Jens Nordvig (New Direction)
The Eurozone has generally been considered a great success in its first ten years. A change occurred around 2010 when the world markets were hit by the so-called financial crisis. Until then, no one had really been thinking about the situation in which a Eurozone member would want (or even have to) leave the joint program. It was during the financial crisis that this eventuality was first openly discussed. It is clear that the crisis was the first acid test of the common currency and no one could imagine other possible scenarios of the future development. The financial crisis, however, triggered a wave of uncertainty and doubts about the future direction of the Eurozone. Europe’s southern states such as Greece, Italy, Spain and Portugal were all, at least briefly, close to fail and thus leave the Eurozone. The financial crisis has been successfully stabilized since 2012, though the Eurozone is still facing new problems and challenges.
One the the major problems is political opposition to further integration, whereby EU members are trying to postpone their accession to the Eurozone as much as they can. It is no longer an exception that countries openly reject the euro. For many opponents, the Eurozone has become a kind of “boogeyman”, which they use to point to the issue of a democratic deficit in the EU. The common currency is therefore often referred to as a further consolidation of the dictate or a loss of own sovereignty. These responses can be observed, for example, during the negotiations about Greece’s rescue, which is effectively forced to abide by the negotiated measures. However, it is concurrently a situation that is very unfavorable for the current Eurozone members because it suggests between the lines that the common currency is being taken into a blind alley.
Many therefore perceive a quick exit from the Eurozone as the only way out. Leaving the joint program is, however, a highly complicated affair, whereby all the other Member States would have to deal, willingly or not, with such a dire scenario. It is, by and large, a legally complex process with immense economic consequences that would hypothetically reach up to the global level. It could be also expected that the breakup of the Eurozone would have a bearing on the very functioning of the Union. Everyone is therefore trying to avoid such a scenario, though the question remains how much longer this could last. The existence of a functional Eurozone actually means much more than the common currency.
(The study can be downloaded here: http://europeanreform.org/files/CostBenefitsBreakup_-_Jens_Nordvig.pdf)