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The Euro's Future Is Up to Italy -- but Can Italy Meet the Challenge?

So far, Germany has been able to steer the ship along its chosen path in spite of high emotions and name-calling. German Chancellor Angela Merkel has been firm in her low-key manner as she pushes for tight money and a strong euro.

Still, the forces on the other side of the picture continue to attack this approach, citing low economic growth, high levels of unemployment and growing social unrest. The effort to belittle Germany's effort has been substantial.

Yet things seem to be improving. Spain expanded by 0.6% in the second quarter, the fastest of any country in the eurozone. Portugal is showing much improvement despite the recent problems it has had in banking. Greece seems to be on the mend. And France seems to be moving in the right direction, although it complaining all the way.

Draghi and the ECB seem to be supportive of the more disciplined approach.

All this is why so much attention is being given to Italy. If Renzi can stick to his course and get the Italian budget under control, and if he can reform the labor markets, make Italy more business friendly and restructure the political framework, then the model for the whole eurozone will change. The eurozone could be more competitive economically, the euro could become one of the stronger currencies in the world and Europe could hold its own in world circles.

If Renzi and Italy cannot pull off this turnaround, additional pressures will be put on the ECB to enter a phase of quantitative easing, and further questions will arise over the viability of the German approach.

Let us hope that Renzi sticks to his "chosen course" and succeeds. It would be nice to have a strong Europe based on disciplined budgetary principles, prudent monetary rules and competitive business practices.

At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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