alt Hacker NewsJoining the Euro is not the panacea that everyone thinks it is.
It comes with some major drawbacks: - no control of interest rates since these apply to everyone in the Eurozone regardless of the current economic situation of a particular country. - no more devaluation to get back some competitiveness on international markets - strict financial guidelines in theory (3% deficit max per year and 60% of GDP/debt ratio)
Finally, the biggest problem as it's been highlighted by many economists is that it spreads the risk to the whole Eurozone which sounds great in theory until you find yourself drowning in debt like Greece was in the 2010s or like France is nowadays.
Because now your government is borrowing in Euros, the markets move very slowly and the full impact of the finances of any Euro government is completely subdued since in the pool of countries that use the Euro there is Germany which is very good and very trustworthy creditor.
Take a look a what happened with Liz Truss in the UK, she made some rather stupid announcements and the markets reacted as they should and that lead to her removal and to a change of plans.
In France by contrast, no such changes have happened despite the fact that the French economy has been going downhill for awhile due to their 5%++ yearly deficits and their 120% debt ratio.
If France still had the Franc, then the markets would have forced the politicians in charge to either course correct and/or eventually to pass on multiple painful but necessary reforms.
Instead what we have is complete political paralysis and many presidential candidates are openly calling for a roll back of more pension reforms, lowering the retirement age to 60, increasing the pay of all the civil servants by 20% and more complete out of control spending.
The supposed EU fiscal rules have never been enforced anyway which means that countries don't really have any incentives to curb their spending since the ECB is always backing them.
Note that a lot of that stuff still exists when you have your own currency, but it gets absorbed into exchange rate movements instead of being an explicit decision. This is both a blessing because it automatically balances, and a curse because you can accidentally shift it in an unwanted way and it may be hard to notice you're doing so.
For instance you can have a different interest rate when you have your own currency, however it will cause your currency value to shift over time in opposition to the interest rate difference. For instance I think New Zealand had 6%ish rates while the mainstream was 3%ish, as a result the NZ dollar devalued by 3%ish per year. If they wanted a stable currency value, they would've had to maintain interest rates comparable to their trading partners. The fact this isn't happening to Japan is a great mystery to economists because it normally does happen.