Acta Universitatis Danubius. Œconomica, Vol 9, No 2 (2013)

Abstract

This article provides for the identification of the present challenges faced by the monetary policy of the European Central Bank, given that the sovereign debt crisis has complicated the pursuing of its primary objective of the maintaining the price stability. This research is a part of a larger framework, being a continuation of some previous works related to the issue of the sustainable functioning of a currency area. Based on the research of the international monetary institutions documents, we have presented "the route" of the financial shock and also the challenges facing the European Central Bank monetary policy in the current period and in the short-term perspective. The results reveal that the current crisis has been maintained and enhanced by the conflict occurrence between the “no bail out” clause provided in the Maastricht Treaty, and the “too big to fail” principle applied to the sovereign debt of the European countries. This discrepancy has undermined the confidence in the euro project at a level where the conventional channels of the monetary transmission mechanism do not work efficiently. This topical subject could be a reference for the academic research regarding the European monetary integration process and its new challenges.