A deeper integration of markets would stimulate price flexibility by fostering competition and open product markets. Greater cross-border competition and the integration of markets across the euro area countries would contribute to lower prices. It could also enhance the adjustment processes in the individual countries in the event of asymmetric shocks or differing cyclical developments.
It is also important to promote further financial market integration and the development of readily available opportunities for portfolio diversification. This would help to attenuate the impact of country-specific shocks, as I mentioned earlier. National authorities can make a substantial contribution to ensuring the proper functioning of adjustment mechanisms within the euro area by conducting a well-designed fiscal policy.