BIS central bankers’ speeches  1  The founding fathers of our monetary union therefore created a framework of rules to prevent, or at least correct, such unsound developments: the Stability and Growth Pact. This was intended to keep national fiscal policies in check. One of its tenets was that annual government budget deficits may not exceed 3% of gross domestic product.
The penalties for breaching this deficit limit could be escalated all the way to financial sanctions. There is one more key building block in the edifice of the euro area alongside the Stability and Growth Pact: the no-bail-out principle, which forbids member states from assuming liability for the debts of other member states.