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MONETARY POLICY AND THE PRODUCTIVE ECONOMY IN THE EUROZONE
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However, the analysis of the goals and in-
struments of monetary policy clearly show that
this is not, or should not be the case. As we will
see, the focus of the goals of managing money
supply and demand is intrinsically inseparable
from boosting the real and productive economy
–and that requires the experts to explain clearly
and transparently whether monetary policy
might be managed more effectively from the
point of the view of the European productive
economy. Bearing in mind the size of the re-
sources involved, that also requires political
players and public authorities to make a swift
change of stance. If, as there is every indication,
monetary policy can be managed in an appreci-
ably more effective way that prevents the
squandering of our resources, then the European
political class must act immediately.
The real economy as the purpose of
monetary policy
Monetary policy and investment policy
In academic circles and in political circles too it
is usual to analyse and manage monetary policy
and investment policy as if they were radically
independent areas.
However, it seems clear that in both cases
we are talking about injecting public money
into the economy. That is why the usual dialectic
–in informal conversations, comment in the me-
dia and so on– interprets both policies to boost
investment and expansionary monetary policies
as “stimulus policies” or “recovery policies”.
Nevertheless, when European Central Bank
(ECB) managers or chiefs are quizzed about
their potential role in investment policy, the sys-
tematic response is always the same: our remit
is not investment policy but monetary policy
and we cannot step outside this framework laid
down for us by the Treaty on the Functioning of
the European Union. Similar replies are usual in
other institutional and academic areas too.
It is clear that there are substantial structural
differences between policy to promote invest-
ment and monetary policy, which could well be
summarised into two fundamental areas:
– Regarding the origin of the resources used.
– Regarding the purpose of the injection of
the resources into the economy.
From the point of view of the origin of the
resources, while in the case of monetary policy
we find “new” financial resources created by
the State, based on the power to create money
conferred specifically on the monetary authori-
ty, in the policy to promote investment they are
budgetary resources from various public bodies
usually raised through the collection of taxes or
the issuing of debt.
As for the purpose of injecting those re-
sources into the economy, in the case of “policy
to promote investment” it is precisely a matter
of boosting private or public investment in the
economy as a whole, almost always through
the granting of credit or guarantees. In mone-
tary policy, on the other hand, the basic objec-
tive established in the Treaty of the European
Union is to influence money supply and the
demand for money in order to maintain price
stability.
However, we have already said how the usu-
al language directly links expansionary mone-
tary policy decisions with “boosting economic
activity”, “reactivation”, the struggle against
unemployment, and so on. The fact that this is
not the case from a regulatory point of view
does not stop academics or policy makers from
frequently using this language, which is some-