Forming a monetary mechanism for the single European currency

The strength of the single European currency will largely depend on forming an efficient monetary mechanism for the Central European Bank (CEB). Despi te the achieved success in the convergence of monetary developments of memb er countries under the Maastricht criteria, there are still differences in applied tools for managing liquidity/currency, especially in the cl edit pr ocedures of member countries, and in the transparency and strategy of monet ary policy, The path to a monetary mechanism will be more complicated than expected. Th e focus will be on short-term interest rates; the traditional stabilization role of minimum reserve requirements, commercial notes, and discont and lo mbard rates will weaken. The trend will be to shift from outright to repo o perations. It will be important to specify the monetary strategy of the CEB and its procedures to enhance the transparency and credibility of the new monetary policy.