A key part of this challenge is that member states tend to be exposed to divergent regional developments while at the same time the single currency makes currency appreciation or depreciation no longer available as an economic policy tool. Principally, member states may address their regional issues by employing independent fiscal and economic policies.
In a currency union, the burden of excessive debt can be partially shifted to other member states. This increases the incentive for member states to avoid politically difficult decisions in the short term by borrowing more. It is important to remember that this problem had been foreseen from the very outset.