The goal: price stability

The main objective of the Maastricht Treaty was to ensure price stability in the Eurosystem.

This goal refers to the general level of prices and consists of avoiding both prolonged inflation and deflation.

The benefits derived from achieving this goal are vast:

It makes it easy to recognise relative price variations, which enables companies and consumers to decide how they wish to invest or spend their money, which in turn makes it possible to assign resources more efficiently and increase the economy's productive potential.
It reduces the premium on interest rates demanded by investors as compensation for the risks that come from maintaining nominal assets over long terms to protect their capital against unforeseen inflation. In this way, there is more incentive to invest.
It limits the probability of individuals and companies diverting resources that could be put to productive use as a means of protecting themselves against inflation. In a situation of high inflation rates, there is a tendency to accumulate property assets, given that they retain their value better than financial assets. However, this is an efficient investment decision that hampers economic growth.
It eliminates the real financial costs that are generated when inflation intensifies the distortional effect of the tax and social security systems.
It mitigates the effects of inflation on the cash trends (acting like a tax), which reduces the demand from homes and, as a result, generates higher transaction costs.
It preserves social cohesion and stability. High inflation or deflation rates usually generate social and political instability.