Open Access Journal Article

The effectiveness of the european central bank in pursuing its prime mandate

by Mark Scholliers a,* orcid  and  Herman Matthijs a,b
Universiteit Gent, Gent, Belgium
Vrije Universiteit Brussel, Brussel, Belgium
Author to whom correspondence should be addressed.
EAL  2024, 52; 3(2), 52;
Received: 15 August 2023 / Accepted: 14 October 2023 / Published Online: 15 June 2024


The objectives and tasks of the European Central Bank (ECB) are defined in Articles 2 and 3 of Protocol (No 4) on the Statute of the European System of Central Banks (ESCB) and of the European Central Bank (ECB). While in Article 3,1° of this Protocol other tasks are mentioned, the prime objective of the ESCB and therefore of the ECB, is price stability. This concept was originally specified by the Executive Board of the ECB as an annual increase of less than 2% in the inflation rate over the medium term, measured by the Harmonized Index of Consumer Prices (HICP) for the euro area. This paper examines to what extent the ECB has been effective in realizing price stability over the period from January 1, 2000 to December 31, 2022. Price stability is important for economic agents. It allows them to plan their savings, spending and investment eventually resulting in sustained economic growth.   Notwithstanding the commitment of large human and other resources and the use of unconventional monetary policies, the ECB did not realize its prime objective during a large part of this period. We conclude that putting too much confidence in DSGE-modeling as one of the methodologies to determine monetary policy, may have played an important role in the ECB not achieving its main statutory objective.

Copyright: © 2024 by Scholliers and Matthijs. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

Share and Cite

ACS Style
Scholliers, M.; Matthijs, H. The effectiveness of the european central bank in pursuing its prime mandate. Economic Analysis Letters, 2024, 3, 52.
AMA Style
Scholliers M, Matthijs H. The effectiveness of the european central bank in pursuing its prime mandate. Economic Analysis Letters; 2024, 3(2):52.
Chicago/Turabian Style
Scholliers, Mark; Matthijs, Herman 2024. "The effectiveness of the european central bank in pursuing its prime mandate" Economic Analysis Letters 3, no.2:52.
APA style
Scholliers, M., & Matthijs, H. (2024). The effectiveness of the european central bank in pursuing its prime mandate. Economic Analysis Letters, 3(2), 52.

