# The EURO Experience : Good or Bad? **URL:** \ **Category:** Great Debates\ **Created:** [October 28, 2004, 1:40pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662 "2004-10-28T13:40:05Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [October 28, 2004, 1:40pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/1 "2004-10-28T13:40:05Z")
As far as I know, three european nations opted out of the Euro common currency scheme…they were the UK, Denmark, and Sweden. How has this turned out for them? As far as I can see, the conversion to the Euro has created winners and losers. The winners: -France and Italy: conversion to a stronger currency (the Euro) has resulted in lower cost of imports, hence a benefit. The losers: -Germany (big time): abandoning the Mark has meant that Germany can no longer help its export-oriented industries by adjusting exchange rates. This has led to very high and persistent unemployment, plus huge budget deficits. So, how has the UK fared by keeping the pound? I’d say their economy has done much better than Germany’s! As for Denmark, it is so small (essentially an economic appendage of germany), I don’t think it has mattered much, except that having Germany in recession can’t be good for the Danish economy. ---
**Author:** ![Rashak\_Mani](https://avatars.discourse-cdn.com/v4/letter/r/ea666f/32.png) [@Rashak\_Mani](https://boards.straightdope.com/u/Rashak_Mani)\ **Post date:** [October 28, 2004, 1:53pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/2 "2004-10-28T13:53:03Z")
High Currency makes exporting harder… not that great an advantage actually. I feel quite the contrary… lower value currency would help european industry. From what I’ve read Denmark and Sweden are doing fine… Norway that is outside the EU is doing well too. The UK I’m not too sure, the pound is very expensive too. ---
**Author:** ![Rune](https://avatars.discourse-cdn.com/v4/letter/r/e68b1a/32.png) [@Rune](https://boards.straightdope.com/u/Rune)\ **Post date:** [October 28, 2004, 2:01pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/3 "2004-10-28T14:01:49Z")
Hey! What’s this stuff about appendage?! Actually the Danish economy is in excellent condition. A consistent surplus for many years. Relative low unemployment (compared to European average). Relative fair growth (compared to Germany). The higher oil and coal prices are actually a boon for us. Though Denmark is part of the Euro in all but name, since it has followed a fixed exchange rate policy with the Euro (and before that German Marks). Most economics thinks we’ d do even better adopting the Euro in full, and the Danes are turning that way also – there’s going to be a vote about it sometimes in 2006. Germany’s trouble is hurting Denmark a bit (as is the new dollar-zlothy). Personally I think the German trouble has little to do with the Euro, and the Euro is being used as a scapegoat for incompetent politicians and labour organisations unwilling to face the new reality of globalisation. ---
**Author:** ![Mops](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mops/32/16494_2.png) [@Mops](https://boards.straightdope.com/u/Mops)\ **Post date:** [October 28, 2004, 3:42pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/4 "2004-10-28T15:42:43Z")
The influence on Germany has not been significant macroeconomically AFAIK - the D-Mark didn’t fluctuate wildly wrt the other European currencies before. There has been a major influence - a psychological one. On changing to the Euro a lot of retailers and restaurants took the occasion to adjust some “signal” prices on the occasion of the changeover. As these were typically items with well-known prices, for items that were paid in cash, a public perception of an overall large increase in prices arose (the big expense items, like rent, utilities, insurance, etc. did not appreciate in the changeover, but people did not notice this as these big expenses are usually paid out automatically from one’s bank account). This perception of a high “felt” inflation, combined with concerns about what the implication of the last years’ tax/social security/etc. reforms for one’s houshold budget were going to be (and we Germans tend to always assume the worst), led to people holding on to their money, an increased savings rate and a drop in domestic demand. This has contributed much to the last years’ lack of growth. ---
