The implications of this paradigm shift must be borne in mind: heightened complexity, reduced transparency, and discarding the principle of equal treatment. Abandoning rules in favour of discretion would represent a major step backwards. EMU was once meant to be placed on a solid institutional foundation instilling credibility.
Monetary policy can only help in those cases where liquidity is scarce or interest rates are too high, but it cannot make up for the loss of income due to payments not made. Instead, ﬁscal transfers directly address the fundamental problem at hand, since they substitute for lost income.