Its unwillingness to do so, for local political reasons, and the inability of the European authorities to induce the country to do so, aggravates the situation in the financial markets and tests the political resilience of the creditor countries. Political leaders are now realising that monetary union is a political union. They should act accordingly, instead of passing on the responsibility to financial markets.
Towards a comprehensive solution We have recently entered a new phase of risk transfer going from sovereign entities to the banking system and back again. Increased risk aversion has progressively spilled across countries.