**Author:** ![Merkwurdigliebe](https://avatars.discourse-cdn.com/v4/letter/m/74df32/32.png) [@Merkwurdigliebe](https://boards.straightdope.com/u/Merkwurdigliebe)\ **Post date:** [October 28, 2004, 5:24pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/5 "2004-10-28T17:24:18Z")
Yeah, AFAIK, Denmark is basically in the Euro without actually recieving any kind of benefit that members have. Their currency is tied, so its only a matter of what the denominations are. But then, you don’t want to mess with any kind of consumer spending that may be affected by the increase. The Krone/Euro conversion rate is really hard to do in your head. Its something like 7 to 1 and maybe that would keep people from actually doing the conversion in their head and thinking in terms of old prices. I don’t really think this would be the case, though, because in Spain, where there was also a very strange conversion rate, people still think in pesetas for large sums of money. But in Germany the conversion was 2 to 1, so it made things easier, and people don’t really use Marks for their mental calculations so much now. But would the benefit of changing for Denmark outweight the possible negative side-effects of consumer behavior? I don’t know ---
**Author:** ![Alien](https://avatars.discourse-cdn.com/v4/letter/a/57b2e6/32.png) [@Alien](https://boards.straightdope.com/u/Alien)\ **Post date:** [October 28, 2004, 7:06pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/6 "2004-10-28T19:06:35Z")
> [@ralph124c](#): > > As far as I know, three european nations opted out of the Euro common currency scheme…they were the UK, Denmark, and Sweden. How has this turned out for them? As far as I can see, the conversion to the Euro has created winners and losers. The winners: > -France and Italy: conversion to a stronger currency (the Euro) has resulted in lower cost of imports, hence a benefit. > The losers: > -Germany (big time): abandoning the Mark has meant that Germany can no longer help its export-oriented industries by adjusting exchange rates. This has led to very high and persistent unemployment, plus huge budget deficits. > So, how has the UK fared by keeping the pound? I’d say their economy has done much better than Germany’s! As for Denmark, it is so small (essentially an economic appendage of germany), I don’t think it has mattered much, except that having Germany in recession can’t be good for the Danish economy. I think your missing the main point, namely the advantage of having a single currency within a strongly integrated trade union. In the long run, the positives will outweight the negatives, even in those countries who don’t do well in the beginning. Think each state in America having their own currency … In the 80s and 90s, European currencies, yes even the pound, were frequently speculated against, leading to economic instability. With the Euro, those days are gone. ---
**Author:** ![Alien](https://avatars.discourse-cdn.com/v4/letter/a/57b2e6/32.png) [@Alien](https://boards.straightdope.com/u/Alien)\ **Post date:** [October 28, 2004, 7:32pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/7 "2004-10-28T19:32:33Z")
> [@Alien](#): > > I think your missing the main point … I think _you’re_ :smack: ---
**Author:** ![Hemlock](https://avatars.discourse-cdn.com/v4/letter/h/c5a1d2/32.png) [@Hemlock](https://boards.straightdope.com/u/Hemlock)\ **Post date:** [October 29, 2004, 11:40am UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/8 "2004-10-29T11:40:00Z")
The countries that kept their own currencies also kept their own monetary policies. In other words, they set their interest rates to suit their own economic conditions, not someone else’s. They have all gained from this, relative to the countries that adopted the Euro - which were forced to adopt interest rates too high (recession) or too low (inflation). Also, countries that kept their own currencies retained exchange rate flexibility - their currencies gained or lost in value in accordance with their own economic conditions, not someone else’s. Again, this has served them well relative to countries that adopted the Euro. Finally, countries that kept their own currency don’t run the risk of other countries debasing their currency by overspending. In the Euro zone, countries whose govts run huge deficits spread the resulting pain among all the other users of that currency. (A govt that runs huge deficits is punished by international markets in the form of a declining currency and/or higher interest rates.) So, eg, Germans have to subsidize Italians for their profligate social security system. The benefits of a common currency are (in theory) lower transaction costs and greater transparency of cross-border prices. But in practice, cross-border transactions are priced in dollars anyway, or you hedge. And there’s no evidence of Europe-wide price equilibrium as a result of the Euro - there are too many other variables keeping the different economies apart. The people who pushed the Euro at the start admitted it was for political, not economic reasons. Countries that scrapped their currencies and adopted the Euros were suckers. ---
