In sum, the creation of the euro may itself be contributing to the very conditions that make the use of nominal exchange-rate adjustments among the members of the euro area less necessary than was the case before they joined the euro area. Nevertheless, it can be argued that a country surely must give up something if it no longer has the exchange-rate tool.
My reaction to this argument is that adjustment of the nominal exchange-rate is not a magic bullet. One should not expect an economy with competitiveness problems, running, say, current account deficits equal to 6 per cent of GDP, to depreciate the nominal exchange rate and become competitive for-ever-after.