Euro currency’s missing pieces challenge policymakers
The troubled countries lack the safety cushion that comes from having their own currency, which would fall in value and make them cheaper places to do business. Instead, they have to cut labor costs.
“So the burden of adjustment ... falls squarely on labor, basically on cutting labor costs,” said Simon Tilford, deputy director of the Centre For European Reform in London. “That, politically, is a precarious basis for a currency.”