If there is no perfect historical precedent that shows the way out of the current crisis, one thing is shown time and time again: without a political union that allows for fiscal redistribution and a degree of economic convergence, currency unions tend to fail.
Initially, they demanded convergence of currency rates and interest rates.
As their complex bets on global macroeconomic trends, or on the convergence of currency, stock or bond prices, started losing tens of billions of dollars in the late 90's, they gave way to Silicon Valley's venture capitalists as the rock stars of money management.
The concept of the euro was that a single currency would force economic convergence and integration.
However, those of us who are frustrated with the inability of world leaders to find common ground on issues that pit national sovereignty against global convergence — corporate regulation, currency rates, trade agreements — know that Bismarck's major contribution was the creation, driven by economic and social policy, of the welfare state and the co-determination model of corporate governance.
The markets have tended to behave as if default risks were essentially similar across the currency zone hence the talk of "convergence plays" on countries close to euro entry.
Still, doomsayers who worry about the Year 2000 computer bug may want to take notice that the convergence of the currencies in "Euroland," the 11 member countries in the monetary union, appeared to take place without any significant computer glitches.
"There can't be a single currency without economies heading toward more convergence," he said.
"There really isn't too much economic logic to convergence," said Vincent Low, a currency strategist in the Singapore offices of Merrill Lynch.
But it was hoped that the single currency itself would bring about an "endogenous" convergence as it allowed goods and labour to move around the euro area ever more freely.
