In 2000 Milton Friedman gave a keynote address to the Bank of Canada, which is available for download here [PDF]. The keynote itself is interesting, but moreso are his responses to a Q&A session, where he talks about issues such as the future euro and monetary policy at the zero lower bound. Here, without commentary, are some hilights:

Michael Bordo: Do you think the recent introduction of the euro will lead to the formation of other common-currency areas? Milton Friedman: [SNIP] I think the euro is in its honeymoon phase. I hope it succeeds, but I have very low expectations for it. I think that differences are going to accumulate among the various countries and that non-synchronous shocks are going to affect them. Right now, Ireland is a very different state; it needs a very different monetary policy from that of Spain or Italy. [SNIP] You know, the various countries in the euro are not a natural currency trading group. They are not a currency area. There is very little mobility of people among the countries. They have extensive controls and regulations and rules, and so they need some kind of an adjustment mechanism to adjust to asynchronous shocks—and the ﬂoating exchange rate gave them one. They have no mechanism now. If we look back at recent history, they’ve tried in the past to have rigid exchange rates, and each time it has broken down. 1992, 1993, you had the crises. Before that, Europe had the snake, and then it broke down into something else. So the verdict isn’t in on the euro. It’s only a year old. Give it time to develop its troubles.

On the euro:

On inflation targeting:

Malcolm Knight: Countries with a ﬂexible exchange rate need a nominal target for monetary policy to anchor expectations. Do you feel that inﬂation targeting provides a useful nominal target? Milton Friedman: As I mentioned earlier, I think it’s a good thing to have a nominal target, to say that you’re not going to try to ﬁne-tune, and to indicate what you aren’t going to do. The problem I have is this: the current mechanism for all of the central banks who are inﬂation targeting is a short term interest rate—as in the United States—in all of the central banks. We know from the past that interest rates can be a very deceptive indicator of the state of affairs. A low interest rate may be a sign of an expansive monetary policy or of an earlier restrictive policy. And similarly, a high rate may be a sign of restriction, of trying to hold things down; or it may be asign of past inﬂation. The 1970s offer the classical illustration in which there were high interest rates that were reﬂecting the Fisher effect of inﬂation expectations. So I’m a little leery of operating primarily, or almost primarily, via interest rates. But, I think that having a given inﬂation target is a good objective. The question is, how long will you be able to keep it?

Finally, on monetary policy at the zero lower bound: