Euro area  There has recently been a tendency among commentators to regard Economic and Monetary Union (EMU) as being in need of far-reaching reform. This view has been encouraged by the emergence of tensions in certain euro area sovereign debt markets in 2010, which has caused some observers to reappraise the prospects for the single currency.
US monetary policy, the key driver of the global financial cycle, also influences euro-area financing conditions. At the same time, given that the euro is the second most important currency in the international monetary system, the ECB’s monetary policy is itself potentially a source of spillovers (Fig. 2).