In reality, Germany is in a weak position with respect to the other euro-zone countries

It is often claimed that the euro zone is under German hegemony and that Germany dictates the economic policy rules that suit it. But in reality, Germany is in a weak position with respect to the other euro-zone countries: A break-up of the euro would have dramatic consequences for Germany, as did the break-up of the European Monetary System in 1992. Germany is therefore forced to accept any mechanism that protect s the integrity of the euro zone in the event of a crisis; The growing regionalisation of trade, as production returns to the vicinity of the final buyers of goods, means that Germany is going to need a dynamic domestic market in the euro zone. Germany must therefore contribute to boosting domestic demand in the euro zone, which it is not doing at present; The other euro-zone countries have very high debt in various forms with Germany (other countries’ government, corporate and bank bonds are held in Germany; TARGET2 balances). This forces Germany to collaborate in maintaining borrower solvency in the other euro-zone countries.