In the Monetary Union, insufficient attention was paid to competitiveness divergences, because such divergences build up over time, little by little, and at some point there is a need for a significant adjustment. We should have paid more attention to economic divergences. Why? It is important for sound economic policymaking to identify at an early stage the erosion of competitiveness.
Generally, the global environment remains benign although there was a very hot debate at the recent BIS annual meeting which I attended, where there was a huge concern that expectations of inflationary tendencies remain both at the regional and international level, and consequently most economies have actually tightened their monetary policies, or at least have withdrawn monetary stimulus on a timely basis which would improve the long term global economic growth prospects and  1  Institute of International Finance (IIF), March 2006.