The economies of the euro area countries had not converged sufficiently when the euro was introduced, and the gaps among them widened further after the bubble burst in the middle of 2000s. Divergence is evident in unit labor cost growth and current account balances. Yield differentials in the European bond markets have also widened.
Such market fragmentation has forced investors to reconsider country risks, which had been considered eliminated with convergence to a single financial market. To accomplish a greater degree of convergence, while taking into consideration strong national identities and the slow process of population movements across borders, three options are often mentioned, ones that are not mutually exclusive.