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While the threatened breakup of the euro zone, is seen as a potential catastrophe by many, analysts believe that it could do just the opposite. As many see it, euro is too weak for booming economies but too strong for growth-challenged countries.

Since the eurozone debt crisis began, countries with huge deficits, like Greece, Portugal, Ireland and Spain, faced tough austerity measures, undermining their ability to compete. If the euro is dismantled, it is believed that these weaker economies can go back to their own currencies which could devalue but would spur exports growth and be competitive. Germany being largest national economy in Europe and the world's second largest exporter, runs a large trade surplus. If its deutsche marke is restored, the value of the currency would appreciate and surplus would be translated across into increased public and consumer spending and rise in the standard of living of German households, which in turn, would further fuel imports from euro countries, helping to rebalance Europe’s economy.

However there are counterarguments to this - that disadvantages could negate any immediate economic gains and that the break up of eurozone could potentially trigger another massive global financial crisis.

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fxpie
fxpie
1 year ago
 

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“The threatened breakup of the euro zone, which many see as a potential disaster, would actually open the door to renewed economic growth, not just for weaker members of the zone, but for Europe as a whole,” A statement by Capital Economics analysts including Roger Bootle in London.
But Honestly, Wouldn't this bring them back to the pre-Euro Zone time? Was it actually better than now? There won't be a definite answer until then.

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Warren
Warren
1 year ago

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There can be argument about the merits and dismerits about this for years to come individual having his or her opinion.There were conditions laid down before a country member of the European Union can join the monetary union which one of the core condition was that the government budget deficit should not be more than 3% of the GDP.What I think happened was some were no longer observing this rule after joining the monetary union and no strict penalty for offenders so things get blowned out.But with the measures being taken of late we hope it will bring things into control.Dissolving the EURO will damage EURO's credibility internationally and easy business transaction between the Euro zone.

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Harold
Harold
1 year ago

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Overall its no mystery that in the Euro there are some countries that are weak and dead weight and are being carried by stronger nations. Example would be Germany and Greece. Germany is the strongest of the nations in the Euro Currency. The country is a top exporter of goods, controls its debt and has lower unemployment. Therefore because it is so strong it keeps weaker nations like Greece afloat. Greece has horrible debt problems, not a high export producing country & is riding the wave of the Euro because it is part of it. When in fact its debt problems that is holding the Euro Down. By dissolving it Stronger nations will appreciate their currency value without having to worry about the problems of another country

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fuji022
fuji022
1 year ago