Since the crisis, however, trade has provided noticeably less support to economic growth. Trade growth has barely kept pace with output growth, and has even lagged behind it in a number of years. As a result, the current economic expansion in the euro area has been driven largely by domestic demand, supported by substantial monetary policy accommodation.
This is the classic “one-way bet” scenario: the strategy creates the expectation that the exchange rate will eventually adjust, thereby inducing additional speculative capital flows. 15  This view was elaborated on in a 2011 speech by M. Carney, “The Paradigm Shifts: Global Imbalances, Policy, and Latin America” (speech to the Intern-American Development Bank, Calgary, Alberta, 26 March 2011).