TOKYO — The euro zone is sometimes dubbed "Euroland" by Americans (and some Asians). Given its echoes of "Disneyland," a place of fantasy, that is a far more mocking than useful nickname.
Ever since the euro was first proposed, skeptics (mostly American) and believers (mostly European) have fiercely debated the economic preconditions for the single currency, its benefits for members, and its political feasibility. Asian economists who promote regional integration in Asia have observed the debate with amazement, in that the fault line is not based on economic philosophy but on a geographical divide.
American economists have argued that the euro zone's economies are too diverse, with too many institutional differences and labor-market rigidities, to form an optimal currency area. Moreover, a common monetary policy combined with independent fiscal policy is bound to fail: The former increases unemployment in weaker economies because the interest rate reflects average euro-zone indicators (with large weights on Germany and France), but keeps borrowing costs low enough that weak economies' governments can finance fiscal profligacy.