Q: Is the euro going to survive as a viable currency given the weakness of the European Union’s economy?
A: Yes. European policymakers have a great deal of political and economic capital invested in the euro and will take every step possible to ensure its survival. The common currency has reduced transactions costs in Europe and improved economic efficiency. Northern Eurozone countries, including Finland, Germany, Austria, Belgium, and the Netherlands, have strong economic fundamentals. Even with current grave concerns about Europe, the euro has recently equaled around $1.44 versus an average of $.90 in 2001. If solutions to European’s debt problems among its southern members cannot be resolved, weaker nations, such as Greece, might leave (either temporarily or permanently), but the euro should survive.