**Author:** ![SentientMeat](https://avatars.discourse-cdn.com/v4/letter/s/43a26b/32.png) [@SentientMeat](https://boards.straightdope.com/u/SentientMeat)\ **Post date:** [October 29, 2004, 11:53am UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/9 "2004-10-29T11:53:01Z")
It’s incredibly difficult to compare like for like in assessing the impact of the Euro on a given country: as a general trend, as one might expect, joining the Euro appears to be borderline negative for large, economically strong countries, borderline positive for large but less strong countries and extremely beneficial to smaller and less economically developed countries (witness Ireland). Germany is a _very_ tough one to call, since the effects of reunification with a Soviet economic ruin took, and still take, an enormous toll. Ultimately, as others have said, the _political_ and “visionary” benefits are what drive many supporters, myself included, to the extent that some slight overall economic detriment might be considered an acceptable price to pay. One could certainly not claim that it has been a _disaster_. ---
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [October 29, 2004, 1:24pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/10 "2004-10-29T13:24:26Z")
> [@Hemlock](#): > > So, eg, Germans have to subsidize Italians for their profligate social security system. > . It’s the other way around. The two main culprits of what you’re mentionning (overspending without regard for the rules that precisely _these two countries_ insisted on out of fear they could be hurt by the deficit ran by supposedly less vertuous members of the EU) are France and Germany. They’re both running deficit higher than what is allowed by the treaties, and don’t show any intent to comply with them (except in words, of course). Being the main members of the Eurozone, they eventually managed to get away with this, after lenghty talks, instead of facing the penalties they should have faced according to the treaties. Which legitimately infuriated the “vertuous” countries. ---
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [October 29, 2004, 1:30pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/11 "2004-10-29T13:30:16Z")
> [@Hemlock](#): > > The countries that kept their own currencies also kept their own monetary policies. In other words, they set their interest rates to suit their own economic conditions, not someone else’s. They have all gained from this, relative to the countries that adopted the Euro - which were forced to adopt interest rates too high (recession) or too low (inflation). > > Also, countries that kept their own currencies retained exchange rate flexibility - their currencies gained or lost in value in accordance with their own economic conditions, not someone else’s. Again, this has served them well relative to countries that adopted the Euro. > > . What you’re saying is true. It’s the reason why, since the economical situation in Chigago and Los Angeles for instance are rarely similar, everybody favors the continuing existence of the Illinois dollar and the Californian peso, rather than the adoption of a common american currency. ---
**Author:** ![pantom](https://avatars.discourse-cdn.com/v4/letter/p/34f0e0/32.png) [@pantom](https://boards.straightdope.com/u/pantom)\ **Post date:** [October 30, 2004, 6:13am UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/12 "2004-10-30T06:13:39Z")
**clairobscur** : I know you meant that sarcastically, but in fact, if each city, and the surrounding area that depended upon it, had its own currency, things might be a lot better than they are. In an admittedly ideal world, this idea, which was actually seriously argued in the book [Cities and the Wealth of Nations,](http://www.amazon.com/exec/obidos/tg/detail/-/0394729110/qid=1099112084/sr=8-4/ref=pd_csp_4/104-9520995-0745528?v=glance&s=books&n=507846) by Jane Jacobs, just might work well. The very few examples that we have of modern cities that for a time have been on their own - Singapore and Hong Kong - show quite clearly that it’s hardly a bad idea. To see why, you have to reduce economic life to its lowest common denominator and work your way up. This was done in historical times, during the Dark Ages, when, in Western Europe, the economy mostly ground to a halt and people were thrown back on the land to survive. After a time, towns began to revive. To quote Henri Pirenne from _Medieval Cities_: > [@](#): > > Perhaps the most striking character of the feudal State was its almost absolute lack of finances. In it money played no role. The demesnial revenues of the prince replenished only his privy purse…Landed capital had been everything, and now by the side of it was made plain the power of liquid capital. Heretofore money had been sterile…Trade, naturally, released this captive money and restored its proper function. Thanks to this it became again the instrument of exchange and the measure of values, _and since the towns were the centers of trade it necessarily flowed towards them_. The revival of trade began with the formation of commercial centers where merchants gathered, places otherwise known as cities. As soon as cities once again began to form, money began to circulate. City economies need money; rural economies can get along with payments in kind. Given that, the ideal economic world would feature individual cities with their own