In the case of the EU the convergence criteria were taken as a basis for policy action, a disciplining device. Thus, for instance, if a country was not likely to meet the fiscal criterion, strict monitoring as well as peer pressure forced the country to take measures to come back on track.
According to this analysis, given the difficulties in recognising the nature of the slowdown in real time, monetary policy did not prevent a build up of inflation, which became entrenched in expectations and eventually led to stagflation, with relatively low growth and double-digit inflation. A painful disinflationary process was necessary in order to restore macroeconomic stability.