‘Europe's underlying debt troubles could undermine its currency
’ was the stark warning delivered by the American White House’s Economic adviser Paul Volcker
last Thursday as he made an appearance at London’s School of Economics
Mr Volcker, left, himself a former chairman of the US Federal Reserve
and a widely respected economist, told those in attendance that it was difficult to have a common currency without a common government, admitting that “initially I thought the Euro was a good idea
"I think Europe is going to have to decide in the end whether to get more integrated or get less integrated, in which case the Euro comes into question,
" Volcker said, before repeating that there is in his opinion still a threat of the Euro disintegrating.
He made repeated references to the “inherent problem
” of trying to manage a common currency that's not tied to one government or fiscal policy while adding that the bailout deal reached over the weekend is not a long-term solution.
"Europe was forced to react, and their first reaction was to buy time,
" he said. "If the time isn't used very constructively, it doesn't cure the problem.
His damning comments came just days after European officials announced they had reached an agreement on a rescue package worth €750 billion to prevent Greece's debt crisis from spilling over into other vulnerable European economies
While the plan’s announcement initially sparked a powerful global stock market rally, doubts still remain as to whether countries can successfully cut their borrowing and spending and raise taxes enough to put public finances back on a sustainable path.
Countries that have switched to the single currency have enjoyed lowered borrowing costs, which left unmonitored has allowed some to build up what are increasingly becoming unmanageable levels of debt.
Since Eurozone countries are no longer able to devalue their own currency to control the debt, those in such financial trouble as Greece, have instead been forced to impose harsh and very unpopular, but necessary, austerity measures.
While protesters have hit the streets of Athens and spurred violence in objection to the austerity measurers, there is also a growing backlash against the deal in richer countries like Germany, where taxpayers resent having to foot the bill.
But despite this, no countries are fleeing the Eurozone just yet.
In fact, this week the European Commission took another step towards adding a 17th member state to the Eurozone when it ruled that Estonia had met the necessary financial conditions for inclusion
Eight other European Union countries are workings toward joining the Eurozone with only two members of the European Union (United Kingdom and Denmark) declining to join.
European Commission President José Manuel Barroso
, in his announcement about Estonia's upcoming addition to the Eurozone, referred to the recent worries about the future of the currency stating that “in all this debate, let's remember: nobody wants to leave the Euro, and others are seeking to join.