As the tenth anniversary of EMU is approaching, a debate is underway as to whether
the single currency has promoted or hindered convergence among the countries of the
Euro Area. On the one hand, there is wide agreement that asymmetric shocks have
subsided after the creation of the single currency, but if one moves to examine the
catching-up process between the more and less affluent countries of the Euro Area,
the evidence is waning. Another worrying development in the Euro Area is the
emergence of unprecedented current account deficits in the southern Euro Area
countries, while the northern ones enjoy substantial surpluses. To counter these new
imbalances, new well-framed policy priorities are required in the Euro Area that put
more emphasis on convergence and competitiveness than before.
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