Answer to Question #199098 in Macroeconomics for Joseph

Question

In the years prior to European monetary union, long-term interest rates in the countries

forming the (later) euro area converged towards the lowest levels. What could explain

this development

Answer 1

 European monetary union is driven by three goals which are to control inflation, ensure stability of exchange rate and encouraging trade.  European monetary union has led to low level of interest rates by focusing on the three goals. They have been able to control inflation in Europe.