Under acute pressure, many members of Europe's currency union have undertaken courageous economic reforms. As reflected in their improving fundamentals, these countries are better equipped to face global competition today than at any time since they adopted the euro. In the second quarter of 2013, the eurozone emerged from recession and even those hardest hit by the downturn are bottoming out.
This is not just a result of the cyclical pendulum swinging back. Their minds focused by the crisis, European leaders have embarked upon a comprehensive renovation of their institutions. The joint governance and surveillance that underpin monetary union have been much reinforced. While more efforts by member states are still needed, fiscal and economic policies in the euro area are far more integrated today than in the first decade of European monetary union, resulting in the gradual reduction of economic imbalances. Economic convergence is back on the agenda.
