Others argue that EMU needs to focus on public risk-sharing, be it through introducing a central euro area fiscal capacity or creating safe assets. In reality, separating these two channels of risk-sharing is far from the obvious solution. Is private risk-sharing a substitute for public risk-sharing? Or do they complement each other?
There are several arguments in support of the view that the two channels complement each other – but only if the right powers are matched at the federal level.