In these circumstances, so the argument goes, such shocks are likely to lead to widening price differentials so that a common nominal interest rate in the monetary union results in different real interest rates among countries. For member countries with relatively-strong domestic demand and a higher-than-average inflation rate, the lower real interest rate fuels domestic demand and national inflation.
Conversely, for countries with relatively-weak domestic demand and a lower-than-average inflation rate, the high real interest rates put further downward pressures on domestic demand and inflation. A one-size monetary policy, in other words, does not match the needs of all members. The foregoing, traditional view of optimum currency areas neglects several important factors.