Can the Euro Survive?

One of the fascinating aspects of the European debt crisis has been the resilience of the euro. For much of 2011, the euro was a key reserve currency, oblivious to the chaos ravaging European economies. Now, however, the gravity of the crisis is finally dragging down the euro. As the Euro zone debt crisis enters its third uncertain year, the question about whether the Euro can survive rises. This paper argues that the Euro can survive given policy makers still have in hand various tools. These tools include creating exit rules, implementing new stabilization rules and instruments, adopting new fiscal policy, introducing conditional Eurobonds, using inflation differentials, and providing more independence to the European Central Bank.