Article Metrics

Article Access Statistics


  1. Ashworth J. (2020). Quantitative Easing: The Great Central Bank Experiment. Agenda Publising, Newcastle upon Tyne, 192 p.
  2. Altavilla C. et al. (2021). Assessing the Efficacy, Efficiency and potential Side Effects of the ECB’s Monetary Policy Instruments since 2014, ECB, Occasional Paper Series, no. 278, 68 p.
  3. Andersen A. L. et al. (2021). Monetary Policy and Inequality. Economics Working Paper no. 1761, Universitat Pompeu Fabra, 71 p
  4. Blanchard O. (2016). Do DSGE Models have a Future?. Policy Brief 16/11, Peterson Institute for International Economics, 4 p.;h=repec:iie:pbrief:pb16-11
  5. Boeckx J. et al. (2017). Effectiveness and Transmission of the ECB's Balance Sheet Policies. International Journal of Central Banking, Vol. 13 (1), p. 297-333.
  6. Burns S. (2022). European Central Bank raises Rates to fight Inflation, but understands burden it puts on People, says Lagarde. Interview with Christine Lagarde published in the Irish Times of 28 October 2022,
  7. Bank of England (2007). Key Monetary Policy Dates since 1990. Wayback Machine.
  8. Board of Governors of the Federal Reserve System (2023). Federal Funds Effective Rate. Selected Interest Rates (Daily), Table H.15,
  9. Banbura M. and Christoffel K. (2019). ECB Models and Forecasting Tools, 16th ECB Central Banking Seminar, 2 July 2019, Frankfurt am Main
  10. Christiano l. J. et al. (2018). On DSGE Models. Journal of Economic Perspectives, Vol. 32, No. 3, p 113–140.
  11. Coeuré B. (2019). Monetary Policy: lifting the Veil of Effectiveness. Speech by Benoît Cœuré, Member of the Executive Board of the ECB, at the ECB colloquium on “Monetary Policy: the Challenges ahead” held in his honour, Frankfurt am Main.
  12. Darvas S. et al. (2022). The ECB’s monetary tightening: a belated start under uncertainty, in 'Assessment of the ECB’s current monetary policy stance. Compilation of Papers, Policy Department for Economic, Scientific and Quality of Life Policies, Directorate-General for Internal Policies, PE 733.983, 117 p
  13. Debortoli D. et al. (2017). Designing a simple Loss Function for Central Banks: Does a Dual Mandate make Sense?. IMF Working Paper, WP17/164, 56 p.
  14. De Santis R. A. (2016). Impact of the Asset Purchase Programme on Euro-area Government Bond Yields using Market News. ECB, Working Paper, No. 1939, 24 p.
  15. European Union, 'Protocol (Nr. 4) (2016) on the Statute of the European System of Central Banks and of the European Central Bank. Official Journal of the European Union of 7, C202, p. 230-250
  16. EUR-Lex (2021). Regulation (EU) 2021/378 of the European Central Bank of 22 January 2021 on the Minimum Reserve Requirements-Article 6: Calculation of the Minimum Reserves. L_.2021.073.01.0001.01.ENG
  17. ECB PR (1998). A Stability-Oriented Monetary Policy Strategy for the ESCB. Press Release,
  18. ECB PR (2003). The ECB's Monetary Policy Strategy. Press Release
  19. ECB PR (2020). ECB announces Easing of Conditions for Targeted Longer-Term Refinancing Operations - TLTRO III. Press Release
  20. ECB PR (2021). Governing Council of the ECB adopts its New Monetary Strategy. Press Release
  21. ECB PR (2023). ECB adjusts Remuneration of Minimum Reserves. Press Release
  22. ECB (2021). Review of Macroeconomic Modelling in the Eurosystem: Current Practices and Scope for Improvement, ECB Strategic Review, Occasional Paper Series, No. 267,
  23. ECB (2022a). Monetary Policy Decisions,
  24. ECB (2022b). The Definition of Price Stability.
  25. ECB (2023a). How to Calculate the Minimum Reserve Requirements?.
  26. ECB (2023b). Minimum Reserves.
  27. ECB (2023c). Key ECB Interest Rates.
  28. ECB (2023d). Statistical Data Warehouse, Total assets/liabilities – Eurosystem. Series ILM.W.U2. C.T000000.Z5.Z01, T000000.Z5.Z01
  29. Eurostat (2023). Harmonized Index of Consumer Prices, HICP-Monthly Data (Annual Rate of Change) (prc_hicp_manr).
  30. Financial Crisis Inquiry Commission (2011). The Financial Crisis Inquiry Report. Official Government Edition,
  31. Grande G. et al. (2019). The effectiveness of the ECB's Asset Purchases at the Lower Bound. Banca d'Italia, Occasional Papers, No. 541, 40 p.;h=repec:bdi:opques:qef_541_19
  32. Heijdra B. J. (2017). Foundations of Modern Macroeconomics’ (Third Edition), Oxford University Press, Oxford (UK), 2017, 944 p.
  33. Haldane A. (1995). Inflation Target. Bank of England. Quarterly Bulletin, Volume 35, No. 3, p. 250-259
  34. Hammond G. (2012). State of the Art of Inflation Targeting ‒ 2012. Centre for Central Banking Studies, Handbook, no. 29, 2012, 50 p
  35. Hesse H. et al. (2018). The macroeconomic Effects of Assets Purchases Revisited. Journal of Macroeconomics, No. 58, p.115-138.
  36. Hetzel R. L. (1987). Henry Thornton: Seminal Monetary Theorist and Father of the Modern Central Bank. FRB Richmond Economic Review, Vol. 73, No. 4, p. 3-16.
  37. Hohberger S. et al. (2019). The Macroeconomic Effects of Quantitative Easing in the Euro-area: Evidence from an estimated DSGE Model. Journal of Economic Dynamics and Control, Vol. 108, p. 1-31.
  38. Judd J. P. et al. (1998). Taylor’s Rule and the Fed: 1970-1997. Economic Review, 1998, No. 3, Federal Reserve Bank of San Francisco, 14 p
  39. Mandler M. and Scharnagl M. (2020). Estimating the Effects of the Eurosystem's Asset Purchase Programme at the Country's Level. Deutsche Bundesbank, Discussion Paper, no. 29/2020, 56 p.
  40. Meyer L. H. (2012). Inflation Targets and Inflation Targeting. Federal Reserve Bank of St Louis, Review, Vol. 83, No. 6, p. 1-13.
  41. Mouabbi S. and Sahuc J.G. (2019). Evaluating the Macroeconomic Effects of the ECB's Unconventional Monetary Policies. Journal of Money, Credit and Banking, Vol. 54 (4). p. 831-858.
  42. Nakamura E. et al. (2018). The Elusive Costs of Inflation: Price Dispersion during the U.S. Great Inflation. The Quarterly Journal of Economics, Volume 133, Issue 4, p. 1933-1980.
  43. Neri S. and Siviero S. (2019). The non-standard Monetary Policy Measures of the ECB: Motivations, Effectiveness and Risks. Banca d'Italia, Occasional Papers, No. 486, 51 p.
  44. Smets F. and Wouters R. (2004). Forecasting with a Bayesian DSGE Model. An Application to the Euro Area. ECB Working Paper Series, No. 389, 33 p.
  45. Stiglitz J. (2018). Where modern Macroeconomics went wrong. National Bureau of Economic Research (NBER), Working Paper 23795, 43 p.
  46. Storm S. (2021). Cordon of Conformity: Why DSGE Models are not the Future of Macroeconmics. International Journal of Political Economy, Issue 2, Volume 50, 2021, p. 77-98.
  47. Schnabel I. (2023). New Challenges for the Economic and Monetary Union in the Post-Crisis Environment. Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Euro50 Group Conference, Luxembourg,
  48. Shirai S. (2018). The Effectiveness of the Bank of Japan's large scale Stock Buying Programme., VOX, CEPR Policy Portal,
  49. US Bureau of Labor Statistics (2023). CPI for All Urban Consumers. Series ID CUSR0000SA0,
  50. Woodford M. (2003). Interests and Prices: Foundations of a Theory on Monetary Policy. Princeton University Press, Princeton, 808 p.
  51. Weidmann J. (2019). What the Future Holds - Benefits and Limitations of forward Guidance. Speech at the European Banking Congress, Frankfurt am Main