The euro zone’s heterogeneity was hidden; now it is in plain sight, making it very difficult to have a single monetary policy

From the creation of the euro until the 2008 crisis, the countries whose interest rates were higher prior to the euro benefited from a sharp fall in interest rates, which stimulated their economies and gave the illusion that all euro-zone countries were in rude health, making it easy for monetary policy to become more restrictive . During the subprime crisis (2008-2009) and the euro-zone crisis (2010-2014), all countries were in trouble , which made it easy to conduct an expansionary monetary policy. But all these mechanisms that lent the euro zone an illusory homogeneity have now disappeared. The euro zone’s true heterogeneity (regarding growth, productive specialisation, the situation of banks, etc.) has now revealed itself, which will make it very difficult to conduct a single monetary policy in the future.