ABSTRACT
Some say that since the dollar functions flawlessly in the US, the euro can function perfectly well in Europe, as long as the scope of fiscal integration is increased and barriers to the flow of labour and capital are removed. However, in the US the currency area is contiguous with the area of American statehood, the source of citizens’ identity. In contrast, Europe comprises states that group together nations using various languages, cemented by distinct historical and cultural traditions. In many countries there are regions that are economically uncompetitive for a long time, from where people emigrate, and which become permanent recipients of fiscal transfers from other parts of the country. However, prolonged problems with competitiveness become more dangerous when they concern the entire state. We believe European states should not be exposed to the risk of a situation in which the only escape from many years of high unemployment is mass emigration and the forced dispersion of the nation around Europe. In addition, while internal migration and interregional fiscal transfers are tolerated in many countries for years, mass cross-border migration has become politically disruptive in the EU and permanent fiscal transfers to deficit countries are officially regarded as unacceptable.
