Economic governance in the euro area  But the crisis has shown us that this should be no reason for any complacency in the euro area. Persistent losses in competitiveness on the part of individual members in a currency union lead to a build-up of external and internal imbalances. When these unravel, the cost for the affected economies can be large.
They can also have spillover effects on other members of the currency union. In any union, an economic governance framework is needed to prevent developments in an individual member state endangering the smooth functioning of the union.