So your saying that who or what ever countries have the strongest currencies are the ones that set the value of weaker currencies? Am I following you correctly here? Also even if a nation left the Eurozone, it would still use the Euro wouldn’t it? er no? :/

@ Kristofer Torkildsen
The currency markets also baffle me at times as well. But then again, recession economics tend to be completely predictable. But this is what I think. The US Government has had a general pattern of budget deficits for many years (with occasional surpluses), which makes it issue bonds. The US dollar has the status of the world’s reserve currency, particularly due to the previous Bretton Woods system (which I don’t completely understand). US bonds (as well as Japanese bonds), and the currency in general is considered a safe-haven during tough-times, because the US has yet to default on a loan (though the probability of doing so will increase significantly unless the deficits become surpluses within the next decade or two). The risk-aversion flight that has occurred with this recession has lent support to the US dollar and yen, which have risen in response to the demand.

@ U.S. Citizen
I agree. Unfortunately, not everyone in the EU is content with a common currency. In the past, some of the weaker economies could simply devalue their currency and lower interest rates to ease recessions. But with a common currency, the economic policy of the central bank is usually dictated by the largest (or strongest) economy(or economies), and this is not always the best for those weaker economies, and can even depress growth in those weaker economies. There are rumours of some stressed countries considering leaving the Eurozone, but these are just rumours and haven’t been confirmed on any level. While the probability of that happening is low (it is possible that dong so would cause even more problems), it can’t be ruled out. In this recession, almost anything can happen.
As to saving a falling currency, the Euro has a special position (though not as strong as the dollar) in the world as a reserve currency (outside of the Eurozone). It is very unlikely that big holders of the currency will want to see it become worthless, and will likely try to prop up the currency. In the past, though rare, countries have intervened to stop strengthening and weakening currencies. In addition, it is unlikely that the Euro could currently become worthless, especially considering the vast resources within the Eurozone, which would give it internal value regardless of the exchange rate with foreign countries.

They do for right now, that is vary true Gus, but what will they have after everyone is useing the euro? Have you heard about the NAU euro? The soon to be Asian euro? what other currencies will there be when every nation uses the euro? What will everyone fall back on or barrow from when they all use the same currency and that begins to faulter? Just wondering is all at this point.