currencies. In the real world this is mostly impractical, since city-states are militarily vulnerable. But if something like transaction costs were an obstacle, places like Singapore would be impossible; indeed, small countries like Taiwan or Switzerland would have a rough time. Obviously, this ain’t necessarily so. Currencies function as a measure of value between the outputs of different economies. If one place is doing better than another, its currency will have a tendency to rise relative to other places. This makes its goods more expensive to the outside world, but it also cuts the price of imports, and if it’s an advanced economy, a rise in its currency could give the place a competitive advantage by cutting the price of raw material imports. Even if a currency is fixed in value, if the place allows interest rates to rise and fall in sync with the demand for and supply of money, this will give an economy good and appropriate feedback. Therefore, the more closely tied a currency is with a uniform economic area, the more timely and appropriate the feedback it gives. The euro unites such disparate places as Ireland, Greece, and Germany. Greece is Mediterranean, Germany practically landlocked, while Ireland is way out in the northwestern corner of Europe, physically apart from the rest of Europe. Each speaks a different language. Obviously, in any real world, their economies are going to run on different cycles. To arbitrarily throw them together is to ask for trouble, since none of them are going to get the proper feedback they need at the time they need it from the value of their currencies or from interest rates, which are very closely tied to the same monetary policy that would decide currency values. Recently, Greece has been booming along and would benefit from a rising currency. Germany hasn’t been, and would benefit from a stable or falling currency. You can have a currency union across lots of different countries, as long as you let interest rates rise and fall within each country. This was the way the classical gold standard worked. Gold was, in a sense, the universal currency. But each country set its own interest rates, and those rates were determined in part by the flow of gold between different countries. An outward flow would raise interest rates as the supply of money fell, and an inward flow would lower rates as the supply of money increased. Outward flows generally happened when an economy was doing well, and vice versa; thus interest rates provided appropriate feedback as to how an economy was doing, and acted as a governor that either automatically stimulated the economy when needed, or restrained it when it was doing well. This didn’t work perfectly, but it worked well enough that Paul Einzig, a well-respected writer on international economics in his day, wrote in his book _The History of Foreign Exchange_ that > [@](#): > > Generally speaking, as far as a substantial part of the Western world was concerned, the years immediately before 1914 constituted the most stable period in the history of Foreign Exchange since Augustus and his immediate successors. Moreover, the trend pointed towards the stabilisation of the remaining unstable currencies. It seems highly probable that, had it not been for the two World Wars, this progress would have continued. That progress was made under a uniform standard for fixing currency values, but it was one that allowed each country to have its own monetary policy and its own level of interest rates and currency parities. The euro doesn’t allow for rising or declining currency values between countries, or for rising or declining interest rates within a country. Also, fatally, the ECB sets an inflation target of 2%. This is so low that it just about permanently condemns the larger countries, Germany and France, to perpetual stagnation, because if the smaller countries are growing quickly and therefore running higher rates of inflation, Germany and France have to be restrained in order to keep the average rate of inflation throughout the eurozone at or below 2%. This was recently pointed out in _Barron’s_, an investment magazine here in the US, in their European Trader column. The euro will fail, either formally as countries withdraw from it, or informally by keeping Europe perpetually stagnant. This is not merely the view of your humble crackpot, moi; at least one economist with a paying job at an investment bank put forth the view that investors need to start weighing the possibility of a [Euro wreck (pdf file).](http://www.morganstanley.com/ourviews/articles/euro_wreckage_report.pdf) ---
**Author:** ![Hemlock](https://avatars.discourse-cdn.com/v4/letter/h/c5a1d2/32.png) [@Hemlock](https://boards.straightdope.com/u/Hemlock)\ **Post date:** [October 30, 2004, 8:27am UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/13 "2004-10-30T08:27:01Z")
> [@clairobscur](#): > > What you’re saying is true. It’s the reason why, since the economical