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). Despite the achieved success in the convergence of monetary developments of member countries under the Maastricht criteria, there are still differences in applied tools for managing liquidity/currency, especially in the cl edit procedures of member countries, and in the transparency and strategy of monetary policy, The path to a monetary mechanism will be more complicated than expected. The focus will be on short-term interest rates; the traditional stabilization role of minimum reserve requirements, commercial notes, and discont and lombard rates will weaken. The trend will be to shift from outright to repo operations. 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.