Image: Wikimedia/JLogan. Some rights reserved.Since the outset of the sovereign debt crisis in Europe, there has been much talk about the future of the single currency — the euro — and the common market system based on it. Over the past decade, anti-euro parties and movements have grown not only in Greece, where the government considered a contingency plan to revert back to the drachma during Varoufakis' tenure as minister of finance, but also in other battered economies of the south, including Italy, Spain and Portugal.
More recently, the Nobel Prize-winning economist Joseph Stiglitz has indicated that the single currency may very well be the greatest threat to the sustainability of the entire European Union, especially against the backdrop of Brexit and the surge of anti-EU parties across the continent.
Stiglitz’s argument is that the “eurozone was flawed at birth” because it didn’t account for Europe’s inherent diversity, hitherto a trademark of the continent’s success. Not only did the single currency entail “a fixed exchange rate among the countries, and a single interest rate”, but it was predicated on the assumption that a highly diverse region could be managed by the same macroeconomic standards. To save Europe, he recommends splitting the eurozone into two: a ‘strong’ euro for the Northern economies and a ‘weaker’ alternative for those of the South.
