Krugman with an outstanding summary of the Euro history (this is why you never stop reading Krugman, regardless of how off-putting the tiresome political whining may be):
I’d put it this way: it so happened that the euro came into existence at a time when the German economy was in the doldrums. Then the euro made investors believe that southern Europe was safe, causing a huge fall in interest rates there:
This in turn led to vast inflows of capital; the flip side of these inflows was large trade deficits, and large counterpart German surpluses, which was just what the Germans needed. Everyone was happy! For a few years.
Hard to make it more succinct than that. If the Euro was born in another other era maybe it would never have worked in the first place!