A popular narrative has unfolded around Europe's sovereign debt crisis. It revolves around extravagance in Europe's periphery and the need for Europe's more responsible countries to deal with the repercussions of excessive debt. It applauds efforts to discipline certain countries in order to guard against a recurrence of less-than-prudent fiscal and financial behavior. Though this popular story carries much truth, Europe actually has more fundamental problems.

The euro could never have delivered on the benefits promised to smaller, poorer economies. The different rates at which nations joined the common currency did much to create today's problems.

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