What would have happened during the financial crisis if the euro had not existed? The short answer is that there would have been currency crises among its members. The currencies of Greece, Ireland, Italy, Portugal and Spain would surely have fallen sharply against the old D-Mark. That is the outcome the creators of the eurozone wished to avoid. They have been successful. But, if the exchange rate cannot adjust, something else must instead. That “something else” is the economies of peripheral eurozone member countries. They are locked into competitive disinflation against Germany, the world's foremost exporter of very high-quality manufactures. I wish them luck.

The eurozone matters. Its economy is almost as big as that of the US. It is three times bigger than those of Japan or China. So far, it has passed its initial test. Nevertheless, the peak to trough decline of the US economy was only 3.8 per cent (second quarter 2008 to second quarter 2009), while the eurozone's was 5.1 per cent (first quarter 2008 to second quarter 2009).

More important than the eurozone's overall performance is what is going on inside the zone. The starting point must be with the pattern of current account deficits and surpluses. In 2006, the zone was in rough balance. Inside it, however, were Germany, with a huge surplus of $190bn (6.5 per cent of gross domestic product) and the Netherlands, with a surplus of $64bn (9.4 per cent of GDP). At the opposite end of the spectrum were the capital importers, of which Spain was the most important, with a huge deficit of $111bn (9 per cent of GDP).