some pitfalls that the Community must avoid if monetary union is to be successful.