In many cases there is a considerable need for reform, e.g. with respect to reducing the government expenditure ratio, deregulation, restructuring of social security systems or adjusting tax legislation. There are, however, good grounds for hoping that the pressure exerted by the single currency will greatly foster the reform process.
Yet even if major steps are taken towards flexibility, the risk of national or regional special developments can never be ruled out altogether. Whereas it used to be possible, at least to a certain degree, to respond to special national problems by modifying the interest rate and/or the exchange rate, this option is no longer available in the monetary union.