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Why is the European debt crisis caused by their unified currency but not unified finance?
In the process of European economic integration, the unified currency has brought many benefits to the countries in this region. In the stage of economic prosperity, this arrangement has promoted the development of intra-regional trade and reduced the macro transaction cost. However, when the storm warning is in place, the countries in crisis can't implement monetary policy according to local conditions, so they can't reduce the debt scale and increase the international competitiveness of export products through currency depreciation. They can only reduce the total demand by tightening finance and raising taxes, thus increasing the source of debt repayment funds, which makes the already depressed economic situation worse.

At present, the euro zone implements a unified monetary policy, while the fiscal policy is decided by the member States. The consequence of this inconsistency is that the unified monetary policy makes the euro zone countries have to use fiscal stimulus when facing economic problems, which eventually leads to excessive fiscal deficit and high government debt. For another example, Greece implements a high welfare system from cradle to grave, which leads to high rigidity of social security expenditure and "financial deficit". Problems such as "high welfare" of EU member states are also the social causes of the European debt crisis. The institutional defects within the EU cannot be solved immediately, nor can the social contradictions among member States be solved immediately. Although European countries have introduced various fiscal austerity plans, it is obvious that the fiscal stimulus to the economy will be greatly reduced.

I once saw a saying that the German people are unwilling to help Greece, and Greece is also the European Union. It is because Germans think that Greeks are lazy and work 20 hours a week, while hardworking Germans are unwilling to use their hard-earned money to help lazy people under the so-called "high welfare". Therefore, the German parliament cannot pass the economic aid plan. This is caused by the lack of unified finance.

In addition, the President of Iceland has pointed out that Iceland can quickly rebound from the abyss of bankruptcy because the government and the central bank can devalue its currency to promote the export of its products, which is a "policy welfare" that no euro zone country can enjoy. No wonder the British government has repeatedly reiterated that it will not join the euro zone.