The euro currency, used daily by about 332 million Europeans, might not survive the current battle over government debt, the International Monetary Fund said.
European leaders struggling to come up with a second Greece bailout have produced no consistent road map, leaving both orderly and disorderly outcomes on the table, the intergovernmental organization that oversees the global financial system said in a report.
The reaction by national authorities and economic agents has been one of retrenchment, threatening to turn back the clock on economic and financial integration, the very foundation of the Economic and Monetary Union, the IMF said.
The currency, which started circulating January 1, 2002, could succumb if countries put sovereign pride over the common good, IMF eurozone chief Luc Everaert told reporters in a conference call Tuesday.
Without a true recognition of eurozone oneness, even with national and cultural differences, and then making decisions demonstrating that recognition rather than denying it, one cannot have a currency union, he said.
The IMF report came before European leaders' Thursday meeting in Brussels on a new emergency program for Greece to add as much as $100 billion in loans from eurozone governments, officials said.
Banks and other private investors were being asked to share the burden by agreeing to maintain more than $40 billion in existing bond investments in Greece rather than withdraw the money when the bonds come due, the officials said.
The meeting comes amid renewed fears strong economies such as Germany will leave the eurozone to protect themselves from paying for a succession of bailouts, and weaker ones will leave to regain control of their own currency and monetary policy, The Washington Post reported.
Economists say Spain and Italy may soon collapse in debt like Ireland and Portugal, which followed Greece in getting bailouts. They add the European-IMF bailout fund cannot likely handle either of these new bailouts because Spain and Italy's economies are no big -- and each country getting into trouble means one fewer country contributing to the fund.
Eurozone politicians don't -- or don't want to -- understand that the eurozone as we know it is on the precipice, Societe Generale S.A. credit strategist Suki Mann wrote in a note to clients.
Greece appears beyond repair, Italy is on the brink, and the chances are that the euro might be no more very soon, his note said.
We are approaching the endgame for this part of the European sovereign crises, Gary Jenkins, head of fixed income at Evolution Securities Ltd., was quoted in The Daily Telegraph as saying.
The number of cans that now need kicking down the road would challenge the left foot of Lionel Messi, Jenkins said, referring to the soccer superstar who plays for Barcelona, Spain.