And even in this domain, the mechanisms that were envisaged to prevent and correct unsustainable fiscal performance by Member States proved to be lacking. No framework was foreseen for monitoring competitiveness and heterogeneity within the euro area and for enforcing corrective action when needed. What’s more, in interconnected financial systems an entirely national perspective on bank regulation and supervision turned out to be insufficient.
On the downside, concerns remain relating to a stronger or more protracted than expected negative feedback loop between the real economy and the financial sector, renewed increases in oil and other commodity prices, the intensification of protectionist pressures and the possibility of disruptive market movements related to the correction of global imbalances.