[20] If certain countries are more exposed to financial shocks or disruptions, it could lead to greater divergence in borrowing costs and lending conditions across the euro area, which could in turn affect the effectiveness of monetary policy.
A key to addressing any such challenges will be close engagement between national authorities and EU institutions to coordinate policy responses and promote greater economic integration and resilience across the euro area. As a small, highly-interconnected economy, Ireland faces greater downside macro-financial risks compared to larger, more diversified economies.