Either the European Central Bank will have to play a more active role in propping up the most indebted euro-zone nations, or countries will have to commit to a more federal system, with something like a Treasury Department and a real central bank. If not, a breakup of the euro zone, with some countries dropping the currency or being forced to do so, may be inevitable.
These discussions are causing anxiety inside the European Union, especially among the 10 member countries that do not use the euro, who fear a two-speed Europe — the European Union divided into different blocs with different rules — that hurts their interests. Some countries inside the euro zone fear such changes, too, because they will require more rigor and discipline.
The options are politically difficult, said Mr. Klau of the European Council on Foreign Relations. “But the alternative is potentially so devastating that the cost of action, however large, is much smaller than the cost of inaction, because inaction can trigger a chain of events that European leaders will no longer be able to control.”