This chapter is concerned with the issue that there are benefits from membership in the euro area as well as challenges. Countries with traditionally weak currencies have realized that without the anchor of the euro, they would have experienced a spiral similar to that of developing countries: a speculative attack, a balance-of-payments crisis, and interest rates jumping through the roof. A debate that took place while the euro was being designed was whether the single currency would induce convergence or divergence in the economic performance of member countries. The effect of currency unions on trade has received a large amount of attention. The decentralized structure of euro area supervision and of the lender-of-last-resort function has long been a source a concern. It has also provided the countries that are already members with reasons to be more cautious about enlargement. The euro's second decade promises plenty of interesting developments.
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