Recent fiscal accords may have reduced the risk of a GDP contraction. On the other hand, during 2012, the euro area fell into recession with unemployment rates at record highs. To a large extent, the problems in the region stem from institutional limitations of the design of the monetary union that have complicated dealing with the aftermath of national financial crises.
Progress in revamping the EMU architecture, bailout programs for troubled economies and, especially, decisive measures undertaken by the ECB have lowered perceived risk for sovereign and bank debt, especially in the peripheral countries.