Floating currency is just a way to automatically renegotiate all of a country's contracts. It will not magically create more wealth or lower the costs of materials. In the end, if you're importing something for $1 and you earn $100/yr or it costs $3 because of your devalued currency but you earn $300/yr, nothing has changed.

What sucks is the most productive people left and the already massive state obligations fell on those left. It wasn't the currency that did that.

That automatic renegotiation is useful for poorer countries though. If a country exports a lot more than it imports then the valuation of their currency increases, meaning that buying from that country becomes more expensive (because you buy with their currency and there's more demand for the currency). This enables poorer countries to step in and offer to export similar goods for cheaper. It also means that poorer countries, where their imports exceed their exports will get more investments, because their currency is worth less.

A simplified example of the above:

Let's say that Germany kept the Deutsche Mark (DM) and Italy kept the Lira. Let's assume in this case that Germany's exports exceed their imports (trade surplus) and Italy's imports exceed exports (trade deficit).

In the case of Germany, because their exports exceed imports, the value of the DM would go up, because there's more demand for the DM. This would make goods from Germany more expensive (your dollars can buy fewer DMs) and it would slightly diminish the exports of Germany. Due to the DM being more expensive it also means that foreign investment in Germany is more expensive, because your dollars can buy you fewer DMs.

In the case of Italy, because their imports exceed their exports, the value of the Lira would fall, because there's less demand for it. This means that goods from Italy become cheaper (your dollars can buy more Lira) and it would increase Italy's exports. Due to the Lira being less expensive it's cheaper for foreign investors to invest on Italy, because you dollars can buy you more Lira.

When both of these countries adopt the euro, you will have to add up their exports and their imports to find out whether there's a trade surplus or deficit. Let's say that when you add them up and compare you find that you have neither a trade surplus or deficit. This means that goods exported by Germany won't increase in price and the goods exported by Italy won't decrease in price. This is advantageous to Germany and disadvantageous to Italy. It also means that Italy won't gain an advantage in attracting foreign investments compared to Germany either (based on the currency).

In reality, the topic is much more complex, but different currencies seem to have a balancing effect on exports, imports, and foreign investments. Strong exporters in the eurozone benefit from the countries that import a lot.

I think your last point needs more investigation and I don’t think the EU really wants to examine it in detail. Freedom of movement means that really productive and educated people can go wherever they want. I encounter groups of Italian and Spanish students everyday here in Germany. I’ve met a really bright Greek politics and law student that has now a job here. At one conference an Italian guy working in Switzerland told me at the company in England he was before the office was dominated by Greek and Italian developers. All of these anecdotes point to the same thing young successful people from these countries try to start a life elsewhere in the EU. It’s obvious that this is a huge benefit to Germany and the UK (which the Brexit supporters failed to recognize)

>> At one conference an Italian guy working in Switzerland told me at the company in England he was before the office was dominated by Greek and Italian developers.

Yeah, but it doesn't mean they are brighter than British ones. It just means it's cheaper to hire a Greek or Italian developer (that and culture differences that British people would also need to deal with).

Saying this as a developer from Lithuania working in the UK.

Which is crazy.... in the US, a developer from Nebraska is just as expensive as one from California for any given company.

The location of the company dictates the wages ( costs of living), not the source of the developer.... (unless we’re talking an H1B visa sham hire which isn’t the same as your situation)

If the developer from Nebraska plans to go back home after a period of time working in CA, they may be more likely to be content with lower salaries though. I wonder where these talented people in the EU plan to raise their kids/ retire.

Generally, freedom of movement is a good thing, allowing the most productive people to go to places that enable them to produce the most. The issue appears to be that the EU isn't a real country. Taxing winners and transferring resources to losers of the open borders/single currency zone turns out to be really important.

Good thing for who? Framed in another way, you’re simply talking about brain drain, which clearly isn’t a good thing for the source country.

