This is despite the fact that trade tariffs are still higher than in most other countries in the world, and that capital account controls still exist. The large capital inflows, despite the cautious approach to liberalization, meant that such flows can engender volatility in exchange rate movements.
While these measures have reduced the risks of severe financial turbulence, the EMU could still do with additional improvements. First and foremost, we need a better balance between liability and control. Let me explain what I mean.