No one doubts that Germany and most other eurozone members would prefer the single currency to continue.

Devaluation is not an option because of the common currency.

As a result, investors and depositors have learned that the erection of financial barriers within the currency area is indeed a genuine risk.

The final question is what such a eurozone banking union would mean for the single financial market, and especially for EU countries that are outside the single currency.

Indeed, in the extreme, some countries could find themselves considering whether to leave the single currency altogether.

For eurozone citizens who do not speak a major language, especially English, mobility across national borders within the single currency area is limited at best.

It would be a delusion to imagine that the eurozone need only follow its current path to ensure the single currency s future.

The euro s survival in 2012 if only by the skin of its teeth confounded skeptics who forecast Greece s exit from the eurozone and the single currency s collapse by the end of the summer.

The common currency is now looked at with suspicion.

Now we have awakened to an existential crisis for the common currency.

The general feeling was that the common currency was doomed.

This is no way to secure the future of the single currency.

Even before it was born, some economists (such as myself) asked whether a single currency would be desirable for such a heterogeneous group of countries.

More realistically, advocates of a single currency reasoned that it would cause people to identify as Europeans, and that the shift to a single European Central Bank would herald a shift of power away from national governments.

And pricing of goods and labor throughout the currency area, which previously had different exchange rates, becomes much more transparent.

A common currency requires unified and centrally agreed monetary and fiscal policies.

The case for capital market integration, and then for a single currency, was similar.

Greece benefited from a common currency, unified capital markets, and free trade with other EU member states.

There have, of course, been many examples in history in which currency unions or single currency states have broken up.

The eurozone s southern European members must reduce their wage costs to claw back the competitiveness that they have lost since adopting the common currency.

Europe s high degree of linguistic fragmentation does not allow the eurozone to absorb a self inflicted crisis, so people move out of the currency area rather than within it.

Indeed, a German proverb to the effect that trust is good, but control is better has been the basis of eurozone leaders policy since the developed world s debt crisis engulfed the single currency s system of governance.

They want to end the common currency, because, in their view, it is undermining the European ideal.

The common currency is the canary in the mine of the global exchange rate system.

CAMBRIDGE The economic recovery that the euro zone anticipates in 2010 could bring with it new tensions. Indeed, in the extreme, some countries could find themselves considering whether to leave the single currency altogether.

First, there is no substitute for timely and coordinated action when the single currency is under pressure.

The convergence of sovereign debt yields implied and required by the establishment of the common currency need not return.

Further, two of the territories under review of the Special Committee share our common Eastern Caribbean currency.

If eurozone governments are unwilling to build the federal institutions needed to stabilize the eurozone, they should either assemble a big enough rescue fund themselves, or accept that the single currency is unworkable in its current form.

In reality, of course, a single currency or fixed exchange rate is not needed for trade to flourish.

Perhaps the same is true of the single currency, which will derive strength and validation from the challenges that it overcomes.

Since the single currency was France s condition for accepting German reunification, Germany played along.

Expansion of the euro zone has therefore been slow, especially in central and eastern Europe, where to date only Slovenia (2007) and Slovakia (2009) have become members of the single currency.

Ten years after the common currency s introduction, the 16 member euro zone has the world s second most important currency, accounting for more than a quarter of all central banks foreign exchange reserves and having overtaken the dollar as the currency of choice for international bond issues.

The eurozone s peripheral countries, including Greece, Portugal, Ireland, and Spain, found themselves pinned to the mast of the common currency, unable to gain competitiveness through exchange rate depreciation.

The Nobel laureate Robert Mundell laid out the conditions under which a single currency could work.

The conclusion seems straightforward. The eurozone s southern European members must reduce their wage costs to claw back the competitiveness that they have lost since adopting the common currency.

The euro s survival in 2012 if only by the skin of its teeth confounded skeptics who forecast Greece s exit from the eurozone and the single currency s collapse by the end of the summer. Indeed, the European Union s future still seems acutely uncertain, owing mainly to a mismatch between rhetoric and reality.

Indeed, without the single currency, many of these countries would have succumbed to a downward spiral of devaluation, default, and recourse to the IMF.

Perhaps one could interpret the common currency as forcing eventual convergence in policies.

Consider the euro no head of state or government has so far been able to present a coherent defense of the eurozone to counter the pervasive unease that now exists towards the common currency.

To be sure, eurozone member states also needed the courage to respond to the crisis of confidence confronting the common currency with concerted action for tighter control of national budgets and improved cooperation.

No one doubts that Germany and most other eurozone members would prefer the single currency to continue. Today s uncertainty concerns whether this preference may be overridden by pressing considerations of national politics, or resentment at the slow pace of reform in certain eurozone countries.

For meaningful burden sharing to work, however, eurozone leaders must stop dreaming that the single currency can survive another 20 or 30 years without much greater political union.

Third, Greece s eurozone partners wield a massive stick that is typically absent in sovereign debt negotiations. If Greece does not accept the conditions imposed on it to maintain its membership in the single currency, it risks being thrown out of the European Union altogether.