situation in Chigago and Los Angeles for instance are rarely similar, everybody favors the continuing existence of the Illinois dollar and the Californian peso, rather than the adoption of a common american currency. Regional economic differences in the US can be compensated for by a huge federal govt, which taxes and redistributes wealth from rich to poor (people and places) through various programs and through a willingness/ability of people/businesses to migrate to areas of greater economic strength. The EU does not have a federal govt raising and spending the bulk of tax revenue. Nor does it have internal labour mobility, owing not least to language differences (how can a Polish teacher move to Spain or a British factory worker move to Greece?). It also has major structural impediments (welfare systems and employment ‘protection’ laws) which further reduce non-monetary flexibility. The utopians behind the Euro imagined that by locking all these countries into a single currency they would somehow force US-style conditions into existence (especially the big federal govt, of course, which is basically these people’s agenda). So in answer to the OP: the experience has not been much good (obviously convenient to tourists travelling across different borders, but also bad for consumers in that retailers rounded up prices when they changed over to the new currency). For the bulk of people living in under-performing economies, it has been bad. The mind boggles that people like **SentientMeat** in “Cardiff, EU” can claim that high unemployment and freeloading national govts are “slight overall economic detriments”. The duty of govt is to look after people’s lives, not indulge in utopian visionary schemes that damage purchasing power and employment opportunities. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [October 30, 2004, 8:59am UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/14 "2004-10-30T08:59:32Z")
I think the point about the money creation rate is telling. Here in the USA, the Federal Reserve controls the rate of new money creation-how does this get decidedin Brussels? For example, suppose the Dollar/Euro exchange rate gets pushed way up (dollar drops, euro rises). Then the german automobile exporters will get hurt…what can they do? Are they allowed to cut their export prices? In regard to IRELAND, I have some relatives there. Ireland has benefitted from the Euro (and EC membership), but at a cost…my relatives tell me that there is almost no farming left in Ireland-they now IMPORT potatoes from Greece! Irish labor is now so expensive that farming is no longer profitable…on of the weird distortions that have arisen from the euro conversion. ---
**Author:** ![GorillaMan](https://avatars.discourse-cdn.com/v4/letter/g/50afbb/32.png) [@GorillaMan](https://boards.straightdope.com/u/GorillaMan)\ **Post date:** [October 30, 2004, 10:00am UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/15 "2004-10-30T10:00:05Z")
The [European Central Bank](http://www.ecb.int/home/html/index.en.html) has a similar role to the Federal Reserve. However, the criticism of overall interest rates not acknowledging local differences is one that applies no matter what scale it works on. It’s true that interest rate decisions may be taken eg to favour German economic recovery at the expense of Spanish growth, but then the Federal Reserve could equally take a decision that would harm California while helping other parts of the country. Similarly, the Bank of England is constantly having to make difficulr decisions between trying to temper the rapid economic growth of London and the south-east, while not further harming the much poorer northern regions. Few people claim that the Common Agricultural Policy is an outdated farce. But it’s not true that farming has disappeared from Ireland - it’s still responsible for one-seventh of the total workforce. And the changes in the Irish economy long pre-date economic union: there’s been huge demographic and social changes over the past thirty years, taking it from being the poorest member of the EU to one of the richest. ---
**Author:** ![pantom](https://avatars.discourse-cdn.com/v4/letter/p/34f0e0/32.png) [@pantom](https://boards.straightdope.com/u/pantom)\ **Post date:** [October 30, 2004, 5:20pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/16 "2004-10-30T17:20:27Z")
Yes, but if it has this effect no matter what the scale, why increase the scale? Obviously, the larger the scale, the greater the damage. Europe had the advantage of lots of countries, each running a monetary policy responsive to reasonably local conditions. It deliberately gave that up for a pipe dream. The effect of this is clear, if you bother to look. I saved the below from the Lex column of the _Financial Times_, from about a month ago, when it commented on this latest attempt at a European recovery: > [@](#): > > Blink and you might have missed it. A few months ago, economists were celebrating