They prohibited printing money to finance government deficits, they ruled out government bail-outs and they established an excessive deficit procedure. However, repeated breaches permanently impaired the fiscal rules. Germany was one of the main culprits here, as it – together with other countries – proceeded to water down the Stability and Growth Pact in the early 2000s.
Moreover, the institutional set-up turned a blind eye to other macroeconomic and financial imbalances. Overall, the framework could neither prevent nor manage a crisis. Given these institutional shortcomings, the euro area member states share responsibility for the emergence and escalation of the crisis in this respect. We were all caught on the wrong foot.