ABSTRACT
This chapter analyses the economic governance framework of European Monetary Union (EMU) and its inability to promote the real convergence of its economies. The creation of the EMU aimed at the establishment of a macroeconomic framework in which member states would benefit from higher nominal stability in their economies, and improved coordination and governance of their economic policies. This macroeconomic environment would promote higher integration of markets, namely financial markets, and improvements in competitiveness, growth, employment creation and well-being of its citizens. Progress in the integration of European Union financial markets was important to effective transmission of the single monetary policy to member countries. Portugal endeavoured to avoid the contagion effects of the Greek crisis. In May 2010, immediately after "rescue package" for Greece was decided and the European Financial Stability Facility (EFSF). The European Monetary Union was unable to promote the real convergence of the euro area economies. The financial crisis had, consequently, asymmetric implications within the euro area.
