“Badly”, is the easy answer. Badly, for the euro that is; but nicely, no doubt, for the economics of the member states.
We can make that prognosis based on the well-known instability of cartels that results from the intense incentive to cheat that they generate among their members.
This applies just as well to monetary cartels, especially for currency unions that have been built without a central government having been established beforehand. 29 In a cartel of goods and services, in fact, once an agree-
29 Michael D. Bordo and Lars Jonung, “The Future of the EMU: What Does the History of Monetary Unions Tell Us?”, NBER Working Paper N° 7365, September 1999.