For a combination of monetary policy and macroprudential policy to promote economic and financial stability in the euro zone.

Summary The experience of the euro area over the last decade has shown that a single monetary policy does not necessarily promote convergence of the economies belonging to a monetary union. The objective of this article is threefold. First, we seek to illustrate the divergences between the countries of the zone based on the gap between the policy rate of the single monetary policy and the rate that would have resulted from the application of a standard Taylor rule, which we calculate at several levels: the zone, the "core", the "periphery", and certain countries taken individually, representative of the core or the periphery of the zone. Second, we show that a monetary policy that would use a Taylor rule extended to financial stability to correct the resulting financial imbalances would risk further reinforcing divergences. Finally, we conclude that the euro area would benefit from a new policy mix that would combine monetary policy with macroprudential measures adjusted to the economic and financial situation of each member state. This combination would promote not only financial stability but also macroeconomic stability.