But a measure of anxiety remained about the standards that would apply in the new economic and monetary entity. This source of anxiety came to the surface in summer 1997, when the intermediate-maturity yields paid by those core countries which had reached complete alignment started to rise in sync [see Chart 1b and 1c].
The balance of market expectations seemed to be shifting toward a loose interpretation of the new regime. A conviction that was gaining ground was that the rapid descent of short-term rates in the converging economies of Italy, Spain and Portugal would be matched by a gradual increase in the short-term rates of the low-yield economies. The two paths would meet somewhere half-way.