By dispensing with the exchange rate, the participating countries will be doing without the mechanism which they were previously able to use to cushion differences between countries in terms of inflation, productivity or the growth of government debt. In the euro currency area, there will be no comprehensive financial adjustment scheme in support of economically weaker countries.
The countries lack the money and probably the willingness for large-scale transfer payments. The burden of adjustment in the case of changes in productivity and demand will lie almost exclusively with national labour costs. Wages and wage-related levies must be geared to differences in productivity, otherwise unemployment will easily occur.