As long as national budgets are in order, there is no incentive for member states to pursue an overly lax monetary policy, with an eye to reducing the interest burden on their budgets. Wage policy is another national responsibility. Wage agreements have in general been settled in line with productivity advances.
Low, and stable, inflation expectations reflect confidence in the Eurosystem’s policy, and help in negotiating stability-oriented wage settlements. Research in the field of optimum currency areas has come to the conclusion that the member states of a successful currency union need to be what is called convergent economies. Convergent economies allow for a unified policy; divergent economies require differentiating policies.