Turning to more recent developments in economic activity in the euro area, over the last few quarters more positive fundamentals have gradually come to influence both economic growth developments and market sentiment. From the external side, global demand has seen a protracted expansion that has consistently supported euro area exports.
If the central banks were assigned an exchange rate target in addition to the objective of price stability, considerable conflicts could arise between these two objectives, a point that has been proved especially by events in Asia and Latin America over the past few years.