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Here is a great article by Cullen Roche on the future of European currency union. The key message of their problem is the lack of fiscal transfer between European countries. The best analogy is to think of the USA as a union of 50 countries under one shared currency. Extreme trade imbalance exists between these states. The federal government addresses this problem by fiscal transferring from trade surplus states to trade deficit states through government aid programs. See infographics below:

Graphic from Economist. Data from National Statistics.

Graphic from New Think Tank

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