Good thing for the overall economy, so in this case for the EU as a whole. Increasing productive capacity overall is good because it means a society can afford more of the things it values. But again, the EU is in a difficult place because it's not a cohesive country. If you can't convince a German to value the well being of an Italian in the same way he values that of another German, then increasing the productive capacity of the EU as a whole doesn't help Italy at all.

Almost like MMT is real.

No but a currency can be managed as to put a gridlock in the investment and financial markets, which prevents wealth from being created. See this: https://medium.com/@b.essiambre/the-world-deserves-a-pay-rai...

This is what the ECB did.

> It will not magically create more wealth or lower the costs of materials

No, but it will lower the cost of labour. If you have low productivity, you need to pay your workers less. If you can't devalue the currency, you have to lower wages. If you lower wages, you create deflation: your money will be more valuable tomorrow than it is today. And so you stop spending and start saving, and consumption falls.

In my opinion the long term goal is to transition the EU (over the course of multiple human generations) into a single nation, similar to the way the United States operates. In that case, the conditions you described are an expected part of the process. In the US the states and local municipalities have different economic situations, different taxes, etc. And if our states broke off into 50 currencies, some would benefit while others would crumble.

Your thoughts are on point imo. One must never forget the context of how the EU and it’s main political objective came to be: the culmination of centuries of small scale wars and two world wars within 30 years of each other.

Juncker - who is the only European politician who signed the Maastricht treaty in ‘92 still active today - reiterated at a 20 year commemoration mid January this year that for him, the European Fiscal Union remains an unconventional measure of politics for common peace.

Closer political union has been on the cards for a long time. Churchill post-WW2 (1948) said "Mutual aid in the economic field and joint military defence must inevitably be accompanied step by step with a parallel policy of closer political unity", and referred to a United States of Europe ("I was anxious at first lest the United States of America should view with hostility the idea of a United States of Europe"), with it being presented as a force for peace ("the German problem is to restore the economic life of Germany and revive the ancient fame of the German race without thereby exposing their neighbours and ourselves to any rebuilding or reassertion of their military power of which we still bear the scars. United Europe provides the only solution to this two-sided problem"). It's pre-EU, but clearly the ideas come from a similar place.

http://www.churchill-society-london.org.uk/WSCHague.html

And the phrase "United States of Europe", in turn, was coined a hundred years before Churchill. And the idea is older still.

Then again, it's also just a logical extension of the same process through which the most powerful European states today have formed themselves.

The motto is „a ever closer union“, although that does not necessarily see a nation state at the end, and it has become somewhat outdated...

What the US has, and the EU would need, are some mechanisms to level economic differences between the constituent states. Any federal US program effectively works as such, even though that is rarely acknowledged in the public discourse. As but one example: military spending is financed primarily by the economically strong and populous states, and disproportionately favors poorer states with defense contacts or military bases.

The EU has a few such mechanisms, some explicit (regional development funds), some less so (agriculture). But the total E.U. budget is rather tiny compared to the economy. Something like a common unemployment insurance would be best, mechanistically. Because it would automatically adjust to changing fortunes at the very local level without requiring constant political intervention and the accompanying bargaining. At present, such a policy is unlikely to find approval because of pervasive remaining mistrust („lazy Greeks taking our money“).

We should have two currencies, one slowly sinking in value and one slowly rising. Then a country should be able to choose internally to align itself with the Euro or the Orue, for internal trade, external trade and money value.

The EU already has a version of this. Some countries in the Eurozone are net recipients of EU money. Just like California is a net contributor and Mississippi a net recipient.

It can be argued that the Euro has certain structural issues, or that the wealth transfer is too big/small, but the EU demonstrates that you don't need to become one nation just to have wealth transfers.

But is the size of these wealth transfers comparable? I have the impression, maybe wrong (absolutely no data to confirm it, in fact) that wealth transfers within the EU are much lower than those that would take place between the regions of a single nation.

