On top of that there are huge cultural differences within the Euro area. Extreme Cultural Differences Germany is very financially responsible. Ever since the terrible hyper-inflation the country experienced after World War I,it's been extremely inflation averse and incredibly careful about spending and borrowing. In general, Germans work hard, expect little in the line of state benefits and meticulously pay all of their taxes. Many Greeks, on the other hand, enjoy generous state benefits and don't pay taxes. Greece has a terrible problem, it has never collected the majority of the taxes it imposes on its citizens and its always been this way. Joining the Euro just amplified it. The German view is that doesn't work. If you want our money, you need our morals. As the debtor countries headed towards default the whole continent of Europe was in danger. Even though the economies of the debtor countries are relatively small, they posed a huge threat because the European financial system is so interconnected precisely because of the Euro Remember, the debtor countries borrowed money from banks, investors, and other governments throughout Europe, as the debtor countries get closer to default everyone who lent them money becomes weaker and everyone who lent those lenders money also becomes weaker, and so on and so forth. A problem in one country could reverberate across the whole continent, triggering a chain-reaction of default. If Greece defaults then Spain could default, Italy, Portugal, and Ireland would be next, then France, then Germany pretty soon it could spread not just across Europe but across the world, Fiscal Union or Breakup. The problem is even if the debtor nations adopt austerity measures and even if the bailout from Germany in the stronger countries helps them pay down their debts and avoid the immediate crisis. There's no system in place to prevent this from happening again, brings us back to that fundamental division of monetary policy and fiscal policy. Ultimately, the euro area requires a fiscal union to match its monetary union, or neither. That is, there must be a political organization with authority to set fiscal policy within every Euro area country. It must have the power to cut spending, raise taxes and set laws. A fiscal union like this could actually prevent excessive borrowing and spending. However, this is an enormously complicated and unpopular notion. It means surrendering sovereignty to a higher power, in essence, a United States of Europe Yet without a centralized fiscal union countries will continue to run deficits, accumulate debt, degrade the value of the Euro and threatens stability in Europe. Can Europe take the necessary steps and create a fiscal union alongside the monetary union? Or will the monetary union breakup and the Euro disappear?