The twin principles of home country supervision and mutual recognition should be supplemented in the short run by a clear allocation of responsibilities in times of crisis, and a mechanism to ensure that all financial institutions operating in Europe have an effective lead supervisory authority.

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In the months ahead, there will be a renewed intensification of the European debt crisis that could have major implications for the US economy.

Is a monetary union along the lines of Emu a good idea for countries that fail to meet the basic economic criteria of an optimum currency area?

The current economic crisis may provide a severe test of the euro's ability to survive in more troubled times.

Should IMF-style austerity programmes result in anything like the collapse of the Latvian economy in Europe's periphery, it would render the continued servicing of the periphery's debt well nigh impossible.

Vá Klaus, prime minister of the Czech Republic, returned to AEI on September 30 to deliver a luncheon address on the prospects for a single European currency.

The stage now seems to be set for perhaps the final act in the Euro-zone debt crisis. With its economy literally imploding, social tensions close to the boiling point, and its IMF program woefully off track, there is every prospect that Greece will experience a hard default by year end.

While it is indeed true that no man--or nation--is an island, especially not in a world of highly integrated financial markets, it is important to be clear that the southern European crisis was not inevitable; it sprang mainly from the failure to implement the fiscal discipline required of nations that participate in a single currency area.