You're right. The wealth transfers are fairly small. The EU had a budget of €118 billion for 2016. There's only so much you can do with that money for 500 million people. Note that a large chunk of it goes back into the big countries as agricultural subsidies.

No, but does it matter? I'm pointing out that you structurally don't need a nation-state to do this. The EU isn't going to have some natural or legal tipping-point where the wealth transfer moves up or down by 0.1% and suddenly it structurally doesn't work.

You said that you don't need to be a nation state to have wealth transfers. And I agree, an in fact the EU has them.

But from a political and social point of view, while it's somehow easy to convince the citizens of a nation that they have to contribute from their own pockets to the common good, the situation is much harder in Europe. We are not a nation, we are culturally and linguistically different, we consider ourselves as separate entities. The euro is actually increasing reciprocal distrust. The whole EU political system is overly complicated (and, ironically, undemocratic) because it includes both a parliamentary democracy and a council of heads of states- because no European nation would trust decisions made by a shared parliament without having them vetted by their own national governments.

There should have been a major push in education to form citizens that would be at least able to understand each others- there wasn't, at least in part of the EU. Damn, we have major EU members that decide to wage wars on their own, it's inconceivable.

So how do you convince the citizens of rich, disciplined countries, to get money out of their pockets to heavily subsidize the citizens of other countries, speaking a different language, with autonomous armies, different legal systems, completely separate political class, very limited transfers of people across borders (and mainly in one direction, north)?

/rant :)

Most of your skepticism of inter-EU wealth transfers applies equally to intra-EU wealth transfers from metropolitan to rural areas.

I live in one of the wealthiest NUTS3[1] regions in the EU. Why should I be paying higher taxes to send someone's kid living in the boonies in my country to school? Let's just form a city-state instead. We even have a handy historical defensive wall we could resurrect for that purpose.

Of course most people would think that's absurd, but it's worth mentioning since this notion that you should subsidize your "countrymen" was once just as novel as the idea that the Dutch should subsidize the Greeks is to some today.

You're only taking this for granted for nation states because you grew up in the era of nation states. There's no intrinsic reason for why someone born in the EU area in 2100 wouldn't find the idea that you shouldn't engage in wealth transfers within that area as quaint as the idea that we should being going back to city-states is today.

I think if anything what the WTO, NAFTA, EU etc. show is that in the future the idea that you need to sign up for some "package deal" of a nation state for everything from tariffs to defense will be viewed as too monolithic.

1. https://upload.wikimedia.org/wikipedia/commons/9/90/Map_of_G...

> Most of your skepticism of inter-EU wealth transfers applies equally to intra-EU wealth transfers

I know very well the issue because it's been at the center of a bitter north- south dispute in Italy for decades. (the rich, productive north complains that too much money has been given to the south without appreciable results).

But in the national case the transfers are decided at national level, the regions have no say in it; if there are protests, a national police keeps order. The tax money is collected by state entities, and then redistributed to the regions. There have been pushes to partly change this, but there is also a strong cultural resistance because there is a sense of national unity, of shared history, cultural and family ties, and a historical foundational myth.

All this stuff is weak or non-existent for the EU as a community. It's not impossible in principle, it's simply not there now, and given all the differences- especially linguistic- it seems that it's going to take a long time and a lot of effort to create, provided that there is even the will to do so.

I don't think we fundamentally disagree. I agree that it's possible, it's just that there is going to be a lot of resistance along the way and that the national governments, which still hold the majority of the power in the EU and are still the intermediaries between their citizens and EU institutions, will be extremely cautious in implementing such a system without a complete support from their citizens.

Ah, 2100 is very, very far away. I'm not sure we can wait that long.

Even with Spanish and English, the US has a few issues. The EU has 23. Out of interest, after these 'multiple human generations' how many languages do you think the single nation will be speaking? You have an opinion. Fair enough but will it be a democratic decision to make the transition? One thinks of 2005, when on a turnout of 69% of French votes, 55% rejected the EU Treaty. It was accepted nevertheless.

