Changes in price competitiveness can reflect •  convergence in the price level of tradable goods,  •  the Balassa-Samuelson effects and  •  the response to cyclical differences between euro area countries.8  It is possible that the euro has amplified the divergence trend in current accounts since it grants better access to international capital markets for catching-up member states and hence allows running larger trade deficits.
This is largely due to how these bonds were taxed between 1996 and 2011, which made after-tax interest on bank bonds relative to medium-term deposits much more attractive. When the preferential tax treatment ended, the bonds were gradually replaced with deposits or asset management products as they came to maturity.