The advantages of economic integration afforded by the Single Market process are enhanced by the elimination of the transaction costs of exchanging different currencies, the direct result of the introduction of the euro. Furthermore, the single currency will make prices across the euro area directly comparable, which should increase competition and hence efficiency and economic growth in the euro area.
In particular, in the current setting of heightened price pressure due to food and energy price increases, it is becoming obvious that globalisation does not necessarily produce tailwinds for a stability-oriented monetary policy. In fact, “headwinds induced by globalisation” are a better description of the drivers of today’s inflationary pressures.