This is because they act as a shock absorber in the event of economic shocks: if one Member State is hit, they distribute the follow-up costs across the entire euro area. This form of private risk sharing also alleviates the pressure on the fiscal policies of the countries concerned.
4 Effective fiscal rules for the euro area Ladies and gentlemen, “The union of Europe cannot be based on goodwill alone. Rules are needed.”[20] Those were the words of Jean Monnet, one of the founding fathers of the European Union, back in 1952. In the euro area, these necessary rules include the European fiscal rules.