Nobel prize winner Christopher Sims voiced concerns when Europe began using the common euro currency in 1999 that have proved prophetic as the continent struggles to deal with surging government debts.

Sims, who won the Nobel economics prize on Monday, wrote an academic paper about what he called the “precarious foundations” of the European Monetary Union. The American economist concluded that countries using the euro — now 17 of them — would face difficulties because, while they were using the same currency and had created a central bank, there was no unified fiscal authority or authority to issue bonds or impose taxes. The euro replaced the separate currencies issued by individual countries.

Sims said the currency union — in his words — “will have to find ways to enforce fiscal discipline on its member states, even when those states are under economic stress.” His prediction is now at the heart of the eurozone's difficulties as individual fiscal policies in Greece and other debt-ridden countries have raised the possibility of default.

Sims said after his award was announced that the eurozone “will have to work out a way to share fiscal burdens and … fiscal authority.” The eurozone bloc, led by economic power Germany, has so far rejected the idea of selling euro bonds, which has led to sharply differing borrowing costs for the 17 nations. Tax rates in the eurozone also vary widely.

One of Simpson's 1999 predictions has not occurred, however. He suggested that if a eurozone nation was in such financial distress that it was nearing the “brink of default,” it would leave the eurozone and restart its previous currency. The opposite has happened in Greece.

Some northern European critics of Greece have suggested that it be ousted from the eurozone. But the Athens government has vowed to work through its financial woes and has won support from Germany and France — the continent's two biggest economies — for continued use of the euro.