Europe’s long-awaited return to growth. Now, as the European Central Bank policy board meets today, come hints that the upturn may have peaked… **Indeed - astonishingly - the employment component of the PMI has been worsening for 39 consecutive months. That puts American complaints about a “jobless recovery” in a new light** …Moreover, eurozone growth still looks too slow to dent the jobless count or seriously improve public finances. That picture might change in the next two years, if global growth surges. But do not count on it. France is unlikely to be the only eurozone government selling assets in a frantic effort to reduce debt. I think the word for the above economic performance is pathetic. I could be wrong; maybe pitiful would be better. ---
**Author:** ![ruadh](https://avatars.discourse-cdn.com/v4/letter/r/d2c977/32.png) [@ruadh](https://boards.straightdope.com/u/ruadh)\ **Post date:** [October 30, 2004, 5:55pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/17 "2004-10-30T17:55:37Z")
> [@ralph124c](#): > > Ireland has benefitted from the Euro That’s debatable. There has been a great deal of inflation since the Euro was introduced, and the strength of the Euro has hurt our exports, which are pivotal to the Irish economy. ---
**Author:** ![furt](https://avatars.discourse-cdn.com/v4/letter/f/439d5e/32.png) [@furt](https://boards.straightdope.com/u/furt)\ **Post date:** [October 30, 2004, 7:02pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/18 "2004-10-30T19:02:22Z")
> [@Hemlock](#): > > The duty of govt is to look after people’s lives, not indulge in utopian visionary schemes that damage purchasing power and employment opportunities. That is a value statement. I think many people have much grander vison of government than you do. Not that _I_ do… ---
**Author:** ![GorillaMan](https://avatars.discourse-cdn.com/v4/letter/g/50afbb/32.png) [@GorillaMan](https://boards.straightdope.com/u/GorillaMan)\ **Post date:** [October 30, 2004, 9:18pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/19 "2004-10-30T21:18:37Z")
> [@pantom](#): > > Yes, but if it has this effect no matter what the scale, why increase the scale? Obviously, the larger the scale, the greater the damage. One could equally ask, why not reduce the scale? Why not have separate economic controls for US states, or for regions of Britain? (Yes, I’m being slightly hypothetical - but the scale of the eurozone is comparable to that of the US in both population and economic terms.) ---
**Author:** ![Alien](https://avatars.discourse-cdn.com/v4/letter/a/57b2e6/32.png) [@Alien](https://boards.straightdope.com/u/Alien)\ **Post date:** [October 30, 2004, 9:41pm UTC](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662/20 "2004-10-30T21:41:09Z")
Well, I’m no big supporter of the EU. But if there’s one good thing done by the EU it is introducing the Euro, even if the transition meant a one-time bump in prices. EU is not a country (yet), it’s a trade union: Free flow of goods, services, capital and people. The benefits of having a common currency _within a unified market_ far outweighs any negatives. EU and the Euro is not an attempt to mimic the US, though there are some in Europe who wants to go down the road. The idea that the Euro cannot work because the national economies are running on different cycles is pointless. Investments will always flow where return is highest. Governments can still influence their economies by proper management of interest rates, deficits and taxes. And you all seem to forget that several EU members has enjoyed massive infusions of capital from the EU. For example, GorillaMan’s argument that “interest rate decisions may favor German economic recovery at the expense of Spanish growth”, fails to include that Spain has received massive amounts of capital over the last few years to stimulate regional growth. And because of that Spain has done quite good. Singapore, Hong Kong, Switzerland and Taiwan are all economies with advantages that makes them uncomparable to EU countries. Singapore and Hong Kong enjoys near tax-haven advantages. Switzerland’s geographical location is crucial for transportation of European goods, and they have signed a broad trade agreement with EU members. . Finally, I don’t know if the argument was meant seriously or not, but the idea that cities or small countries could be better off having their own currencies is ridiculous. That’s treating cities like bubbles, disregarding that a currency is a tool for trade between regions and therefore vulnerable to outside influence, like, for instance, international speculation. It may have worked 300 years ago, and it may work in North Korea today - but not in our oil-driven, global, economy. And rural economies cannot get along without money any more than cities. We’re just to modern. And btw, Ireland is _not_ in the northwestern corner of Europe. [Next page](https://boards.straightdope.com/t/the-euro-experience-good-or-bad/271662.md?page=2)