Crisis Makes Former Skeptics Rethink Euro

From Poland to Iceland, once-resistant nations want to join up
By Jason Farago,  Newser Staff
Posted Dec 2, 2008 8:07 AM CST
As the financial crisis wears on, the euro is looking more appealing to nations that once rejected it.   (©Rainer Ebert)
camera-icon View 3 more images

(Newser) – When the euro was first proposed, skeptics cautioned of the dangers of an integrated system during a time of crisis. Now that the crisis is here, the euro has performed relatively well while smaller currencies have plunged in an investor "flight to quality." As the New York Times reports, the financial crisis is leading countries that swore never to join the single currency to reconsider.

In Poland and Hungary, citizens who took out euro-denominated mortgages have been hammered as their local currencies have fallen hard. Danes and Swedes, who voted down referendums on the euro before, are changing their minds after central banks had to raise interest rates to punishing levels. Even Iceland, whose economy was nearly destroyed when its banking sector collapsed, wants to join the single currency—despite the fact that it isn't an EU state.