Introduction

The euro was ten years old in 2008. To celebrate this important birthday the European Commission produced a 350-page report (European Commission, 2008), accompanied by a string of research papers, to evaluate the European Monetary Union (EMU) experience after a decade. Lights and shades emerged from a careful and thorough analysis of the relevant issues, but the overall conclusion was that EMU is ‘a resounding success’. Though perhaps more soberly, most observers would have subscribed to this view, ready to shelve some issues that, hotly debated when EMU was first launched, seemed now to have lost relevance: the effects of asymmetric shocks when optimum currency area conditions are not satisfied, the dangers of uncoordinated fiscal policies, the Walters (1986) critique of a ‘one-size-fits-all’ single monetary policy. One of the questions examined in the report, and at first sight somewhat reminiscent of the issues raised by Sir Alan Walters, was that of persistent differences in growth and inflation between some countries and the rest of the euro area. Misgivings on the sustainability of these trends were expressed here and there, but on the whole the policy conclusion was broadly reassuring: