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The Boston Globe

Business

Europe’s doomsday scenarios are held at bay

Euro surviving, despite forecasts it would crumble

FRANKFURT — Say what you will about the eurozone’s quarreling policy makers. But they can claim at least one achievement during 2012: Their common currency still has a heartbeat.

A year ago, many people seriously doubted whether the euro would still exist by now. On the threshold of 2013, the debate is more about how long it will take for the eurozone economy to recover and what must be changed to avoid future crises.

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Europe still has plenty to worry about. Economic output is shrinking in nine of the 17 nations that use the euro. European banks remain weak, and many have yet to confront their problems decisively.

Many businesses in Spain and Italy and other distressed countries cannot obtain credit, hampering a recovery.

On top of that, with national elections coming in Italy (February) and Germany (September), leaders there may be more focused on the narrow concerns of their voters, rather than the cause of European unity.

‘‘At the moment the crisis seems to have calmed down somewhat,’’ Jens Weidmann, president of the Bundesbank, the German central bank, said in an interview with the Frankfurter Allgemeine newspaper published Sunday. ‘‘But the underlying causes have by no means been eliminated.’’

But consider some of the doomsday scenarios that did not occur in 2012.

Greece did not leave the eurozone or set off a Lehman Bros.-like financial disaster.

Spanish and Italian bond yields, rather than succumbing to contagion from Greece, retreated from levels that had threatened their governments with bankruptcy.

And nowhere did populist, anti-euro political parties gain the upper hand.

All of these things could still happen, of course. But the probability of catastrophe has fallen substantially because of a fundamental change in the way that European leaders are dealing with the crisis.

Under its president, Mario Draghi, the European Central Bank has promised to buy bonds of countries like Spain, if needed, to control their borrowing costs.

That vow, which cooled the crisis fever of late summer, bought time for elected officials to begin creating the superstructure that the euro needs to become more credible, including a permanent fund for rescuing stricken member countries and a unified system for overseeing banks.

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