Monetary Policy and Financial Markets in the 1990s
This paper deals with certain fundamental issues concerning the formulation and conduct of monetary policy in Greece over the coming years. In the 1990s monetary policy should have two central objectives: monetary stability and financial efficiency. The first macroeconomic objective calls for rapid disinflation and restoration of external balance. The second objective, which is microeconomic in nature, requires the further liberalisation and development of domestic financial markets and their integration in the European financial system. The attainment of these two objectives is of vital importance for the stabilisation and recovery of the Greek economy. It is also essential for the country’s participation in the process of economic and monetary union (EMU) in the European Community (EC). During the first stage of EMU, beginning on 1 July 1990, the drachma was to participate in the European monetary system (EMS) exchange rate mechanism (ERM) and the Greek financial markets were to be integrated in the single European financial area.
KeywordsInterest Rate Monetary Policy Fiscal Policy Commercial Bank Real Interest Rate
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