Like it or not, the euro area will need a similar risk- sharing system. Economists have long warned that the member countries' economic cycles are too far out of sync to coexist without some kind of stabilizing mechanism. Inflation and unemployment rates diverge wildly, and European workers aren't mobile enough to compensate by moving to where the jobs are.

So what would it cost to turn Europe into a better fiscal union? Let's try a thought experiment.

The first step is to figure out what kind of fiscal transfer system best suits the euro area. Equalizing income levels need not be the goal -- trade and investment can play that role. What matters for the currency's viability is diverging growth rates. So, the transfers should be aimed at smoothing them out.

To get a sense of how this could work, imagine a fictional European Stabilization Fund. Countries experiencing relatively fast growth (more than 2 percent, adjusted for inflation) would contribute to the fund. Countries in recession would receive payments equal to 40 percent of their loss in income, a cushion at least as generous as that in the U.S. If the 12 countries that have been in the euro since 2001 all participated in such a fund, how would it have worked out?

Based on the economic performance of the 12 countries, it's possible to come up with an answer. The results are surprising.

From 2001 through 2012, a period that included one of the worst recessions on record, the contribution required from the fast-growing economies to keep the fund above water would have been only 0.64 percent of their gross domestic product. Germany grew fast enough to qualify as a contributor in only four of the 12 years, so its average payment would have been a meager 0.03 percent of GDP -- a total of about 11 billion euros for the whole period. In the recession year of 2009, Germany would have received a stimulus equal to 2 percent of GDP, more powerful than the program the U.S. put in place that year.

Spain, not Germany, would have been the biggest net contributor in euro terms, putting in more than 14 billion -- a function of its real-estate boom in the first part of the decade. France would have come in second at nearly 13 billion euros. Greece would have been a contributor in most years; ultimately, it would have received a net 5 billion euros, mostly in 2011, a year it desperately needed the help.

David Fuller's view I will leave it to others to question or confirm the validity of the numbers above. Nevertheless, it has been obvious to many people since well before the euro's actual launch that the single currency could not succeed over the longer term without fiscal union. Like it or not, that is the direction in which it is headed and markets have responded more favourably.