Most euro area countries have benefited from significantly better financing conditions than in the 1990s, a situation which has supported fiscal consolidation. 2 For instance, in the run-up to Stage Three of EMU, fiscal deficits were considerably reduced, mainly due to falling interest payments, from an average of 5.2% of GDP between 1990 and 1998 to 3.4% between 1999 and 2007.
The euro also helps to strengthen trade and financial linkages across euro area countries. There is clear evidence that the introduction of the single currency and the associated increase in price and cost transparency have fostered both intra and extra-euro area trade in goods and services. 3  1  See ECB Monthly Bulletin, May 2008.