The Future of the Euro
I remember, in the early days of the Euro, feeling puzzled and wondering if the new currency would really catch on.
I grew up in Stuttgart – spent my teenage years visiting beaches in Spain, cathedrals in France, and mountains in Switzerland and Northern Italy. Someplace I probably still have a few Deutsche Marks stashed away in a scrapbook…
I mentioned yesterday that the Euro is under stress. NPR recently aired an interview with James Surowiecki, a financial columnist for The New Yorker. Topics of discussion included the sustainability of the Euro as a currency.
Could Germany pull out? Could it go back to using the Deutsche Mark? It seems like a long shot. But the fact that speculation exists will probably just feed the speculation.
A number of West African nations peg their currency to the Euro. So do Bosnia, Bulgaria, Denmark, Estonia, Lithuania, and Latvia. If just Germany left the Eurozone, the value of the Euro would decline dramatically. If other countries followed, the Euro could disappear as quickly as it came on the international monetary scene – or shrink to the level significant that, say, the Italian Lire had in the 1980's.
It would be traumatic. But the world would adjust.
