Second, over the past three years the pattern of GDP growth rates has converged again. I see the cyclical downturn, triggered mainly by the “common shock” of a large fall in world trade, as a determining factor during this period. Third, interest rate convergence may have also greatly contributed to the cyclical synchronisation of domestic demand in the euro area.
In fact, not only shortterm interest rates have fully converged, but long-term interest rates have also been characterised by a sizeable convergence, while disparities in real interest rates have narrowed. In that sense, we have evidence that the dynamics of convergence that can be expected to be inherent in a monetary union appear to be at work.