The first option would imply EMU member states abandoning a substantial part of their national sovereignty over fiscal policy and would therefore require fundamental legal changes on the European and possibly also the national level. The second option requires a return to the fundamental principles of monetary union, with each member state bearing the consequences of its own fiscal policy decisions.
Either option would be sustainable from an economic point of view. However, combining elements of both options, ie sharing the risks of unsound fiscal policy and retaining national sovereignty over fiscal policy, is condemned to failure. It would undermine the incentives for sound fiscal and economic policy even further, thus achieving the opposite of stabilising monetary union.