I often wonder if it would not be better if the Euro did end. It is pretty clear to me, in hindsight, that it was a mistake in the first place. It does not necessarily follow that it would be better for the countries of Europe to return to having their own currencies, given the huge disruption that would ensue, but it seems at least possible that the long term gain would be worth the short term pain.



The problem with large areas having a single currency is that it makes regional adjustment very hard. If Greece had had its own currency when its real estate boom collapsed, the currency would have fallen in value, boosting exports and helping to stave off unemployment. On the Euro, this could not happen. Greece has been forced to try to re-balance its prices through deflation, a very slow and painful process.



Large countries that successfully implement single currencies over a large area all have ways in which there is re-distribution from parts of the country that are doing well to those that, at any time, have a lack of demand. That seems to be politically impossible in Europe. If that continues to be the case, the cost of the lack of adjustability over the long term could outweigh the short-term cost of a breakup. Hopefully, the countries of Europe could maintain at least free trade among themselves, but each have their own currency.