This report surveys the economic performance of the euro area and gives recommendations about six policy challenges of major importance for the future of EMU.

Against the backdrop of the financial crisis that unfolded in 2008, this book deals with policy challenges going forward, focusing in particular on the ongoing catching-up process in Central, Eastern and South-Eastern European countries.

What is the link between the financial cycle – financial booms, followed by busts – and the real economy? What is the direction of this link and how salient is this connection? This unique book examines these fundamental questions and offers a paramount contribution to the debate...