The problem is that EU bureaucrats are too impatient to wait multiple generations, therefore they try to speed up the process by schemes like inviting few millions immigrants from Africa and Middle East and then forcing member states to take them, to undermine their national identity. Or try to enforce the same EU wide standards regarding controversial topics such as LGBT rights, abortion, etc. Which of course causes backlash, effectively being counterproductive.

I think that's an overly conspiratorial view. I agree with your analysis in part but I don't think the EU is doing these things deliberately to undermine, it's more that it's their philosophy (which IMO is counter to the interests of the average european).

Oh no, come on. And by the way, if things keep going like they have, we can't wait multiple generations. We have at most one decade to fix things before they explode.

So... is there some way to have both the benefits of multiple currencies and a single one? The convenience of a single currency in terms of cash is becoming less relevant as cash itself is used less, but my understanding is that the main theoretical benefit is that it strengthens the single market. Basically allows EU companies to have suppliers and customers in any EU state, without having to incur currency risks. How great is that benefit? Could some of it be achieved while allowing individual EU members to control their own monetary policy? Or on the other side, could the Euro be kept, but the negative effects somehow mitigated, perhaps via changes to transfer payments, maybe based on the difference between what would be the domestic currency value and the Euro?

> So... is there some way to have both the benefits of multiple currencies and a single one?

Look at the USA as an example. The difference with the EU is that the USA are vastly more homogeneous and I believe there is very little opposition to redistribute wealth from richer to poorer states. The EU is fragmented, almost nobody wants a tight political and fiscal integration. What would be of the USA if state governors were much more powerful than the federal president, to the point that few people would know who the president is and what he can do? This is the state of the EU.

Welcome to the debacle that was the United States Articles of Confederation.

I’d say that has more to do with the regulations in place that ease the movement of goods and people. In that framework having the same currency and wildly different economies actually goes against the interests of your workers too, because it allows companies to outsource labour to other EU countries where the cost of living is radically less, with basically no drawbacks. The solution to this should be a consistent effort to strengthen the weaker economies, but more than anything impose similar taxation policies throughout the EU.

>but more than anything impose similar taxation policies throughout the EU.

But this would massively hurt the weaker and smaller economies though. Businesses congregate where other businesses are. Workers follow. Brain drain has been a big problem in the EU. If EU countries all have to adopt similar taxation schemes then why would you start a business in Romania if you could just start it in Germany instead?

I am not sure the Euro in itself was the problem, but countries where included before they where ready and not enough mechanisms across the union to help those regions/countries that where struggling. But,hey, I am but an armchair economist.

That's a common argument you see a lot for years, they weren't ready, they cooked their books etc.

But for example Greece, that "cheat" they did to get in eurozone couple years earlier, wasn't a cheat back then and EU was totally informed, also the debt that swapped was insignificant compared with the amount of debt created due to systemic problems of eurozone and EU.

Too bad there are fake news only for the stronger, the weaker and smaller countries can do nothing but get crashed under the propaganda.

You mean countries like France and Italy?

But they were not "included". Nobody forced them or made the decision for them. The countries (peoples, governments) made their choice. I think that some of them, if not all, even had referendums on joining the euro.

Do you think the United States need more currencies as well?(i.e the Texas dollar, California dollar etc)

As someone else pointed out, the US has federal taxes and ways to distribute from rich states to poor states

So issue is really the lack of fiscal union in the EU. Better work on this than on divisive solutions.

A fiscal union would necessitate creating an even stronger political European Union. So far there hasn’t been a call for that and it remains unpopular to most citizens. And the current divisions only make it harder to even suggest one.

A fiscal union would be economically better but politically it is dead.

Yes, and Germany explicitly rejected all attempts and proposals: no Eurobonds, no Green Fund, no fiscal union, no transfers, no nothing. They'll stick to their guns until the whole thing come apart (real soon now: you liked the Brexit? Wait for Italexit. Or Frexit. Sooner than you think).

