How did ECB get the 2 pillar strategy name?

I had posted about a speechfrom Otmar Issing where he explaisn why ECB did not choose inflation targeting regime.  There were 2 main reasons- lack of a Euroarea Economic Model and inflation targeting does not focus on role of money in determining inflation.

I came across another speech from Issing where he explains the rationale for ECB’s  2-pillar monetary policy strategy:

 Before I come back to these questions, let me be precise on history. To be frank, at first in our communication we did not exactly speak of a “two pillar approach”. (In internal discussions we had already used the term “pillar”. We had initially identified three pillars, the third one being the quantitative definition of price stability.) The public use of this term goes back to the press conference of 13 October 1998 in which the president communicated the adoption of “A stability-oriented monetary policy strategy for the ESCB” by the Governing Council. dual pillars of the strategy the monetary element and the inflation forecast or real economy element. Will they carry approximately equal weights or will you decide the relative weighting between the two pillars on a case by case basis?” (By the way this is not only evidence for the intelligence of the journalist but also for the successful ommunication of the ECB right from the beginning.)

Then a journalist asked: “I have a question about your monetary policy strategy regarding the

Wim Duisenberg answered:”…it is not a coincidence that I have used the words that money will play a prominent role. So if you call it the  two pillars, one pillar is thicker than the other is, or stronger than the other, but how much I couldn’t tell you.”

Then it was discussed within ECB and was made official! This is quite neat.

And then Issing mentions why the two pillar approach. Again the reasons are much the same as in the case of not choosing inflation targeting. The need to emphasise the role of money in inflation – Pillar 1 and the various economic factors for price stability- Pillar 2.

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