July 20, 2010: Expensive bailouts, growing national debt in the euro zone and the global financial crunch have some observers wondering whether the euro will survive as the common currency of the European Union. Despite the current problems, the euro seems likely to weather the storm. The main reason might be that economically stronger euro zone members appear to be willing to do whatever it takes to ensure the euro's survival. "One can imagine an increase in the 750 billion euro bailout plan," was EU Commission President Herman Van Rompuy's comment after a meeting with German chancellor Angela Merkel. In other words, if the current bailout plan is not enough, another one will be forthcoming – regardless of the effect on euro zone national debt. But bailout plans are not the only factor in the euro's favor. Statistics also confirm the success and stability of Europe's new currency.

Some Germans wonder whether it might be better for Germany to return to its former currency, the German mark. People who embrace that idea generally believe that their secure German mark world was disrupted by the introduction of the expensive euro, creating a nickname in German, the "teuro" (a play on the word "teuer" for expensive). Their opinion has just one small problem: Statistics show that the value of euro has actually been more stable since its introduction as a book value currency in 1999 than the German mark. Since 1999 the euro has lost an average of 1.6 percent of its purchasing power on an annual basis. According to a study down by the national federation of German banks, the German mark lost on average nearly 3 percent of its purchasing power annually.

Since 1999 the inflation rate in Germany was over 2 percent only twice (in 2007 and 2008). In fact, last year Germany's inflation rate at 0.4 percent was the lowest since German unification 20 years ago. The two worst years for the euro were the first two years of the actual paper currency, introduced at the beginning of 2002. In those two years the euro lost 3.3 percent of its purchasing power. However, in the same period prior to the introduction of the euro the German mark economy had an inflation rate of 4.3 percent.

Despite the euro's better price stability, some long for the good old German mark days. Aside from the logistical headache of reverting to the German mark, Germans who might prefer a return to their old currency don't realize that Germany's departure from the euro zone and the reintroduction of the German mark would mean rapid appreciation of the mark in relation to the euro (and other existing European currencies). Germany is still the economic motor of Europe and a safe haven for investments. However, a strong national currency would have a negative impact on German exports, which account for about one third of the country's GDP. Germany has a positive trade balance with 75 percent of its trading partners, and three of the largest trade surpluses are achieved with euro zone members France, Austria and Spain. The price advantage via a common currency would be diminished if Germany returned to its mark.

A return to the German mark is unlikely because of the detrimental effect it would have on confidence in the European Union and the German economy itself. Germany will do everything it can to stabilize the euro – including using its considerable influence in Brussels to reign in fiscally irresponsible euro zone members.