Can Euro become the single currency of Europe?

In the early years of this century, when Euro was adapted by the member states of EU as their currency, I used to wonder, how will this ever be possible. My doubts were based on the fact that all European countries were not equally well developed and managed economies. The western Europe was well developed while the eastern bloc that followed the Soviet Model wasn't shining and even today the differences between ex-communist countries and countries like Germany, France etc, are starker. I recently read an article which talks about the differences within Germany, after so many years of unification. You can only wonder the difference between countries. (the image is sourced from The American)

The difference in economies would also mean difference in the way fiscal policies and programs are developed and rolled out. Naturally this would cause big differences in fiscal deficit between countries. Fiscal deficit generally determines amount of government spending, interest rates and in turn currency rate. So how will the EU manage one currency for economies as different as Germany and say Romania or a Poland was my question. But then for the last 5 years or so, Euro was climbing up the ladder and everything looked normal. May be my economics is not that good is what I felt. I also thought I should learn more on this topic, and international finance.

Few days back, I came across an article in Knowledge @ Wharton, titled 'Whither Euro'. It is a good article on Euro and opposing views on its future. Take this link if you want to read that article.

We all know Greece ran into huge debt problems and as a result an economic earthquake on moderate scale shook Europe and other markets. Some are predicting a huge one shaking everyone what with Spain going Greece way. Let's hope that's averted. Now from the above linked story I learnt that ECB (European Central Bank) fixed 3% as the upper limit for fiscal deficit for countries adopting Euro as their currency. And ECB has the right to levy a penalty of 0.5% of GDP as a penalty on countries that exceed the 3% limit. Greece exceed the fiscal deficit level fixed by ECB not by 0.5% that it reported but by nearly 10%. The new government in Greece found out, when they came to power, that the actual deficit is not 3.5% as reported but 12.5%. It made it public and set the crisis ball rolling. It has since increased to 13.6%.

ECB did not levy a penalty because it believed what Greece reported that Fiscal deficit is only 3.5%, marginally higher than prescribed limit. Had the real deficit of 12.5% was known to them they may have levied a 0.5% of Greece GDP ($343 billion). Just think of it. A whopping $17.65 billion as penalty. In Indian Rupees the penalty would have run close to Rs.800 billion (100 Crores is one billion). I understand why Greece fudged. Now that it's all in public, Greece government has tightened the screws and cut back public spending. This has created a furore there.

I don't want to get into the ramifications of all this for Greece and EU, in general. You can make your views after reading the above linked article. But my question is, is it possible to bring together people with differing economic interests and make them all stick to a tight control for the sake of one common good, that too mostly to the well off? In fact, contrary to my original thoughts, it is members of west bloc like Greece, Spain, Italy etc. are causing problems to EU unlike the Eastern Bloc. In fact many of the east bloc is yet to be admitted into Euro zone. I am sure Greece story will delay the chances any of Euro wannabes from the east block.

This world is far from ideal place, and people can and many will think and find ways to serve their interests. This also mean that Euro may never make it to be the sole currency of Europe or for that matter EU. It may at best remain as a currency of well off countries like Germany, France etc. It cannot unify Europe, not until all of them have same pockets.