You also see that leaving the EU is not a clear benefit despite "evil" Germany is on its throne...

That's why "Brexit" is taking almost 3 years now and still there is no ultimate progress. Other countries will surely be interested in how this experiment turns out before doing the same..

Disclosure: I'm an EU citizen living in UK.

From what I have gathered, EU's strategy with Brexit has been pretty straightforward: do not even try to impose any further "penalties" on UK on top of what is already taking place without assistance. Just stay put.

The EU can't be seen to dictate internal UK matters - that would only create further animosity (if such a thing is possible, given the rabid UK press). Instead, let the UK repeatedly shoot themselves in the head while going through their cooked-up contortions.

There will be no better deterrent for others in the EU27 than observing Brexit from a relatively safe distance. "Leave, and that will be you. We don't even need to do anything."

And as for watching Brexit unfold at a close distance? It's like looking at a sword swallower trying out a new trick. With a chainsaw.

Let me guess: you're a EU citizen living in _London_. Not exactly the same thing as anywhere else in UK.

For me, watching Brexit from a distance is more akin to seeing people not wanting to leave the Titanic pushed into the lifeboats, dropping from the main deck: sure it's ugly, but wait for the iceberg, and see who are the smart guys afterwards.

Fair enough, and you are correct.

As for leaving... uprooting a family is not something you do without a good plan forward.

The solution is federalism.

Wasn't the problem of countries like Greece and Italy corruption?

Austerity didn't help. The R&R paper that they based the austerity on turned out to not be properly peer reviewed, and surprise, had a some arthmetic errors that when fixed contradict the original result.

Yeah... everyone I talked at the time to said austerity is the wrong tactic.

Wait what? Could you expand on that?

That seems to be very stupid "mistake" from some very important economists.

Italy and Greece have always had corruption. But they didn't always have recession.

Countries get recessions when they pile double-digit deficits and triple-digit sovereign debts hidden from the world with years of accounting fraud, and suddenly banks cease lending them the money they need to keep burning through the cash they don't have.

Greek debt crisis begun when they had 160% of GDP debt, after years of recession, "bailing" packets and the heroic efforts by EU/IMF they now are at 190% of debt. Great success.

You're somehow leaving out the fact that Greece's debt/GDP ratio went up in good part because the true extent of Greece's sovereign debt and structural deficit was uncovered after the inception of thr bailout program, which by itself led to a higher debt ratio.

Also, having to reign in a double-digit deficit by cutiting the state's chronic overspending also lowered the GDP that was kept artificially high by injecting into the greek economy all that borrowed cash.

So, it's disgenuous to insinuate that Greece's bailout program caused any problem when you're actually referring to the natural consequences of:

1) finding out the true extent of Greece's overspending by fixing their accounting incoherences

2) the impossibility of continuing overspending well over 10% of the nation's GDP.

But they did pass ever higher, unsustainable debts to the next generation, which eventually forced them to face reality and stop paying for the corruption with seed corn.

Germany’s byzantine buearoucracy and regulations spilling over the whole EU at this point are a corruption, just different form of it.

Are you saying Germany succeeded in economics where war had failed?

That's... too broad a brush to paint with? Greece

Nope, I think corruption is more of an easy scapegoat. The corrupts are always the entrpreneurs and the politicians, which means the rich and powerful, which means someone else different from the people. Of course corruption is nothing positive and doesn't help, but it doesn't explain the huge amount of missing wealth.

The problem is the lack of free float. Nobody in Europe is as productive as the Germans, therefore they become uncompetitive while being tied to the same currency.

The corruption narrative is just a diversion from the fact that the whole Euro concept was a bad idea to begin with.

Improperly conceived is more accurate. A strong political union is important for a common currency. They should have stuck with free trade and visa free movement ( not permanent relocation) for the level of political union they have.

