The euro area has a built-in dynamic instability due to the lack of fiscal transfers between member states. That leaves it vulnerable to external shocks, especially those which are asymmetric in nature. We find that both the COVID-19 pandemic and the energy crisis were examples of external shocks which, to a first approximation, were roughly symmetric in nature and, as a result, the stability of the currency bloc was not materially called into question. However, through FVI’s FX contagion variable,…