There would be no need for explicit or implicit transfers, or tax sharing – ideas often included in Eurobond proposals – as the costs of an excessive fiscal policy would remain with the country concerned. The third component in strengthening euro area decision-making is to establish a strong enforcer of the rules.
In this regard, the euro area faces its own “impossible trinity”: countries do not want to exert peer pressure; the Commission prefers to mediate than to police; and the IMF is only an occasional player in EU affairs. As the euro area has to have a way of both monitoring policies and ensuring their compatibility with monetary union, one of these has to give.