Fears of a Euro Demise: The Disastrous Consequences of a Return to the Deutsche Mark

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A defeat of the euro would be a victory for the dollar, which would continue on for the time being as the unrivalled currency for all major international transactions. At the same time, a breakup of the euro zone would also cause damage at the political level. As Andreas Scheuerle, an economist with DekaBank, said last summer: "Europe would suffer a massive decline in importance vis-à-vis the United States and China."

Should this scenario really play out, the SWP's Schwarzer also warns of a "monstrous weakening of Europe." The political consequences would be downright devastating as well. In fact, Schwarzer even believes that an end to the euro zone could lead to significant tension between EU member states. In the end, she says, the entire European Union would be threatened.

In the light of these consequences, one possible benefit of reintroducing the deutsche mark, seems downright ridiculous: Vacationing in Italy, Spain and Portugal would be cheaper because, as the ZEW's Heinemann puts it: "The Germans' purchasing power abroad would increase." Nevertheless, it would only be a short-lived advantage given the feared turbulence on the German labor market and the resulting drop in incomes. What's more, Germans traveling to former euro zone member countries would have to resume exchanging their deutsche marks for foreign currency, for a fee -- an annoyance the euro had done away with.

The bottom line is that re-introducing the deutsche mark would have many more negative than positive effects. ZEW expert Heinemann also speaks of an "unimaginable scenario that would have unpopular consequences for everyone involved." And, for this reason, he thinks that chances are very slim that it will ever come to that.

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• Part 1: The Disastrous Consequences of a Return to the Deutsche Mark
• Part 2: The Staggering Costs of a New Currency
• Part 3: Without the Euro, German Exports Would Tank
• Part 4: Unemployment Would Skyrocket
• Part 5: Europe Would Cede Influence to China and the US