The logical conclusion of most of these arguments seems to be that the US should have floating currencies between the states, to stop unfairly benefiting the few net productive export states?

No, IANA Economist, but I'd wager that states in the US are much more homogeneous than are countries in the EU, both in terms of laws + regulations and in labor productivity. Plus, there is a (more or less) democratically elected government that is (nominally) responsive to all of its citizens. Much more so than the various EU branches are, at least.

Not true. There are a number of important differences. The US gradually merged into a single currency over a long period of time. As a nation the states have a sufficiently integrated fiscal policy such that budget redistribution is possible. Furthermore the US has a common language and genuinely frictionless trade between states developed over many years. The Eurozone is a bunch of homogeneous economies glued together without fiscal integration or adequate redistribution mechanisms.

The US has federal taxes and mechanisms to redistribute money from richer states to the poorer states to address this sort of imbalance.

While there are no EU direct taxes, there are redistribution schemes in the EU. I don't know how their magnitude compares to that of American interstate redistribution though.

I'd argue that taxing the rich more and funding non-broken-window public infrastructure is a better policy for growth.

Including investment in education, transport of all kinds, 'going green' (maybe even large new-generation clean-nukes), and also dangling carrots in front of RnD / upgrades likely to produce positive economic impacts.

Not mentioned, since the focus on European governments probably means universal healthcare, is universal healthcare as public infrastructure. That too would be a useful structural improvement and serve to reduce economic friction while improving worker productivity.

No

> Left to float independently, the Deutschmark would not be as low as the Euro is today and the Lira would never be as high.

But wasn't that the whole point?

No it wasn't. The point of the euro was mainly political - a step towards a single European state. Economically the benefits are reduced transaction costs and reduced currency risk between countries within the single market.

No it hurts Germany too, just not nearly as much as the rest of the eurozone. The only ones who were helped here were Russia an China from the ECB putting their main rivals in shambles.

Any gains Germany gets from overly tight money are temporary and transient. Running a disastrous monetary policy to indirectly improve Germany's loan terms is an insanely destructive thing to do both to the indebted countries and to the weaker parts of Germany's own economy.

Not allowing people to work and destroying their countries' economies greatly increases the chance these countries are going to default or restructure parts of their debt. This is not to Germany's advantage.

Having neighbors with poor economies is bad for your exports and your own businesses.

In the long run Germany would have had much to gain if people of Europe had functional investment markets and funding was available to buy the tools necessary for people to work and produce instead of strangulated markets.

Having a single currency could have worked (as it works in the US) if it was not managed like they were trying to destroy the west.

It may be worthwhile to note that the Euro never had support of the German people and it’s very difficult what the long term impact will be for them. My impression is that they borrow other countries money (through ECB and TARGET) to buy their goods that get produced while creating very little wealth for the average worker (in terms of net purchasing power per productivity).

Extending the same principle to provinces/states within, and then to cities, and then to individuals, you finally get to Hayek's "no state currency" proposal.

Another major factor was the debt of each members after joining the euro:

"All members past debts were in their home currency, including Germany. Upon joining the Euro, the past debts were also converted to the Euro because their old currencies were abandoned. What I mean by international value is if you look at the debts of all member states, when the euro doubled in value from 80 cents to the US dollar to $1.60, from a US investor, he doubled his money holding Greek debt or any member’s debt. We can see that the dollar rose sharply against the drachma between 1995 going into 1999 demonstrating that the drachma declined 47% going into the formation of the euro. The cost of servicing the past debt rises in real terms and when they had to pay off the debt and roll into new debt, they were paying in international value more than it was worth upon joining the euro.Back during the Reagan Administration, I met with the U.S. Treasury and warned that Volcker raising rates to 14% meant he was suppressing inflation immediately, but causing it to exponentially rise by the end of the decade. Why? Because central banks cannot stimulate or suppress and economy with interest rates when the government is the biggest borrower. Whatever they think they are doing by raising rates to stop people from borrowing has no impact upon government for they will always spend other people’s money freely. In that meeting, I was flatly told it was OK because the government would be paying back with cheaper dollars. In this case, the rise in the euro to $1.60 meant the opposite – member states would be contracting and had to pay out huge sums beyond what they originally owed. This was no different from people who took out Swiss loans and then the Swiss franc/euro peg broke. Suddenly the borrowers owed a lot more in their home currency when the Swiss rallied.

