For instance, higher risk premiums in response to unsustainable policies in one Member State could spill over to other euro area countries. Euro area membership thus also means compliance with a rigorous regulatory framework: the Stability and Growth Pact.
We are aware that structural improvements are only part of the reason for the current improvement in euro area fiscal balances, from -1.6% in 2006 to an expected -1.0% in 2007. It is much more a consequence of the favorable international economic environment.