"The establishment of the euro is widely regarded as an important cause of the sovereign debt crisis that has ravaged Europe since 2009.  Given the difficulties inherent in implementing a common currency and monetary policy for countries as different as Greece and Germany, the Netherlands and Portugal, and Italy and Finland, why did Europeans support the adoption of a single currency?  Consider the following: During the pre-euro era, if a tourist had started in one of the 12 countries that adopted the euro in 2002 with one hundred German marks, Irish pounds, or Italian lira and then traveled to each of the 11 other eurozone countries doing nothing in each except exchange money into the local currency at each stop, and was charged a standard 3 percent per conversion, he or she would have spent about 28.5 percent of the original sum on commissions alone.”

Professor of Economics at Wesleyan University and author of WRONG: Nine Economic Policy Disasters and What We Can Learn from Them, Richard S. Grossman is sharing seven little-known facts about economic disasters all this week on Tumblr.

Image credit: Euro banknote and coin image taken by Marcus Bornestav. Public domain via Wikimedia Commons.

"The establishment of the euro is widely regarded as an important cause of the sovereign debt crisis that has ravaged Europe since 2009.  Given the difficulties inherent in implementing a common currency and monetary policy for countries as different as Greece and Germany, the Netherlands and Portugal, and Italy and Finland, why did Europeans support the adoption of a single currency?  Consider the following: During the pre-euro era, if a tourist had started in one of the 12 countries that adopted the euro in 2002 with one hundred German marks, Irish pounds, or Italian lira and then traveled to each of the 11 other eurozone countries doing nothing in each except exchange money into the local currency at each stop, and was charged a standard 3 percent per conversion, he or she would have spent about 28.5 percent of the original sum on commissions alone.”

Professor of Economics at Wesleyan University and author of WRONG: Nine Economic Policy Disasters and What We Can Learn from Them, Richard S. Grossman is sharing seven little-known facts about economic disasters all this week on Tumblr.

Image credit: Euro banknote and coin image taken by Marcus Bornestav. Public domain via Wikimedia Commons.