The Value of the Euro

A thought while waiting at the gate at Frankfurt Airport: 20 years ago before the near-universal availability of credit cards and ATMs, having a single currency for Europe would have offered tremendous practical advantages. You could fly from Dublin to Paris to catch a connecting flight to Helsinki and back without the need for constant visits to the currency exchange bureau...

But of course back then there was no Euro. Today, we have the currency union but information technology has drastically reduced the practical benefits...You basically just live life as you always do, paying for lots of things with plastic and withdrawing small amounts of cash when you need it.
Which makes me wonder if moving the different countries of Europe into a single currency wasn’t actually a step against the tides of change. Maybe the real move for the 21st century is for large to go to smaller currency areas. It would arguably have done the “rust belt” some good over the past 30 years to be able to devalue relative to higher-growth portions of the United States. And everyone knows that economic conditions in China’s coastal cities are radically different from what you find in the rural north and west.
It's true that as a traveler it's much less of a pain to deal with multiple currencies these days. And it's also true that at this particular moment, as parts of America and the euro zone exit recession at drastically different paces, independent monetary policies look really nice. But I don't know that Mr Yglesias is right on the broader question.
Easy movement across borders (and price transparency) is just one of the benefits from euro membership. A much bigger one, one imagines, is an end to exchange rate risk, which presumably makes it cheaper to conduct cross-border business, especially as time horizons grow longer. (Of course, one could question whether a union that involves a unified monetary policy but no unified fiscal or regulatory policy has actually eliminated exchange rate risk; certainly some folks may be weighing the likely future path of euro-drachma rates in evaluating potential investments.) The euro also imposed monetary discipline on governments that lacked the German resolve to keep inflation tamed. Though again, this made it easier for those same governments to borrow, which was unfortunate as no corresponding fiscal discipline was imposed.
I've argued before that an underappreciated factor behind America's wealth is the benefit of a large and fairly homogeneous domestic market. The complete lack of variable exchange rate or inflation risk is a part of that, and one which facilitates investment.
A question for another time is the extent to which the Midwest's long-term problems could have been solved by a devaluation. I'm sceptical. I think the decline in question had more to do with the explosion of old models of industrial clustering by plummeting transportation and communication costs.
source: http://www.economist.com/