The commitment is of course to policies that retain macroeconomic balance, which requires fiscal discipline, and international competitiveness in both price and non-price dimensions. For decades, many European Union countries have had a chequered history of macroeconomic imbalances, generally resolved through devaluations at the cost of relatively high inflation, and high nominal and real interest rates, all of which contributed to growthdamaging uncertainty.
In addition to the considerable microeconomic benefits of eliminating currency conversion costs and all of the exchange rate risk for intra-euro area transactions, the main advantage of the currency union was seen to be lower inflation and interest rates, contributing to a stable growth platform. Yet it was as if policymakers and market participants believed that the results would happen semi-automatically.