Why could the serious financial woes of some EU member states lead to the end of the Euro?

Question

I've been reading a lot about the impending bankruptcy of Ireland/Portugal/Spain etc. and how this could mean the end of the Euro.

I cannot connect the dots here. Why would this mean the demise of the Euro?

Answer 1

The Euro is a common currency between various countries in Europe. This means that individual countries give up their traditional sovereign control of their own currency, and cede that control to the EU.

Such a system has many advantages, but it also means that individual countries cannot deal with their unique situations as easily. For instance, if the US were a part of the EU, then the Fed couldn't issue $600B the way they are to bolster the economy.

The danger to the Euro is that countries will withdraw their participation in order to micromanage their economies more effectively. If a major country withdraws its participation, it could start a domino effect where many countries withdraw so that they too can manage their economies more effectively. As more countries withdraw, a shared currency becomes less and less appealing.