Before 2008 – the accumulation of macroeconomic imbalances The significant degree of monetary easing in the run-up to EMU provided a huge stimulus to domestic demand.
As the “new world” of low interest rates and abundant financing seemed to offer a free lunch to the “converging” countries, several imbalances started to build-up in those countries, taking different shapes: • In countries such as Portugal or Greece, fiscal imbalances became a major problem – even if the size of the problem was substantially different.