EuroKampus: “Why are stable prices important?”

While this article by EuroKampus isn’t about cryptocurrency, it does explains very well the importance of a stable currency, which is the exact reason why some major Blockchain developers working on a projects such as Kowala kUSD, Tether’s tUSD and StableCoin already working towards such a solution.

Please find the article below:

The main and most important objective of the single monetary policy is to maintain price stability. In addition, it supports general economic policies, such as full employment and sustainable development.

Why is price stability considered to be so important that it is central to the monetary policy of the Eurosystem? Let’s look at some basics!

We speak of price stability if the value of money remains more or less the same over time. A stable currency preserves the consumers’ purchasing power; this means that a given amount of currency will buy you the same amount of goods and services today and in the future. So, purchasing power is a measure of the value of money.

But how can you talk about price stability when sometimes some prices go up while others go down? Well, a certain amount of price fluctuation is quite normal. The crucial point is that the general level of prices should not fluctuate too much over time. This means that we want to avoid both prolonged price increases (inflation) and prolonged price decreases (deflation).

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Why are stable prices important?