Issues of real and nominal economic convergence are central to any discussion of the formation of monetary unions.59 On the one hand, it is perhaps intuitively obvious that monetary union implies convergence of inflation rates—at least in the long run. Indeed, convergence of both inflation rates and monetary policy has been a feature of the EMS, particularly since 1982; see Chart 3.60 On the other hand, it is not clear whether real convergence is a prerequisite or a consequence of closer economic integration.

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