Why money still matters

This article begins by reviewing some stylised facts about money and inflation that show that money still matters. The second section relates these stylised facts to the two-pillar monetary policy strategy of the Eurosystem, and the article concludes by addressing some interesting challenges we face in implementing our monetary analysis.

Money and inflation

Let me start with a well-known paradox which can be articulated by three propositions: first, price stability is the objective of all centra