Consequently, the past debt of Greece was in drachma and the decline in the currency meant that its debt in terms of dollars (international value terms) fell almost by 50%. Upon joining the euro, the past debt was then converted to euro – not before. Therefore, in international terms of value, the debts effectively doubled in real terms. This would NOT have been a problem had all the debt of member states been consolidated into a federal debt for Europe. Thereafter, any new borrowing would have been purely state debt NOT acceptable for reserves in the banking system.

In this manner, the past debt, which does not stimulate the immediate economic position, doubled in real terms and increased the cost of servicing the past debt. This is how the economy was strip-mined. Had the debt been consolidated into one federal debt, that burden would have been relieved upon by member states. This would have allowed the euro to then actually compete against the dollar."

https://www.armstrongeconomics.com/international-news/europe... - see for more detail. I've followed Martin Armstrong for well over a decade now and have found him and his computer Socrates to be incredibly accurate.

This was the genius (or good luck) of Hamilton. Taking on the debts of the US states at the federal level prevented this problem when switching to a common currency at the formation of the US.

Armchair economist here. Is it correct to say that a country like Italy, with its low productivity, constantly needs to devalue its currency to keep its production competitive; and that while doing so would effectively lower the wealth of the country, it could still keep an apparent growth of the salaries, so that there would be an incentive to internal consumption? And that what happens in Italy instead is that the wages need to shrink, which causes (a state close to) deflation, which causes even more saving and depresses internal consumption?

- Economic homogeneity across an entire nation state can only reasonably expected with small countries

Well, that is not true and probably not an issue. Every country has automatic mechanisms of wealth redistribution across its regions: California feeds most of the central US states. But the EU is a monetary unit without a proper redistribution mechanism between its regions: it's hard to convince the Germans that their tax money should subsidize Italy because it's part of a national unity.

Yes devaluing currency is much less painful. But it creates risk for traders which the monetary union removes. Removing that risk may not be a great idea since one region is bound by a different political structure that is bound to play a role.

Spot on.

Whilst I agree with your analysis I would prefer fewer currencies and better redistribution instead. Though there are significant risks the EU could really benefit in terms of cohesion from federalisation.

Perhaps what the EU needed wasn’t a common primary currency but a common secondary currency that was used as a medium to convert currency between members.

That was what the UK suggested at the time.

Instead of a "Single" currency, there should be a "Common" currency (with notes and coins) available to be used in all EU states and whose value was not allowed to devalue against any of its constituent basket of EU currencies, i.e. the inflation rate of the "Common" currency would always be equal to the lowest inflation rate of the currencies that made it up. That would encourage people to hold and use it and over time people would migrate to it. It would also allow businesses to only concern themselves with a single exchange rate, namely that between their national currency and the Euro Common currency.

The UK suggestion was, of course, rejected out of hand.

The EU is about a forcing the creation of a single state.

It is a political project rather than a practical one.

Hence Brexit.

this already existed before the euro.

It was called the ECU[1]

1: https://en.wikipedia.org/wiki/European_Currency_Unit

Not quite. There were no notes and coins and it couldn't be used by ordinary people to do their shopping.

I always liked the idea of a two tier Euro, like 1:3, and I feel like that could have helped Southern Europe and nudged their fiscal policies closer inline with the ECB.

They also could have just pulled the bandaid off of Greece in 08, booted them from the union, took a loss on the debt, threw aid, and laid it out as an example for Spain and Italy to get their shit in order.