This book presents to the community of central bankers and academics, and to the public at large, the results of the research project undertaken by the Eurosystem Monetary Transmission Network (MTN) on the transmission of monetary policy in the euro area. This is the first comprehensive research project completed jointly by the European Central Bank (ECB) and by the euro area National Central Banks (NCBs) after the introduction, in 1999, of the new single European currency, the euro.

The choice of monetary policy transmission as the topic for this study was a logical and almost a necessary one. The transmission process is a central issue for every central banker. It figures prominently in the preparation, decision-making and communication of monetary policy. Good analysis is needed to get information on the transmission mechanism and to make it systematic and soundly based on economic theory and data evidence. This task was assigned, shortly after the onset of the single European monetary policy, to the Monetary Transmission Network, a team of Eurosystem economists with the proper mix of expertise. Their work lasted some two years. Preliminary results of this research were presented, even before its completion, to a number of academic and policy-making audiences on both sides of the Atlantic. Disseminating in-house research, particularly when the topic is of such policy relevance, is an integral part of central bank communication. This book is part of this communication effort.