> Could you please explain your argument about inflation? > Couldn't each country decide on its own inflation, without harmonization nor a common currency? Wi

> Could you please explain your argument about inflation? > Couldn't each country decide on its own inflation, without harmonization nor a common currency? Without a common currency you can handle your own inflation. But if there are many different moneys in a market, and they fluctuate relative to each other, it's much more difficult to make business. Moreover, when countries have independent monetary policies, they eventually indulge into protectionism (although they try to disguise it into something else). Therefore there's no more common market, with the corresponding economies of scale. Before the Euro, european countries already had a "monetary snake" system which limited money fluctuation and ability to indulge into protectionism, to favor business inside Europe. Finally, being known as unable to raise inflation has a positive effect: since lenders are confident that Euro can't be significantly devalued, they consider the loan as less risky, and therefore accept lower interest rates. Look at Greece: people are afraid that the country might go bankrupt, so they only lend at high interest rates, putting Greece into further trouble. Know, imagine that Greece was able to devalue its currency through inflation: lenders would anticipate massive inflation, and protect themselves with outrageous interest rates. The alternative for Greece would be to borrow into a stronger, foreign money, but then if their economy tanks, the debt would explode with soaring exchange rates, and the whole country would default. Given this high risk of default, interest rates would soar even if labelled in a strong currency. Being tied to a strong currency, with some rules which keep it strong, forces you to drive your economy responsibly. Unfortunately for Greece, the Euro rules weren't strong and enforceable enough to prevent their politicians from acting irresponsibly. Know they're going to pay...