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J. Onno de Beaufort Wijnholds European Central Bank 10th Dubrovnik Economic Conference. Panel Discussion: What after the euro adoption?. What are the policy challenges related to membership of a monetary union?... …The experience of Portugal and Spain might provide some valuable insights.

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J. Onno de Beaufort Wijnholds

European Central Bank

10th Dubrovnik Economic Conference

Panel Discussion:What after the euro adoption?


What are the policy challenges related to membership of a monetary union?...

…The experience of Portugal and Spain might provide some valuable insights.


Observation #1 monetary union?...: Spain has outperformed Portugal as regards economic growth and fiscal solidity.

(Annual percent change/In percent of GDP)

Source: IMF.


Observation #2 monetary union?...: The much stronger increase in ULC in Portugal ...

(Annual percent change)

Source: Broad Economic Policy Guidelines.


… had a bearing on the employment dynamics and the development of the current account.

(Annual percent change/In percent of GDP)

Source: IMF.


Observation #3 development of the current account.: Spain has been more successful in attracting FDI than Portugal.

(In billions of euro)

Source: IMF.


What are the lessons to be learned from these countries’ experiences?

  • Spain put its fiscal position on a sound footing and successfully implemented structural reforms.

  • Portugal conducted an overly loose fiscal policy and tackled less vigorously structural impediments to growth and employment creation.


Conclusions experiences?

National policymakers face specific challenges in the context of a monetary union, relating inter alia to fiscal discipline, wage restraint and sound institutions. Failing to meet these challenges will adversely affect a country’s economic performance.


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