In the U.S.A., we hear commonly that defecits are bad for America because they end up devaluing American currency. Or at least, that's been my impression. What I've been lead to believe is that when a government is running a huge defecit, the government's currency is seen as less stable, and people would prefer to own more stable currencies. As demand for a specific currency drops, so does its price relative to other currencies. Is that about right? Assuming that this is right, I've got a question about European nations using the Euro. I know the U.K. still uses the Pound frequently, but I'm not sure which other nations have more fully converted to the Euro, and which nations have largely kept their own currency. I'm not even sure if there are nations which have fully converted to the Euro or not, so if someone could tell me that, I'd be very appreciative. First part of the question: When European nations sell bonds, how are they paid back? Is it in Euros, the nation's own currency, whichever currency is more convenient for said nation to use, or does it differ from nation to nation? Second part of the question: Let's say you've got a European nation that uses the Euro exclusively. If that nation has an uncontrollable defecit, what incentive would they have to curb it? Presuming the majority of Europe is doing well, and that the Euro will keep its high value, what does a defecit mean to a nation that is using a currency propped up by other economies? It's not as if Denmark having an uncontrollable defecit would send the price of the Euro dramatically down, so why should a small country like Denmark not just exploit the Euro's stability and spend all the money they like?