Exhaustive Analysis of Proposals To "Fix" Euro As Common Currency

By: EW News Desk Team   Date: 22 March 2010

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EW News Desk Team

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22 March 2010

As we have noted several times, the Greek crisis raises significant questions regarding the future of the Eurozone.

As we have noted several times, the Greek crisis raises significant questions regarding the future of the Eurozone.

In this extensive feature, Der Spiegel, one of Germany's most important media voices, does an exhaustive analysis of the problems currently affecting the Euro, and various proposals for solutions.

Since the introduction of the common currency, the countries within the zone have grown further and further apart instead of growing together into a single economic zone,

partly because there are no longer any currency fluctuations to offset competitive discrepancies.

 

 

 

As we noted as early as February 6, the community now consists of countries like Germany and Finland on the one side, with large current account surpluses, and countries like Greece and Portugal on the other, with massive deficits.

The latter, unable to keep up with the continent's powerhouse economies, lived on credit for years, partly as a result of low interest rates.

One conclusion would be a common economic policy for the entire EU - that is, arguing that a common monetary policy REQUIRES a common fiscal, ie government budget, policy.

But this is an idea that meets with fierce resistance, since hardly any country is willing to relinquish control over its own budgetary and industrial policies.

So what can the community do to avert crises like the one that happened in Greece in the future? What should happen in the event of the worst-case scenarios become reality?

Der Spiegel attempts to answer these, and other, crucial questions in this fascinating feature.


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