2. The second challenge is posed by public finances in euro area countries. Since the launch of the euro we have witnessed cross-country differences in the enforcement of fiscal discipline.
While fiscal developments since the launch of the euro have been much better, overall, than developments in the period prior to the start of economic and monetary union (EMU), there has only been a limited reduction in the overall level of indebtedness across the euro area [Euro area aggregate in % of GDP: government budget balance: 1995: –5.0, 2007: –0.6, 2009: –6.3, 2011: –6.1; government gross debt: 1995: 72.5, 2007: 66.0, 2009: 78.7, 2011: 88.5].