I will start with some thoughts about life in a monetary union that is something that unites us, as Texas is a classic case study in the US dollar union, and my country Finland is a founding member of the European Monetary Union.1 I will then present a European view on the near-term global economic outlook. Finally, I will discuss euro area monetary policy.
One relevant perspective on the economics of a monetary union is provided by the well-known theory of optimum currency area. This emphasizes the significance of asymmetric shocks, normally country-specific, which can cause costly adjustment problem for an individual member state when the interest rate is set for the entire currency area and the exchange rate towards the other member countries is fixed.