The euro is facing an identity crisis with Germany in the driver’s seat, Jan Randolph from IHS Global told CNBC Thursday.
The currency began as a political project, but now the markets have forced it into a crisis, Randolph said.
David Blanchflower, professor of economics at Dartmouth College and former Bank of England Monetary Policy Committee member, agreed and said people can respond to crisis caused by the markets, but the euro wasn’t set up to respond.
“It was not a system set up for the bad times,” Blanchflower said. “It was a system set up for the good times.”
After underwriting countries that broke the rules of the euro zone, Germany expects to be able to re-open the political bargain that formed the euro, Randolph said.
The country wants to create rules to be able to eliminate rule breakers as well as rules for debt restructuring, he added.
Now would be the greatest chance of Germany leaving the euro zone, but it is unlikely because of the political fallout that would occur, Blanchflower said.
It is in Germany’s long-term interest to maintain the euro and fill in the holes in the currency’s design, Randolph said.
“I think this crisis still has legs,” Blanchflower said. “And fundamentally the euro, as it sits, is not really a viable currency.”