The European Council meets this week. On the agenda is the establishment of a permanent crisis resolution mechanism for the eurozone to replace the European Financial Stability Facility (or EFSF), which expires in 2013.
This goes right to the heart of the issues that were hotly debated before monetary union was formed - and then brushed under the carpet.

Monetary union needs a fiscal union. Without it, the union could easily suffer from the worst of both worlds: no clear mechanism available to provide support for weaker members in trouble - to make up for the absence of an independent monetary policy and the possibility of changes in the exchange rate - and yet more profligate members being able to free-ride on the credibility of the more prudent ones.

But full fiscal union would surely require political union. At the time that monetary union was forged, the peoples of Europe did not seem ready for such a dramatic move (subsequent developments have suggested that they are even less keen on it now), so measures were put in place to plug the gap; the Stability and Growth Pact and the no bail-out clause in the Maastricht Treaty. Both of these have been honoured more in the breach than the observance.

So, all along, the eurozone has been a half-way house; a currency in search of a government.

Doubtless there will be a strong temptation to muddle through. Yet, as suggested by the current chaos in the bond markets, if nothing is done, before long there will be a financial disaster. More radical action is required.

As the great Yogi Berra once said, "When you come to a fork in the road, take it." The eurozone is at such a fork: the choice is between using the crisis to forge a fiscal and political union or to break up.

Germany holds all the cards. Since she has striven to create a common Europe for decades, her default position must be to keep the eurozone together. Moreover, German business has done well from the euro. Without it, improvements in competitiveness could have been overwhelmed by a strengthening currency.

Nonetheless, it is far from clear that building Europe ranks higher in the pantheon of German values than fiscal probity and low inflation. And the competitive advantages from the euro could easily be outweighed by a financial crisis that Germany was forced to pay for.

David Fuller's view A few old friends will recall how we sat around a dining table every few months, discussing the euro and other mostly financial issues before the single-currency's launch. Our generous hosts at these sumptuous lunches were Peter Bennett and colleagues at JM Finn & Co. Those were the days.

Since we were all British, no one at the table wanted the UK to join the euro. One or two doubted that the launch would actually occur. The rest of us agreed on the obvious - that the first real test of the euro's ability to survive would occur during the first significant recession.

The euro is a political construct. Ultimately, it will be primarily Germany's political decision as to whether or not the euro survives, and in what form. Meanwhile, when under attack from all sides, the first instinct is to form a circle. I do not expect the euro to fail at this first hurdle. Instead, I expect to see a gradual push for more political and fiscal union.

I also maintain that not all of the countries which have already joined the euro, or have applied to join, will stay within the single currency.